Social security tax

Gift, wealth, estate, and/or inheritance tax

Real estate tax

Sales/VAT tax

Unemployment tax

Other taxes

All tax information in this section is summarized by KPMG & Associados – SROC, SA based on the Portuguese Personal Income Tax Code, enacted in 1989, updated as of January 2018, according to the Portuguese Personal Income Tax Reform as well as the 2018 State Budget Law.

Are there social security/social insurance taxes in Portugal? If so, what are the rates for employers and employees?

Employer and employee

* Portuguese residents and non-resident employees in Portugal are liable to social security contributions at a rate of 11 percent on their gross remuneration or 9.3 percent if members of the board or directors of a company. Employers are liable to social security contributions at a rate of 23.75 percent on the same gross remuneration or 20.3 percent for members of the board. However, for members of the board who are “Administradores” and “Gerentes” the social security contributions are at a 11 percent rate for the employee and 23.75 percent for the employer.

Some items may not assessable to social security contributions such as the following:

• irregular performance premiums
• profit sharing
• tuition for children
• allowances for health expenses.

There are three main types of exceptions to the payment of social security contributions in Portugal: those derived from the EU Rules 1408/71 and 2001/83 (EU residents and residents in third countries where these regulations are applicable), those derived from Portugal’s social security treaties and those derived from internal rules in international assignments. In general terms, foreign employees assigned to work in Portugal for an estimated period of less than one year will continue to pay social security contributions in their home country. Under these special assignment rules, the period of exemption of Portuguese contributions may be extended for a further year. Should authorities of the two countries enter into an agreement the exemption can be granted initially for a longer period, but normally up to a maximum of five years. Some exemptions are also available for individuals working in more than one country.

The Portuguese authorities have started to accept exemption in cases other than the two above referred. The exemption process is analyzed on a case-by-case basis.

According to the real estate taxation reform, gift and inheritance tax has been revoked since 1 January 2004. As a result, all actual and effective transfer of assets, located in the Portuguese territory, to individuals, will be liable to stamp tax at a 10 percent flat tax rate. However, gifts (during lifetime or upon death) to the donor’s spouse, descendants and ascendants are tax-exempt. 

Yes. Municipal property tax is levied on the patrimonial value of urban and non-urban property located in Portuguese territory and it is assessed annually considering the property's patrimonial taxable value. This tax is assessed on the value of the property, as determined for tax purposes. The tax rates are 0.8 percent for rural property and range from 0.3 percent to 0,45 percent for urban property.

Yes, value-added tax applies on the following:

• supply of goods and rendering of services carried out in the Portuguese territory (in an onerous way)
• imports of goods
• intra-community acquisition of goods.

There are three different VAT rates are as follows:

• reduced: correspondent to 6 percent (applied in general to basic food products, pharmaceutical products, electricity, and so on)
• intermediate: correspondent to 13 percent (applied in general to wine, flowers, and so on)
• normal: correspondent to 23 percent (applied to the remaining goods and services not subject to the above rates).

No.

Are there additional taxes in Portugal that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on. 

Stamp tax

According to the real estate taxation reform, gift and inheritance tax has been revoked since 1 January 2004. As a result, all actual and effective transfer of assets, located in the Portuguese territory, to individuals, will be liable to stamp tax at a 10,8 percent flat tax rate.

Local taxes

There are no local taxes imposed on the income of individuals. There is, however, a local tax on immovable property as referred to above (Real estate tax).

Property transfer tax

A property transfer tax (IMT) is assessed on onerous transfer of ownership rights, or limited rights, in real estate located in Portuguese territory, as well as on legal actions economically comparable to these transmissions.

IMT is due, namely, in the following situations:

• sale agreements of real estate (on delivery)
• leases which contain contractual clauses under which the leased goods become the tenant's property after all the lease rentals have been paid
• lease or sub-lease for a period that exceeds 30 years
• acquisitions of quotas of certain forms of companies that hold real estate, resulting in the ownership of such companies, or, when the ownership is limited to two people, by spouses when married under the community of goods regime (general or acquired)
• sale agreements which contain clauses under which the purchaser may transfer his/her contractual position to third parties
• grants of irrevocable powers of attorney that empower the transfer of ownership rights in real estate or of quotas mentioned above
• assignment of contractual position or resale adjustment.

IMT is levied on the value of the act or of the contract or on the patrimonial value of the assets, whichever the highest.

The IMT rates are as follows.

Exemptions

• Acquisition by young people, aged between 18 and 35, of a building or part thereof for first permanent dwelling, if located in areas which benefit from less developed inland areas incentives and provided the value of the building that would be subject to IMT does not exceed the maximum values of a building with controlled costs, increased by 50 percent.2
• Acquisition of a building for resale, if undertaken by a real estate, provided the building is resold, not for further resale, within a three-year period.
• Acquisition of urban property if located in areas which benefit from less developed inland areas incentives and allocated in a permanent manner to the company’s activities.

Resident taxpayers are required to identify any foreign bank accounts held (the IBAN and Swift code) in the income portuguese tax return (specifically in appendix J), regardless of having received any income from such account or not.

¹In Madeira and Azores the limits are multiplied by 1.25.

²Exemptions conditioned to the prior submittal of a request thereof to the tax authorities and prior consent of the respective Municipality.