Retirees in Portugal: What You Need to Know About the 2025 Tax Regime

 


If you're a retired expat living in Portugal, the new NHR 2.0 regime introduces important changes that might affect your pension taxation. Here’s what you need to know:

Key Changes for Retirees in 2025

No More 10% Flat Tax on Foreign Pensions
Previously, retirees benefited from a 10% flat tax rate on foreign pension income under the NHR regime. This is no longer available in NHR 2.0.

Standard Progressive Taxation
Pension income is now subject to Portugal’s standard income tax brackets, ranging from 14.5% to 48%, depending on the amount received. This means that some retirees will pay higher taxes than before.

Who Can Still Benefit from the Old NHR Rules?
If you applied for NHR before the end of 2023 and met the residency requirements (such as having a rental contract or house purchase), you may still qualify for the old rules, including the 10% tax rate for up to 10 years.

Mandatory Reporting at the AT Portal

As a tax resident in Portugal, you must comply with declarative obligations at the Portuguese Tax Authority (AT) website (www.portaldasfinancas.gov.pt):

📌 Annual IRS Declaration (Modelo 3)

  • All residents must submit an IRS tax return (Modelo 3) between April 1st and June 30th each year.
  • If you receive foreign pensions, you must declare them under Category H – Pensions in your IRS filing.

📌 Declaration of Foreign Bank Accounts (Modelo 53 - RCBE)

  • If you have bank accounts abroad, you must report them in your IRS return.

📌 Declaration of Foreign Income (Modelo 44 or Modelo 30)

  • If you receive income from rental properties abroad, dividends, or other foreign earnings, these must be declared and properly taxed.

📌 NIF and Tax Representation (If Needed)

  • If you are a non-EU retiree, you must appoint a fiscal representative in Portugal to assist with tax compliance.

📌 Payment of Taxes & Instalments

  • Taxes on foreign income must be paid directly via the AT Portal or through Portuguese banks.
  • Some retirees may need to pay in instalments if their tax liability is high.

What Should Retirees Do Next?

Consult a Tax Professional – Ensure compliance with Portuguese tax rules and optimize your tax strategy.
Stay Updated – Tax regulations may change, so always check for official updates from the AT Portal.
Plan for Higher Taxes – If you relied on the old NHR benefits, review your budget to adjust for potential increases in tax payments.

📌 Portugal remains a fantastic destination for retirees, but tax compliance is key! Make sure you're fully informed and prepared.

Sources: 

https://www.movingtoportugal.pt/en/destination-portugal/retire-to-portugal/

https://prismaat.com/nhr-2-0-portugals-updated-tax-regime/


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