The income tax (Imposto sobre o Rendimento das Pessoas Singulares – IRS) falls upon the whole income of the resident taxpayer in Portugal. Earnings coming from abroad must be considered as well.
According to the portuguese law, the taxation system relies on the universal principle.
The earnings are grouped into categories, which are subject to own rules in order to determine the net income. Progressive rates are then applied to this income by ranking.
The income of non-residents is only subject to taxation, if it was earned on portuguese territory.
Considered as non-resident, is the taxpayer not living as long as or extending a period of six months in Portugal or a company established abroad.
Special rates are charged for the income of non-resident taxpayers, which is not subject to normal taxation.
In case of real estate properties, a tax rate of 25% is applicable over the net realizable value.
Rental income is taxable in Portugal at a rate of 16.50%.