Do Americans Pay Taxes in Portugal? US and Portuguese Tax Basics for 2026

Yes. If you move to Portugal and become a tax resident, Portugal taxes your worldwide income. Because the United States taxes its citizens wherever they live, you also keep filing US tax returns. That sounds like double taxation, but a tax treaty and US credits and exclusions are designed to prevent most of it.

This guide explains when you become a Portuguese tax resident, Portugal’s 2026 tax rates, what happened to the NHR regime, the US rules that still apply to you, and a short section for Canadians. It is general information, not tax advice. Every situation is different, so plan your move with a cross-border tax professional.

When You Become a Portuguese Tax Resident

Under Portugal’s income tax code (CIRS, article 16), you are resident for a year if either of these applies:

• you spend more than 183 days in Portugal, consecutive or not, in any 12-month period that starts or ends in that year; or
• you have a home in Portugal that you appear to intend to keep as your habitual residence.

In the year you arrive, you are resident from the first day of your stay. Residents are taxed on all their income, including income earned outside Portugal; non-residents only on Portuguese-source income. Once you become resident, update your tax address within 60 days; see how to get and update your NIF.

Portugal’s Income Tax Rates for 2026

Portugal cut its income tax rates in November 2026 (Decreto-Lei 212/2026), and the government has said the new rates apply to 2026 income. The mainland rates are:

These are marginal rates: each rate applies only to the slice of income in that band. On top of them, a solidarity surcharge of 2.5% applies to taxable income between €80,000 and €250,000, and 5% above €250,000.

Some income is taxed at a flat 28% instead, including capital income that hasn’t been taxed at source and net capital gains. Residents can choose to add that income to their other income and pay the regular rates instead, which can help if your total income is lower.

Returns are filed online between 1 April and 30 June of the following year, so 2026 income is filed in spring 2027.

What Happened to NHR? Meet IFICI

Portugal’s famous non-habitual resident (NHR) regime was repealed from 1 January 2024. People already registered keep it until their 10 years end, and a transitional window for some applicants closed on 31 March 2025.

The tax authority describes its replacement as the Tax Incentive for Scientific Research and Innovation (IFICI), often called “NHR 2.0”. In brief:

• It applies to people who were not Portuguese tax residents in the previous five years and never had NHR or IFICI.
• Qualifying employment or self-employment income is taxed at 20% for 10 consecutive years.
• Only specific activities qualify, such as certain research, innovation and highly qualified roles defined in law.
• Most foreign-source income is exempt, but pensions are not, so IFICI doesn’t help most retirees.
• You must apply by 15 January of the year after you become resident.

Most Americans moving on a D7 visa should plan on standard Portuguese rates. Some remote workers and founders on the D8 or D2 may qualify for IFICI, and that is worth checking before you move.

What Still Applies on the US Side

You keep filing US returns

US citizens are taxed on worldwide income wherever they live. If you live abroad, you get an automatic two-month extension, to June 15, to file.

Foreign Earned Income Exclusion (FEIE)

For tax year 2026, you can exclude up to $132,900 of foreign earned income (salary or self-employment income, not pensions or investment income) if you qualify. It doesn’t cover passive income, which is what most D7 applicants live on.

Foreign Tax Credit

You can generally claim a credit on your US return for income tax paid to Portugal (Form 1116), but not on income you excluded under the FEIE. Unused foreign tax can be carried back one year and forward ten. Because Portugal’s rates are often higher than US rates, the credit frequently wipes out the US tax on the same income.

FBAR and Form 8938

• FBAR (FinCEN Form 114): required if your foreign accounts together exceed $10,000 at any time in the year. It’s due April 15, with an automatic extension to October 15.
• Form 8938: for taxpayers living abroad, required above $200,000 at year-end or $300,000 at any time (single), or $400,000 and $600,000 (married filing jointly).

Your Portuguese bank also reports your accounts to the IRS under FATCA; see opening a bank account in Portugal.

The US–Portugal Tax Treaty

The income tax treaty between the two countries entered into force in December 1995 and has generally applied since 1 January 1996. A few points matter most for Americans living in Portugal:

• The saving clause: the US keeps the right to tax its own citizens as if the treaty didn’t exist, with some exceptions, including the relief-from-double-taxation article. That is why you keep filing US returns.
• Relief from double taxation: for income the US taxes only because you are a citizen, the treaty treats the income so that the Portuguese tax can be credited against your US tax.
• Private pensions: generally taxable in your country of residence, but the US can still tax its citizens under the saving clause.
• US Social Security: according to the IRS’s reading of the treaty, both countries can tax it when paid to a US citizen living in Portugal. The US keeps the primary right, and Portugal gives relief for the US tax.

Separately, a US–Portugal social security (“totalization”) agreement has been in effect since 1 August 1989. It coordinates social security coverage for people who have worked in both countries.

If You Are Moving from Canada

Canada taxes by residence, not citizenship, so the key question is when you stop being a Canadian resident.

• Residential ties: the CRA looks at significant ties (a home, a spouse or partner, or dependants in Canada) and secondary ties (such as a car, bank accounts, a driver’s license and provincial health cover). Form NR73 asks the CRA for an opinion on your status.
• Departure tax: when you leave, most property is treated as sold at fair market value. Canadian real estate, pensions, RRSPs, RRIFs and TFSAs are among the exceptions. You can elect to defer the tax (Form T1244), and security is required if the federal tax due is over $16,500.
• CPP and OAS: for residents of Portugal, Canada withholds 15% non-resident tax on CPP and OAS pensions. The first CAN$12,000 of Canadian pensions can be exempt if you file Form NR5.
• Tax treaty: the Canada–Portugal tax convention, signed in 1999, has applied since 1 January 2002.

More in our guide to moving to Portugal from Canada.

How Relocate360 Helps

Our tax and compliance team maps the Portuguese side before you move: when you become resident, how your income types are taxed and whether IFICI could apply. We then coordinate with your US preparer or Canadian adviser, and handle your Portuguese filings once you’re here through our accounting service. Book a free briefing to start.

Sources

• Portuguese tax authority (AT), Income Tax Code: art. 16 (residence), art. 68 (2026 rates), art. 68-A (solidarity surcharge), art. 72 (flat rates), art. 60 (filing).
• AT, Non-habitual resident and IFICI FAQ.
• IRS: US citizens abroad, FEIE, foreign tax credit, Form 8938 and FBAR, US–Portugal treaty.
• Social Security Administration, US–Portugal totalization agreement.
• Canada: CRA, residency status and departure tax; taxes on Canadian public pensions abroad.

Moving from Canada? The visas are the same, but departure tax, provincial health cover, CPP, OAS and RRSPs need their own plan. Read our guide to moving to Portugal from Canada.