IRS in your first year in Portugal: complete guide for immigrants

If this is your first tax year in Portugal, you'll likely need to file IRS between April and June. For recent immigrants the process has nuances that aren't in standard guides — the Non-Habitual Resident (NHR) status, double-taxation credits, specific deductions, and the split-year complication.

This article covers what you need to know.

Who counts as "tax resident" in Portugal

You're a Portuguese tax resident in a given year if:

• You spent more than 183 days in Portuguese territory during the year (don't need to be consecutive), or
• You had housing in Portugal on 31 December showing intent to keep it as habitual residence

If you meet either condition, you must file IRS in Portugal on your worldwide income for that year — not just earnings in Portugal.

Beware split-year

If you came to Portugal mid-year (say, September), your tax year splits into:

• Pre-residence period — taxed by your country of origin
• Portuguese residence period — taxed by Portuguese IRS on worldwide income from that moment

If you worked abroad before moving, that income doesn't enter the Portuguese IRS (already taxed in the other country).

Non-Habitual Resident (NHR) — worth applying for?

The NHR is a special regime offering reduced rates for 10 consecutive years for recent immigrants. Benefits include:

• Flat 20% rate on income from high-value-added activities (medicine, engineering, IT, design, etc) — instead of the normal progressive rate up to 48%
• Near-total exemption on foreign-source income (pensions, dividends, royalties, capital income) if taxed in the source country

Conditions to access:

1. Not having been a tax resident in Portugal in the previous 5 years
2. Applying for the status by 31 March of the year following start of residence

If you arrived in 2025 and were tax resident for the first time, you have until 31 March 2026 to apply for NHR.

⚠️ Important: NHR was changed in 2024. Benefits remain for those who applied by 31 March 2024, but new rules for entries from 2024 onwards are more restrictive. If you arrived in 2024 or later, it's essential to evaluate if it makes sense in your concrete case.

Deductions many immigrants forget

International double-taxation credit

If you paid tax on income abroad before being resident in Portugal, or if you have foreign income during the year, you can deduct the tax paid abroad (capped at what you'd pay in Portugal).

Health deductions

Pharmacy, doctor, clinic expenses, even at private medical centres: 15% deduction up to €1000 per household. Keep receipts with NIF.

Education deductions

University tuition, professional courses, books, kindergarten/daycare: 30% deduction up to €800.

Housing deductions

• Rent: 15% up to €502 (if landlord's NIF is on the declaration)
• Mortgage interest: 15% up to €296 (only for pre-2011 contracts)
• IMI: indirectly via specific deductions

Other receipts with NIF

Restaurants, garages, hairdressers, gyms — 15% of VAT is refunded up to €250 per household. Check on Portal das Finanças → "e-fatura" during the year.

Important deadlines

• 31 March — deadline to apply for NHR (if first residence in previous year)
• 15 February — Portal das Finanças releases "Automatic Declaration" for simple cases
• 1 April to 30 June — official window to file IRS
• 31 August — deadline to contest assessment notifications

Can I use the Automatic Declaration?

Yes, if:

• You only have employment income (Category A) or pensions (Category H)
• Your household is simple (no complex dependents, no recent divorce)
• You have no non-pre-validated deductions

You can't use Automatic if:

• You're self-employed
• You have foreign income
• You have active NHR status
• You made donations or paid alimony

For first-year immigrants, the Automatic rarely is the best path — it usually leaves deductions on the table.

How we handle your IRS

Our team covers all the complexity of the first year:

• ✅ Check NHR eligibility
• ✅ Apply double-taxation credit if applicable
• ✅ Maximise all legal deductions
• ✅ Submit via Portal das Finanças
• ✅ Support for 12 months if the Tax Authority asks for clarifications

All for €20 with VAT included. For simple cases, it's clearly cheaper than hiring an accountant (€100-€300 typical).

Start my IRS →

In summary

IRS in your first year in Portugal is more nuanced than it seems. The key points:

1. Check if you're a tax resident (183-day rule or permanent housing)
2. Apply for NHR by 31 March if you haven't already
3. Watch out for split-year if you arrived mid-year
4. Don't forget deductions — receipts with NIF are money
5. Automatic Declaration rarely fits first-year immigrants

And if you'd rather not deal with this alone, we file it for you.