Filing taxes in Portugal is a crucial obligation for anyone classified as a tax resident or earning income within the country, even if they are not officially considered a Portuguese tax resident. Here, we explain who must submit a tax return in Portugal, the deadlines, how to update your tax residence, and other important details about tax returns in Portugal.
Key takeaways
- Tax residents in Portugal must declare all income earned, while non-residents only need to declare income from Portuguese sources, with some applicable exemptions.
- The period for submitting IRS returns in 2025 is from April 1 to June 30, with important deadlines to be respected to avoid penalties.
- Updating your tax residence and choosing between joint or individual filing can impact the tax burden and should be done with attention to each taxpayer’s specific tax circumstances.
Who is required to file a tax return?
In Portugal, the obligation to file an IRS return primarily applies to tax residents. These individuals must declare their worldwide income, that is, all income earned both in Portugal and abroad, including income tax. For non-residents, the obligation is limited to income from sources within Portugal.
Those who receive income, such as salaries and personal income tax, and pension income, are required to report them on their IRS return. However, there are some important exceptions. For example, individuals with employment or pension income below €8,500 are exempt from filing a tax return. Additionally, agricultural subsidies, as long as they do not exceed a predetermined limit, may also be an exception.
Understanding who must file an IRS return is essential to avoid complications with the tax authorities. Whether you are a tax resident or not, and the type of income you earn, will determine your tax obligations.
Important deadlines for 2025
Meeting deadlines is vital to avoid penalties and ensure that all tax obligations are met. In 2025, the period for submitting IRS returns in Portugal runs from April 1 to June 30. During this period, returns must be submitted online via the Tax Authority’s portal.
Before the submission period, there are several important dates to keep in mind:
- Your household composition must be updated by February 15
- Classifications on e-fatura portal must be completed by February 26
- From March 16 to 31 taxpayers can access deductible expenses through the e-fatura portal
If the tax assessment is completed by June 30, payment must be made by the end of August.
Our team are available to help new clients submit their tax returns!
How to update your tax residence
Updating your tax address is essential to ensure accurate tax assessments and avoid the risk of double taxation, particularly if you are relocating from Portugal either temporarily or permanently. While the process is relatively straightforward, it’s important to understand the implications of changing your tax residency status. For temporary moves, reinstating your tax residency upon return could potentially trigger retroactive tax obligations for previous years. By speaking to our team, we can provide the relevant guidance on this topic.
Updating your tax residence not only ensures compliance with the law but also ensures that any important correspondence from the Tax Authority arrives at the correct location. This is an essential step to keep your tax situation in order.
Filing your tax return online
With technological advancements, filing your IRS return online has become a fairly accessible process. To begin, you need to access the Tax Authority’s portal with your Tax Identification Number and password. If you are submitting a joint return, authentication information for all involved parties will be required.
The online portal allows for an efficient submission experience, however it doesn’t highlight all the factors to take into consideration; such as how to deal with double taxation situations. Plus if anything is submitted incorrectly it could mean a higher tax payment is needed than necessary, seeing individuals then having to setup a payment plan – which isn’t ideal.
Joint vs. individual filing for couples
For couples, the decision between filing a joint or individual IRS return can have a significant impact on the tax burden. Submitting a joint return can result in a lower tax burden, as the combined household income may be more advantageous than individual income. However, it is important to evaluate total income and possible tax brackets when making this decision.
If you choose not to submit a joint return, each individual must report the income of dependents on their IRS returns. In the joint filing option, all household income must be included, regardless of its origin, whether domestic or foreign.
Choosing the best filing option can save money and reduce the complexity of the tax filing process. Carefully evaluating your financial circumstances and consulting a specialist can help make the most beneficial decision.
Special tax regimes
Portugal previously offered the Non-Habitual Resident (NHR) tax regime, which provided significant tax advantages for eligible individuals, including exemptions on certain types of income for up to a decade. However, the NHR programme is no longer open to new applicants and has now transitioned to the ICIFI programme, which is much more specific in scope.
Under the ICIFI programme, individuals may still benefit from special tax regimes, but the criteria and application process differ significantly from the former NHR rules. For those who qualified under the NHR before its closure to new applications, it remains crucial to ensure compliance with existing regulations to continue enjoying the tax benefits.
For anyone considering favorable tax opportunities in Portugal, it is essential to understand the updated ICIFI framework and explore its requirements.
Payment of taxes
Tax payments can be made both in Portugal and abroad, using various available methods. If you are unable to pay the full amount of tax on time, taxpayers can request to make payments in instalments, under specific conditions. Tax debts below €5,000 can be divided into up to 12 monthly instalments without the need for guarantees.
Requests for instalment payments must be submitted electronically on the Tax Authority’s portal within 15 days after the payment deadline. This process offers flexibility and can alleviate financial pressure on taxpayers facing difficulties in paying the tax in full at once.
Understanding payment options and planning ahead can help manage your tax situation more effectively and avoid penalties.
Common deductions and credits
In Portugal, taxpayers have access to various common deductions, including health expenses, education costs, and donations to charitable institutions. It is possible to claim 15% of unreimbursed health expenses, up to a limit of €1,000, as long as these expenses are reported to the tax authorities.
Educational costs, including school and training expenses, can also be deducted, reducing the total tax payable. Keeping detailed records of eligible expenses throughout the year and verifying and updating deductible expenses on the e-invoice system before submitting the tax return can maximize deductions.
Donations to charitable institutions can be reported during tax return submission for tax purposes. Additionally, before submitting, taxpayers can simulate their tax obligations to understand the amounts due or refundable. Making the most of available deductions can result in significant savings and reduce the tax burden.
Handling tax disputes and appeals
Handling tax disputes and appeals can be a complicated process, but it is essential to ensure that taxpayers do not pay more taxes than due. If you believe there was an error in your income tax assessment, you can appeal within 120 days. To file a complaint or appeal, you must use the administrative appeal forms available on the Tax and Customs Authority’s portal, which also relates to tax administration and tax authorities.
Navigating the legal framework for complaints and appeals can be a complicated process, one that is often avoidable with a properly filed tax return from the outset. Tax disputes must first go through an administrative resolution process before escalating to legal action. If these administrative efforts fail to resolve the issue, legal proceedings may then be pursued.
Avoid the hassle of tax disputes and the appeal process by using our expert tax return services. Let us ensure accuracy and fair treatment from the start.
Summary
SummaryIn this guide, we have explored in detail the various aspects of tax returns in Portugal for 2025. From the requirements of who must file a return to the special tax regimes available; covering all the crucial information taxpayers need to know.
By staying informed about important deadlines, updating your tax residence when necessary, and understanding the available deductions and credits, you can manage your tax situation with confidence.
Remember, our team are always available to help navigate this complex process.
Quick FAQs
Until when can you correct the IRS return?
You can correct the IRS return up to 30 days after the error notification, without penalty, or up to 60 days before the end of the four-year statute of limitations for errors resulting in a higher tax than previously assessed. It is crucial to act within these deadlines to avoid complications.
What is the 183 day rule in Portugal?
The “183-day rule” in Portugal establishes that an individual is considered a tax resident if they spend more than 183 days, consecutive or not, in Portuguese territory during a 12-month period, starting or ending in the fiscal year in question. Therefore, for tax purposes, the duration of stay is a determining factor. However, this isn’t the only applicable rule.
Is it possible to file for an extension?
In certain situations, it is possible to request an extension for filing. For instance, if an individual earns foreign income and the tax on that income has not yet been determined, or if they are entitled to a tax credit in Portugal, an extension can be sought. This extension allows the submission period to be extended until December 31 of the year in which the declaration is being filed.
Who is required to file a tax return?
Tax resident individuals in Portugal are required to file an IRS return, where they must declare all global income, while non-residents only need to declare sole income from Portugal.
