Portugal

27/01/2025 What is IRS Jovem? IRS Jovem is a Portuguese tax regime that aims to encourage young people to enter the labour market by granting Personal Income Tax (PIT) exemptions on employment or self-employment income (PIT categories A and B), from Portuguese or foreign sources, earned by taxpayers resident in Portugal. This regime is available to all taxpayers up to the age of 35 and is applicable for the first 10 years of earning income, regardless of the cycle of studies they have completed or when they completed it. According to information released by the Tax and Customs Authority, the first year of income corresponds to the first year in which the taxpayer works in Portugal. In other words, if a young person has already worked outside of Portugal, this labour history will not count for purposes of the IRS Jovem regime. Who can benefit from the IRS Jovem regime? Any taxpayer under the age of 35, provided that: They are not considered a dependent within their parents’ household (i.e. they are over 25 or, if under 25, earn more than the guaranteed minimum monthly wage, which in 2025 is set at €870.00/month, €12,180.00 per year); Have not benefited from other special tax regimes, such as the Non-Habitual Resident (NHR), the Tax Incentive for Scientific Research and Innovation (IFICI) or the Return Programme; and Have their tax situation regularised (essentially, that they have no tax debts).   What are the benefits of the IRS Jovem regime? The benefits consist of a PIT exemption, calculated on income earned in the first 10 years of activity, with the following limits: Without prejudice to these percentages, the maximum exemption ceiling on the income covered each year is 55 times the value of the Social Support Index (IAS). As the IAS is set at €522.50 for 2025, the maximum exemption ceiling for the 2025 tax year is€ 28,737.50 Example 1: If a person under the age of 35 starts working in 2025 and has an annual salary of €20,000.00, opting for the IRS Jovem regime, their entire annual salary will be exempt from PIT because it falls below the ceiling of €28,737.50. Example 2: If, in 2025, a person under the age of 35 is in their 3rd year of work and has an annual salary of €40,00.00, by opting for the IRS Jovem regime, 75% of their salary could be excluded from taxation, i.e. €30,000.00. However, as the maximum exemption ceiling is 55 times the IAS, €28,737.50 in 2025, this will be the exemption ceiling in this case, meaning that €11,262.50 (= €40,000.00 – €28,737.50) will be subject to PIT. It is important to note that the exempt part of the income is aggregated to determine the rate to be applied to the remaining income taxable at the progressive PIT rates, thus guaranteeing the progressivity of the tax. In other words, if the young worker sells a property, the exempt part of the salary is added to the non-exempt part and also to the real estate capital gain to determine the progressive rate applicable to the non-exempt part of the salary and the real estate capital gain).   How is the IRS Jovem regime implemented? The IRS Jovem regime does not require enrolment and is directly implemented by means of an option when submitting the tax return each year during the exemption period. Taxpayers who qualify for the regime can request their employer to adjust the monthly withholding tax to their reality. If this adjustment is not made, the taxpayer will always be entitled to a refund of the excess PIT withheld when their tax return is settled. Final Take-aways The IRS Jovem regime is an opportunity for taxpayers under 35 to optimise their tax burden and maximise their net income. https://belim.pt/en/news-articles/news/irs-jovem-tax-incentive-for-young-professionals/

19/02/2025 What are Cryptoassets? Cryptoassets are digital representations of value or rights that can be transferred and stored electronically, using distributed ledger technology (such as blockchain). Although they can be used as a means of payment, their primary function has been investment and speculation. Examples of cryptoassets include: Cryptocurrencies– Digital currencies such as Bitcoin and Ether. Stablecoins– Digital currencies pegged to stable assets such as fiat currency. NFTs (Non-Fungible Tokens)– Digital representations of tangible and intangible assets. Since 1 January 2023, with the entry into force of the State Budget for 2023, the taxation of income derived from cryptoassets has been regulated in Portugal. However, income derived from NFTs is expressly excluded from taxation. How are Cryptoassets Taxed? The taxation of cryptoassets depends on the entities involved and the nature of the transactions. If the recipient of the income is an individual: Taxation applies under the Personal Income Tax (IRS), and income derived directly from cryptoassets (excluding NFTs) may be taxed under the following categories: Category B (Business and Professional Income): This applies to income derived from mining and issuing cryptoassets. The taxable income can be assessed through the simplified regime or the organised accounting regime and will be taxed under the general regime at progressive IRS rates. Category E (Investment Income):This applies to passive income or income derived from the application of cryptoassets (e.g. income from staking cryptoassets). However, there is no immediate taxation when income is received in cryptoassets (e.g. staking of Solana received in Solana), only when converted into fiat currency (e.g. lending of Tether with interest received in USD). Cryptoasset investment income is generally taxed at a special rate of 28% (without prejudice to the option for aggregation) or at a rate of 35% if it originates from a tax haven. Category G (Capital Gains):This applies to income from the sale of cryptoassets. The loss of Portuguese tax residency is considered equivalent to a sale for taxation purposes. The taxable capital gain corresponds to the sale value minus the acquisition value (purchase, exchange, etc.) and is determined using the FIFO (First In, First Out) method, meaning that the first acquired cryptoassets are the first to be considered sold. This can impact the tax calculation depending on price variations over time. Capital gains on cryptoassets are generally taxed at a special rate of 28% (without prejudice to the option for aggregation) or at a rate of 35% if originating from a tax haven. If the cryptoassets are held for more than 365 days, the capital gain is exempt from IRS. It is important to highlight that receiving cryptoassets as payment for any other category of income is considered income in kind and should be taxed according to the rules of the respective category at its equivalent monetary value (e.g. salary payments in cryptoassets should be taxed under Category A rules and the rules regarding the monetary equivalence of in-kind income). If the entity receiving/transacting cryptoassets is a company: Income from cryptoassets (or paid in cryptoassets) is subject to Corporate Income Tax (IRC). All income and expenses incurred by the taxable entity, including those related to cryptoassets, must be reflected in the company’s accounting records to allow for the assessment of taxable profit, which will then be subject to IRC. Is a donation of cryptoassets subject to tax? Yes, the free transfer of cryptoassets, whether by donation during the donor’s lifetime or through inheritance, may be subject to Stamp Duty at a rate of 10%. Free transfers between parents and children may be exempt but should, in principle, still be reported to the Portuguese Tax and Customs Authority. Is it mandatory to declare cryptoasset income? Yes, individuals must report their cryptoasset-related income annually through their IRS tax return. It is important to note that transactions involving cryptoassets held for more than 365 days that result in exempt capital gains must still be reported. Companies must maintain accounting records of their income and submit the respective annual IRC declaration. It is also worth noting that cryptoasset service providers registered in Portugal (e.g. trading platforms) are required to report all transactions carried out by their clients in the previous year to the Portuguese Tax and Customs Authority by 31 January, meaning that tax authorities will have this information to cross-check with taxpayers’ reports. Final Notes The taxation of cryptoassets has brought greater clarity to a growing sector. However, there are various tax nuances to consider depending on the type of transaction and the holding period of the assets, as well as the interaction of cryptoasset taxation rules with applicable tax regimes or benefits, such as the Non-Habitual Residents (NHR) regime or the Tax Incentive for Scientific Research and Innovation (IFICI). https://belim.pt/en/news-articles/news/taxation-of-cryptoassets-in-portugal-2025/

07/03/2025 What are unit-linked insurance policies? Unit-linked insurance policies are financial instruments that combine life insurance elements with an investment component, allowing capital accumulation with flexible management of invested funds. This product is particularly attractive from a tax perspective, especially for tax residents in Portugal. How are unit-linked insurance policies taxed in Portugal? As life insurance products, income derived from unit-linked insurance policies is classified as investment income (category E of Personal Income Tax – PIT). The taxable income corresponds to the positive difference between the amounts received upon redemption or maturity of the policy and the amounts invested (premiums paid). What are the applicable tax benefits? Investment income derived from unit-linked life insurance policies is subject to a PIT tax rate of 28% (unless originating from a tax haven, in which case the aggravated rate of 35% applies). However, as long as at least 35% of the total premiums are paid during the first half of the policy term, a partial exemption from PIT applies as follows: If redemption occurs after the 8th year of the policy term, 3/5 of the income is excluded from taxation, meaning only 40% of the income is taxable(e.g., if the income amounts to €20,000, only €8,000 is subject to PIT). If redemption occurs between the 5th and 8th year of the policy term, 1/5 of the income is excluded from taxation, meaning only 80% of the income is taxable(e.g., if the income amounts to €20,000, only €16,000 is subject to PIT).   Considering the PIT rate applicable to investment income (28%), these reductions result in an effective tax rate of 11.2% (for redemptions after 8 years) or 22.4% (for redemptions between 5 and 8 years). If the premiums payment requirement is not met or if redemption occurs before the 5th year of the policy, the total income is subject to tax. What are the other advantages of unit-linked insurance policies? Unit-linked insurance policies can serve as an effective wealth planning tool, as they allow the holding of financial investment portfolios that actively generate income without being taxed at the policy holder’s level until redemption or maturity of the policy (tax deferral policy). Additionally, unit-linked insurance policies are frequently used as estate planning tools. In Portugal: The capital paid to beneficiaries does not form part of the deceased’s estate, allowing for efficient wealth transfer outside the constraints of forced heirship rules. Beneficiaries are not subject to Stamp Duty, regardless of their relationship with the policyholder. Final remarks Unit-linked life insurance policies represent a tax-efficient solution for wealth management and succession planning, allowing for tax deferral until redemption, benefiting from reduced taxation on generated income, and providing significant advantages in asset transfer. It is important to note that if the insurance policy is contracted and assets are transferred from personal ownership to the policy by a Portuguese tax resident (or a non-resident with assets located in Portugal), this operation may be considered a disposal of assets, subject to taxation as capital gains (category G of PIT). The taxation will depend on the type of assets and the previous holding period. https://belim.pt/en/news-articles/news/taxation-of-unit-linked-life-insurance-policies-in-portugal-2025/

23/07/2025 The taxation of investment income is of particular relevance to investors and savers. These types of income fall within Categories E and G of the Portuguese Personal Income Tax (PIT), depending on their nature, and are subject to a tax regime that combines progressive rates, flat rates, and, in some cases, exemptions. Understanding the applicable rules and assessing available tax planning options is key to ensuring compliance with reporting obligations while identifying opportunities for tax optimisation. This briefing note summarises the main aspects to consider. Investment Income (Interest and Dividends) Investment income (Category E of PIT) includes, among others, interest, dividends, royalties (when not earned by the original author or rights holder), as well as income from “unit-linked” life insurance policies. As a general rule, this income is subject to a flat tax rate of 28%. Exceptions and specific rules: If the taxpayer opts for aggregation (englobamento), this income is added to the household’s total taxable income and taxed at the progressive PIT rates. Aggregation is only beneficial if the applicable progressive rate is lower than 28%. Income derived from unit-linked life insurance policies is also classified as investment income and subject to specific tax rules, which may include reductions to the taxable base depending on the duration of the contract. For further details, please refer to our dedicated newsletter: Taxation of Unit-Linked Life Insurance in Portugal (2025). Investment income from blacklisted jurisdictionsis subject to an aggravated rate of 35%.   It is also important to note that, in the case of foreign-source investment income, Portugal’s wide network of Double Tax Treaties (DTT) generally limits withholding tax in the source country to reduced rates (typically between 5% and 15%). It is essential to monitor whether the DTT is being properly applied; otherwise, a refund request may be submitted in the source country for any excess tax withheld. Taxpayers who qualify as Non-Habitual Residents (NHR) or are registered under the new Incentive for Scientific Research and Innovation (TISRI or “NHR 2.0”) may benefit from an exemption on foreign-sourced investment income. For further details, see our briefing notes: Non-Habitual Resident (NHR) and The new TISRI or NHR 2.0. Capital Gains on Financial Assets Capital gains refer to profits realised from the sale of financial instruments such as shares, bonds, and investment fund units. The applicable tax treatment depends on the type of asset and the holding period: Short-term gains:Gains from the sale of financial assets held for less than 365 days (considered short-term or speculative) are subject to progressive PIT rates if the total taxable income (including the capital gain) exceeds the top PIT bracket (currently €83,696). If the total income remains below this threshold, the 28% flat rate continues to apply. Long-term gains:Gains on assets held for more than 365 days are taxed at a flat rate of 28%. Aggregation option:Aggregation is available and may be beneficial for taxpayers with low overall income. Blacklisted assets:In the case of certain assets from blacklisted jurisdictions (e.g. trust income, bonds, fund units), the aggravated 35% rate applies.   Capital gains are assessed individually but computed on a net basis: if the annual balance is positive, tax is due; if negative, and aggregation is chosen, the loss may be carried forward for five years to offset future gains in the same category. Additionally, foreign exchange gains realised by individuals – whether due to currency appreciation or conversion – are not subject to taxation under PIT, as they are not considered taxable capital gains under Category G. Regarding precious metals, a distinction must be made between the sale of physical metals (such as bullion or coins in gold, silver, or platinum), outside the scope of a commercial or professional activity, and the sale of financial instruments indexed to precious metals (e.g., ETFs, CFDs or derivatives on gold, silver, etc.). The former is not subject to taxation, while the latter is taxed under the rules mentioned above (28% or 35% if sourced in blacklisted jurisdiction). In the case of foreign-source capital gains, Portugal’s DTTs generally allocate taxing rights to Portugal, and no withholding should apply abroad. If foreign withholding does occur, it may be possible to request a refund in the source country under the applicable DTT. Finally, taxpayers who qualify as Non-Habitual Residents (NHR) or are registered under the TISRI or “NHR 2.0” may benefit from an exemption on foreign-source capital gains. Annual PIT Reporting Investment income and capital gains must be properly reported in the annual PIT return: Portuguese-source investment income (Category E)is usually subject to final withholding tax at 28%, meaning it does not need to be reported unless the taxpayer opts for aggregation, in which case it must be included in Annex E. Portuguese-source capital gains (Category G)must be reported in Annex G, including the acquisition and sale dates and values, as well as transaction-related costs. The First-in, First-out (FIFO) method must be used (e.g., if 10 shares were acquired and 5 sold, the cost of the first 5 acquired must be considered). Foreign-source income (Categories E and G)must be reported in Annex J. Income in foreign currency must be converted to Euros at the official exchange rate of the Bank of Portugal on the date of each transaction. FIFO rules apply to capital gains, and any foreign tax withheld must be included for the purpose of claiming a foreign tax credit, if applicable.   Final Notes The taxation of investment income — whether interest, dividends or capital gains — entails the application of distinct rules, with options that can significantly affect a taxpayer’s overall liability. In-depth knowledge of the applicable rules, the aggregation option, and available tax benefits (such as those under the NHR or TISRI regimes) is essential not only to ensure compliance but also to enable effective and tailored tax planning. It should also be noted that reporting investment income and capital gains can be administratively complex and documentation-intensive, especially for investors with a high volume of transactions, including low-value or fractional trades. Each sale must be reported individually and in accordance with strict criteria (particularly the FIFO method), which can result in a significant compliance burden and increased risk of error or omission. https://belim.pt/en/news-articles/news/taxation-of-financial-income-interest-dividends-and-capital-gains-under-portuguese-personal-income-tax/