Rental income tax in Portugal: what you actually pay
2 min read · Updated in
In short
The headline rate on residential rent is 25%, but almost nobody pays it. Longer leases cut the rate to as low as 5%, and rent up to €2,300 a month on the mainland is taxed at 10% with no minimum term.
The 28% figure you may have read is the rate on non-residential lettings.
What rate applies to my lease?
Whichever is lowest among those the lease qualifies for. The term you agree is therefore a tax decision, taken before there is a tenant.
| Lease | Rate |
|---|---|
| under 5 years | 25% |
| 5 to 10 years | 15% |
| 10 to 20 years | 10% |
| 20 years or more | 5% |
| rent up to €2,300/month | 10% |
| affordable rental scheme | exempt |
What can I deduct?
Municipal property tax, building service charges, fire insurance, the lease's stamp duty, maintenance works, agency and management fees, and the energy certificate.
Not mortgage interest, not principal, not furniture, not works that increase the property's value, and not the wealth surcharge. Interest being non-deductible is the single fact that most changes the arithmetic of a financed buy-to-let.
How and when do I file?
In the Anexo F annex of the Portuguese income tax return, filed between April and June for the previous year, property by property. If the tenant is a business, it withholds 25% at source (10% on a moderate-rent contract taxed at the reduced rate), and you credit it against the final bill. A loss, expenses above rent, carries forward to the next six years.
Do I need to issue receipts?
Yes. Electronic rent receipts on the tax authority's portal, one per payment. They pre-fill part of your return and let the tenant claim their own deduction, which is why an unreported lease tends to surface anyway.
Do non-residents pay a different rate?
No. Rental income from a Portuguese property is Portuguese-source income and is taxed under the same Category F rules. What differs is that a non-resident must file a Portuguese return for it even with no other income here.
Worked example
Rent of €1,100 a month, a 7-year lease, €1,800 of costs
- Gross rent for the year
- €13,200
- Deductible costs
- €1,800
- Taxable income
- €11,400
- Rate by lease length (5 to 10 years)
- 15%
- Moderate-rent rate (rent ≤ €2,300)
- 10%
- Tax, on the most favourable regime
- €1,140.00
Source and date
- Articles 8, 41 and 72 of the Portuguese income tax code
- Article 45-C of the tax benefits statute
Updated in . This page describes the rule in force and is not a substitute for tax or legal advice on a specific case.
Frequently asked questions
Between 5% and 25% on residential rent, depending on the lease length. Rent up to €2,300/month on the mainland is taxed at 10%.
No. Neither interest nor principal is deductible against Category F rental income.
No, the same Category F rules apply. A non-resident must, however, file a Portuguese return for that income.