Portuguese residents are subject to tax on their worldwide income and non-residents are subject to Portuguese tax on their Portuguese-sourced income. A double taxation treaty may, of course, provide a variation to these rules.
Portuguese residents and non-residents earning Portuguese-sourced income are subject to personal income tax (PIT). The tax rates for 2013 range from 14.5 percent to 48 percent, plus an additional surcharge of 3,5 percent on the annual taxable income that exceeds the amount of the annual national minimum salary (EUR 6.790). There is also an additional solidarity surcharge that will be levied as follows:
- 2.5 percent on the annual taxable income between EUR 80,000 and EUR 250,000
- 5 percent on the annual taxable income exceeding EUR 250,000.
The income is allocated to one of six categories depending on the type of income. For residents, overall income is computed by adding together the income of all the relevant categories. Income from certain categories is subject to special tax rates and excluded from overall income.
Non-residents are subject to a 25 percent flat tax rate on employment income derived from Portuguese sources. Other income is also subject to flat rates that may vary between 25 percent and 28 percent.
The official currency of Portugal is the Euro (EUR).
Herein, the host country refers to the country to which the employee is assigned. The home country refers to the country where the assignee lives when he/she is not on assignment.
All income tax information is summarized by KPMG & Associados – SROC, SA, based on the Portuguese Personal Income Tax Code, enacted in 1989, updated as of December 2012 according to the State Budget Law for 2013.