Anyone who is considered a tax resident in Portugal must comply with certain tax, social security, and reporting obligations.
These include, for example, paying monthly Social Security contributions, paying taxes, and submitting an annual income tax return.

In addition to your tax obligations with the United States, if you are a citizen of this country, you also have certain tax obligations in Portugal. If you have acquired the tax status of non-habitual residents (NHR), you should keep in mind that in some situations it is more beneficial than the double taxation treaty itself. Don’t hesitate to contact us to calculate your taxes in both countries.

Tax residency and tax obligations in Portugal

Your tax residency status is very important because anyone who is considered a resident for tax purposes in Portugal must fulfill all relevant obligations — from declaring all income (including income earned abroad) to reporting any foreign bank accounts.
For example, a Portuguese tax resident who works as a freelancer in Portugal but also receives a pension from abroad must include that pension in their annual income tax return (IRS3).

Who is considered a tax resident in Portugal?

According to Portugal’s Personal Income Tax Code (IRS), by its acronym in Portuguese, you are considered a tax resident in Portugal if, during the year the income relates to:

• You spend more than 183 days (consecutive or not) in Portugal within any 12-month period that starts or ends in that year.
• Or, even if you stay fewer days, you maintain a home in Portugal under circumstances that suggest an intention to keep and use it as your main residence on any day within that same 12-month period.
• You are part of the crew of a ship or aircraft on December 31st, provided you work for an entity based in Portugal.
• Or you hold public functions or positions abroad in the service of the Portuguese State.

Main tax obligations in Portugal

If you are tax resident in Portugal, you must meet certain tax requirements.
Besides paying taxes, you also have to make Social Security contributions and submit accurate tax declarations.
Below is a general overview of the main tax obligations in Portugal — covering general duties for all residents, as well as specific rules for the self-employed, remote workers, property owners, and vehicle owners.

General tax obligations for all residents

Personal Income Tax (IRS) and the Single Social Tax (TSU) are two of the most important obligations.
Your income is taxed according to the IRS category it falls under, and each category has its own tax rules and rates.
Social Security contributions are paid every month through the TSU, which is a percentage of your gross salary.
The TSU is split into two parts: your employer pays 23.74% and you pay 11%. If you’re an employee, your employer withholds and pays both parts directly to the Portuguese government.

Filling your annual income tax return

Another key obligation is filing your annual tax return.
Most tax residents must submit a personal income tax return every year (IRS Model 3), as there are very few exceptions under the IRS Code.
The return includes sections for different income types, deductions, tax credits, and applicable rates, and it covers employment and self-employment income, capital gains, and rental income.
Filing it correctly is crucial because it determines whether you’re due a refund or have additional tax to pay.
You must file online between April 1st and June 30th for income earned the previous year.
Employees only need to submit this annual return — their employer handles monthly tax withholdings and Social Security payments.

Specific obligations for self-employed workers

If you’re self-employed or a freelancer in Portugal, you must meet several deadlines for your business activities.
For example, you must issue an invoice after every service provided.
You’re also required to submit VAT returns either quarterly or monthly, and pay Social Security contributions every month.
Self-employed workers pay 21.4% of their gross income to Social Security each month.
However, if more than 80% of your annual income comes from the same client, that client must pay an additional 10% TSU on your behalf.
During your first year of activity, you can qualify for an exemption from Social Security contributions.

How to register as self-employed in Portugal — Specific rules for remote workers

For remote workers, the key factor is tax residency. If you’re a remote worker with tax residency in Portugal (under the rules mentioned earlier), your tax obligations will be similar to those of any other self-employed person.
Double taxation is a common concern for remote workers in Portugal, but this is usually resolved through Portugal’s tax treaty with the United States.
Your Social Security obligations will depend on how you work:

• If you’re self-employed as a remote worker, you’ll pay the standard 21.4% TSU;
• If you work remotely for a foreign company as an employee, that company is responsible for paying your Social Security contributions, just like any other local employer. In this case, the company must have a permanent establishment or tax representative in Portugal.

Specific obligations for property owners

If you own real estate in Portugal, you must pay Municipal Property Tax (IMI) on its taxable value (VPT). IMI is paid annually, either in full by May 31st or in up to three installments (May, August, and September).
If the total taxable value of your properties exceeds €600,000, you must also pay the Additional to IMI (AIMI), due by September 30th.

Specific obligations for vehicle owners

If you own a vehicle in Portugal, you must pay the Single Road Tax (IUC).
The IUC applies to all vehicles (cars, motorcycles, etc.) registered in Portugal and must be paid every year before the last day of the vehicle’s registration month.
The amount depends on the engine size, fuel type, year of registration, and CO₂ emissions.
Vehicles over 30 years old that are of historical interest and used only occasionally are exempt from IUC.

Key tax deadlines in Portugal

Here’s a quick overview of the main tax deadlines:

Obligation	Deadline
Annual IRS3 income tax return	April 1st – June 30th
IRS3 payment	By August 31st (if you owe tax)
VAT	By the 20th of the second month after the tax period (monthly) or by the 20th of the second month after the quarter (quarterly)
IMI	By May 31st in full, or in three installments if over €500
IUC	By the last day of the vehicle’s registration month

Don’t hesitate to call us at +351 211 380 833 , send us an email, or request a free appointment so we can explain the first steps and answer any questions you may have. US Tax Consultants.