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Portugal’s 2025 fiscal framework introduces updated personal income tax brackets, reinforcing its commitment to progressive taxation while maintaining its appeal to foreign residents through flat-rate structures.
Progressive Rates for Residents
Portuguese tax residents are subject to worldwide income taxation on a progressive scale ranging from 13% to 48%. For married couples or those in a de facto union opting for joint taxation, income is halved for bracket application, reducing marginal impact. The tax system includes specific deductions, increasing progressively alongside income brackets to cushion tax liability. For instance, taxpayers earning between EUR 28,400 and EUR 41,629 face a 35.5% marginal rate, reduced by a EUR 4,023.14 deduction.
Flat Rate for Non-Residents
Non-residents are taxed solely on Portugal-sourced income. 2025 the applicable flat-rate remains at 25% for employment, self-employment, and pension income. This includes revenue from work performed in Portugal and remuneration paid or borne by Portuguese companies or permanent establishments, regardless of the employee’s physical presence.
Solidarity Surcharge Remains in Force
An additional solidarity surcharge applies in 2025, aimed at higher earners. The rate stands at:
- 2.5% on taxable income exceeding EUR 80,000
- 5% on income over EUR 250,000
This measure continues to support public finance sustainability while aligning with redistributive policy goals.
Investment and Capital Gains Taxation
Portugal applies separate regimes for capital gains and investment income, often at flat rates distinct from personal income tax scales. These are influenced by the asset’s nature and the taxpayer’s residency status.
Subsistence Level Protection
A notable safeguard in the Portuguese system is the subsistence income rule, ensuring a basic net income level is preserved for individuals primarily reliant on employment, pension, or professional income.
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