Portugal remains one of the most attractive destinations for French people considering expatriation. With its sunny climate, geographic and cultural proximity, and above all its competitive tax system, the country attracts thousands of new French residents every year — freelancers, entrepreneurs, retirees, and remote workers.
But taxation in Portugal has evolved significantly in recent years, particularly with the end of the NHR (Non-Habitual Resident) status and its replacement by the IFICI regime in 2024. In this guide, we cover everything a French expat needs to know about taxes in Portugal: income tax brackets, special regimes, retiree taxation, real estate, and the bilateral tax treaty. If you're considering relocating to Portugal, this article is your starting point.
1. Income Tax in Portugal (IRS)
Portugal applies a progressive income tax (IRS — Imposto sobre o Rendimento de Pessoas Singulares) that works similarly to the French system. Here are the current brackets:
- Up to €8,059: 12.5%
- €8,059 to €12,160: 16%
- €12,160 to €17,233: 21.5%
- €17,233 to €22,306: 24.4%
- €22,306 to €28,400: 31.4%
- €28,400 to €41,629: 34.9%
- €41,629 to €44,987: 43.1%
- €44,987 to €83,696: 44.6%
- Above €83,696: 48%
Portugal's tax rate ranges from 12.5% to 48%. For a €40,000 income, the effective rate is about 25% — compared to 30% in France for the same amount.
Tax Residency: The 183-Day Rule
You become a tax resident in Portugal if you meet one of these conditions:
- You stay in Portugal for more than 183 days (consecutive or not) in a calendar year
- You have a dwelling in Portugal suggesting the intention to use it as your habitual residence
As a tax resident, you are taxed on your worldwide income. Non-residents are only taxed on Portuguese-source income.
2. The IFICI Regime: Successor to NHR Status
The Non-Habitual Resident (NHR) status, which made Portugal's tax reputation for a decade, ended on December 31, 2023. It was replaced by the IFICI regime (Incentivo Fiscal à Investigação Científica e Inovação), effective from 2024.
What Are the Benefits?
- 20% flat rate on Portuguese-source income (versus up to 48% under normal brackets)
- Exemption on foreign-source income (excluding pensions in some cases)
- No double taxation on foreign dividends, interest, and royalties
- Duration: 10 years
With the IFICI regime, a French freelancer relocating to Portugal can pay only 20% income tax on Portuguese income, versus 30-45% in France — and foreign income can be exempt.
Who Is Eligible?
The conditions are more restrictive than the former NHR:
- Must not have been a tax resident in Portugal in the last 5 years
- Must work in an eligible activity: scientific research, higher education, tech, qualified executives in companies making productive investments
- "High value-added" professions (engineers, doctors, architects, auditors…) remain eligible
The IFICI regime is more targeted than the NHR: it aims to attract qualified profiles rather than retirees. This is a major shift for French people considering Portugal.
3. Taxation of French Retirees in Portugal
The question of French retiree taxation in Portugal is one of the most common. Portugal was long a tax haven for European retirees thanks to the NHR. The landscape has changed.
Private Pensions
Under the former NHR, private retirement pensions (general and supplementary schemes) from French sources enjoyed full exemption, then a reduced 10% rate. With the IFICI regime, retirees in eligible activities can still benefit from the 20% rate, but pure pension exemption no longer exists.
Public Sector Pensions
Under the France-Portugal tax treaty, French public sector pensions remain taxed in France. Only private sector pensions can be taxed in Portugal if you are a tax resident there.
Note: A French civil service retiree will continue to pay French taxes on their pension, even while living in Portugal. Only private pensions follow the country of residence.
Is Portugal Still Worth It for Retirees?
Yes, for several reasons:
- Cost of living is 30-40% lower than France
- No wealth tax (ISF) in Portugal
- Capital gains on primary residence are exempt under conditions
- Climate, safety (score 9/10), and quality healthcare (index 85/100)
- Existing NHR beneficiaries keep their advantages until expiry
4. Non-Resident Taxation in Portugal
If you own property or earn income in Portugal without living there, you're subject to non-resident taxation. The regime is quite different:
- Rental income: taxed at a flat rate of 25% (or 28% in some cases), withheld at source
- Real estate capital gains: taxed at 28% on net gains. EU/EEA non-residents can opt for progressive brackets if more favorable
- Portuguese-source dividends: 28% withholding tax, reduced to 15% by the France-Portugal tax treaty
- Interest: 28% withholding tax, reduced to 12% by treaty
French non-residents owning rental property in Portugal pay 25% tax on rental income — without French social contributions, which can be advantageous compared to investing in France.
5. Real Estate Taxation in Portugal
Real estate is often a key component of expatriating to Portugal. Here are the main taxes to know:
IMI — Annual Property Tax
Property tax in Portugal (IMI — Imposto Municipal sobre Imóveis) is the equivalent of the French "taxe foncière." Rates vary by municipality:
- Urban properties: 0.3% to 0.45% of patrimonial value (VPT)
- Rural properties: 0.8%
- Possible 3-year exemption for primary residence (subject to income conditions)
This is significantly lower than France, where property tax can easily reach 1-2% of property value.
IMT — Transfer Tax (Acquisition Costs)
When purchasing property, you pay IMT (Imposto Municipal sobre Transmissões). The rate is progressive:
- From 1% to 8% depending on price and property type
- Primary residence: exempt up to €101,917 (2026)
- A stamp duty (Imposto de Selo) of 0.8% is always added
Second Home Taxation in Portugal
If you buy a second home in Portugal, there's no IMT exemption, and rental income (if you rent it out) is taxed at 28%. On resale, capital gains are taxed at 28% on 50% of net gains for residents, or 28% on the full amount for non-residents.
6. Business Taxation in Portugal
If you set up your business in Portugal, here's the tax framework:
Corporate Tax (IRC)
- Standard rate: 19% (versus 25% in France)
- SMEs (turnover < €50M): reduced 17% rate on the first €50,000 of profit
- Municipal surcharge (Derrama): 0% to 1.5% depending on municipality
- State surcharge: 3% to 9% above €1.5M profit
With an effective rate around 19-21% for SMEs, Portuguese corporate taxation is significantly lower than France's 25% — and company creation takes only 5 days.
Freelancers and Self-Employed
Freelancers in Portugal can opt for the simplified regime (regime simplificado) if their turnover is below €200,000. Only 75% of service income is considered for tax calculation (0.75 coefficient), reducing the tax base.
Combined with the IFICI regime (20% flat), a qualified freelancer can achieve a very competitive effective rate.
7. VAT in Portugal
Portugal applies three VAT rates (IVA):
- Standard rate: 23% (mainland) — 22% in Madeira, 16% in the Azores
- Intermediate rate: 13% (restaurants, food…)
- Reduced rate: 6% (essential goods, books, transport…)
The VAT exemption threshold is €13,500 annual turnover — below this, small businesses and freelancers are exempt.
8. France-Portugal Tax Treaty
The tax treaty between France and Portugal is crucial for avoiding double taxation. Signed in 1971 and revised since, it defines which country has the right to tax each type of income:
- Salaries: taxed where the work is performed
- Private pensions: taxed in the country of residence (Portugal if you live there)
- Public pensions: taxed in France
- Real estate income: taxed where the property is located
- Dividends: withholding tax limited to 15%
- Interest: withholding tax limited to 12%
- Real estate capital gains: taxed in the country of the property
In practice, a French person residing in Portugal declares worldwide income in Portugal and receives a tax credit for taxes already paid in France, thus avoiding double taxation.
9. Social Contributions in Portugal
Social contributions are an often underestimated item. In Portugal:
- Employees: 11% employee share + 23.75% employer share (total: 34.75%)
- Self-employed: 21.4% on 70% of declared income (effective rate of about 15%)
- 12-month exemption for new self-employed workers
Compared to French contributions (about 45% of gross for employer-side employee), Portugal is significantly more competitive, especially for the self-employed.
10. Tax Advantages: Portugal vs France Comparison
Here's a summary of Portugal's main tax advantages for French expats:
- No wealth tax (ISF/IFI): Portugal has no wealth tax. If you have significant assets, this is a considerable advantage
- Low property tax: 0.3-0.45% versus 1-2% in France
- Corporate tax at 19% versus 25% in France
- IFICI regime: 20% flat tax for 10 years for eligible profiles
- Cost of living: €1,200/month for a single person in Lisbon or Porto (versus €1,800-2,000 in Paris)
- Tax treaty: no double taxation
For a French freelancer earning €60,000 per year, moving to Portugal with the IFICI regime can save €8,000 to €12,000 per year in taxes, not counting the lower cost of living.
Want to simulate your tax savings in Portugal? Take the Fiscalia quiz for a personalized estimate in 2 minutes.
11. Practical Steps for Relocating
Here are the key steps for your tax expatriation to Portugal:
- Get a NIF (Número de Identificação Fiscal): this is your Portuguese tax number. Required for everything — opening a bank account, signing a lease, creating a company
- Choose your visa: D7 (passive income/retirement), D8 (digital nomad), or D2 (entrepreneur). EU citizens don't need a visa
- Register with Finanças: the Portuguese tax authority, to declare your tax residence
- Apply for the IFICI regime: within the required deadlines after registering as a resident
- Inform French tax authorities: declare your change of tax residence (form 2042-NR in the year of departure)
Company creation in Portugal takes an average of 5 days and can be largely done online.
FAQ
What is the tax rate in Portugal for French expats?
The rate depends on your profile. Under normal brackets, income tax in Portugal ranges from 12.5% to 48%. With the IFICI regime (if eligible), you benefit from a 20% flat rate for 10 years. For a €40,000 income, the normal effective rate is about 25%.
Do French retirees pay taxes in Portugal?
Yes. Since the end of NHR, French private pensions are taxed at normal Portuguese rates (12.5% to 48%). Public sector pensions remain taxed in France. Portugal is still attractive thanks to no wealth tax and lower cost of living.
How does the France-Portugal tax treaty work?
The treaty avoids double taxation by defining which country taxes each type of income. Generally, salaries are taxed where work is performed, private pensions in the country of residence, and real estate income in the country of the property. A tax credit is granted for taxes already paid in the other country.
Does the NHR status still exist in Portugal?
No, the NHR (Non-Habitual Resident) ended on December 31, 2023. It was replaced by the IFICI regime, more targeted at scientific, tech, and high value-added professions. Those who already had NHR keep their benefits until expiry.
Do I need to pay exit tax when leaving France for Portugal?
Exit tax applies if you hold shares worth over €800,000 or representing more than 50% of a company. Since Portugal is in the EU, you benefit from an automatic payment deferral. Check our article on tax mistakes to avoid when expatriating for more details.
