The Wayli Guide to
Money & Taxes in Portugal

Portugal has become an increasingly popular destination for expats seeking a better quality of life, a favourable tax environment, and a welcoming atmosphere. As an expat in Portugal, managing your money and taxes efficiently can help you make the most of your time in the country. In this comprehensive guide, we'll cover essential aspects of managing finances and taxes for expats in Portugal, focusing on an easy-to-digest structure and logical hierarchy.

Expats living in Portugal should open a local bank account to ease transactions, save on fees, and manage finances efficiently. To open a bank account in Portugal, you will generally need the following documents:

• Proof of identity (passport)
• Portuguese Tax Identification Number (NIF)
• Proof of address
• Proof of employment or income

Some banks may have additional requirements, so it's essential to check with your chosen bank for specific details.

There are several banks in Portugal that cater to the needs of expats. Some of the most popular ones include:

• Millennium BCP
• Banco Santander Totta
• Novo Banco
• Caixa Geral de Depósitos

Expats may need to transfer money between their home country and Portugal for various reasons. Several international money transfer services can help you send money at competitive exchange rates and low fees, such as:

• Wise (formerly TransferWise)
• Revolut
• CurrencyFair

Understanding your tax residency status is crucial for tax planning. You are considered a tax resident in Portugal if:

• You spend 183 days or more in Portugal during a calendar year
• You have a permanent residence in Portugal on December 31st of a given year

Tax residents in Portugal are subject to personal income tax on their worldwide income. The tax rates are progressive, ranging from 14.5% to 48%, depending on your income. Non-residents are taxed at a flat rate of 25% on their Portuguese-sourced income.

The NHR regime is a favourable tax program aimed at attracting expats to Portugal. Under this regime, qualifying individuals enjoy a reduced tax rate on certain types of income for ten consecutive years. Some benefits of the NHR regime include:

• Tax exemptions on foreign-sourced income, such as pensions, dividends, and royalties
• A flat tax rate of 20% on Portuguese-sourced employment and self-employment income

Both employees and self-employed individuals are required to contribute to Portugal's social security system. Contributions are mandatory for residents and cover benefits such as healthcare, unemployment, and pensions.

Property owners in Portugal are subject to the following taxes:

• Municipal Property Tax (IMI): an annual tax based on the property's taxable value, with rates ranging from 0.3% to 0.8%
• Property Transfer Tax (IMT): a one-time tax paid upon purchasing a property, with rates varying from 1% to 8%, depending on the property value and type
• Stamp Duty: a 0.8% tax applied to property transactions in addition to the IMT

Portugal does not impose inheritance or gift taxes on transfers between spouses, descendants, or ascendants. However, other beneficiaries may be subject to a flat Stamp Duty rate of 10% on the value of the inheritance or gift.

Expats retiring in Portugal can enjoy a favourable tax environment, particularly if they qualify for the NHR regime. Pensions from abroad are generally exempt from taxation under the NHR program. Expats should also consider the tax implications in their home country regarding pension payments.

Investing in Portugal can be an attractive option for expats looking to grow their wealth. Some popular investment options include:

• Real estate
• Portuguese stocks and bonds
• Bank deposits and savings accounts

It is essential to consider the tax implications of your investments, as different types of income may be subject to varying tax rates.

Portugal uses the euro (EUR) as its official currency. Expats should be mindful of exchange rates when transferring money between their home country and Portugal. Utilising international money transfer services, as mentioned in section 2, can help you save on fees and get competitive exchange rates.

Managing money and taxes as an expat in Portugal can be complex, and it is essential to have a solid financial plan in place. Consider seeking advice from a professional financial advisor with experience in expat financial planning and Portuguese tax laws. This can help ensure that you are optimising your financial situation and complying with all relevant regulations.

Managing money and taxes as an expat in Portugal can be a daunting task, but with proper planning and knowledge, you can make the most of the country's favourable tax environment and enjoy your time in this beautiful and welcoming destination. By understanding the Portuguese banking system, taxation rules, and investment opportunities, you can efficiently manage your finances and make informed decisions for a secure and prosperous life in Portugal.