# Foreign income tax in Portugal [Living in Portugal](/living-in-portugal/) Guide Law as at 19 October 2026 7 min read [Signed by our advisers](/about/) · 4.7 on Google, 43 reviews In short As a Portuguese tax resident you are taxed on your worldwide income, and you report the foreign part on Anexo J of your IRS return, by category: employment, pensions, business income, rent, investment income and gains. - Tax paid abroad is credited up to the Portuguese tax on that income and within the treaty limit. - Foreign dividends and interest: generally 28%, or progressive rates if you aggregate. - Anexo J also lists your foreign bank and securities accounts, even without income. ## How Portugal taxes foreign income (illustrative, 2026) - Foreign dividends and interest are generally taxed at 28%, with aggregation where available. The 50% inclusion applies only to qualifying EU or EEA dividends when the entity, information-exchange, and proof conditions are met. - Investment income from a blacklisted jurisdiction: **35%**. - Foreign rental income: **25%** on residential leases and **28%** on other lettings, subject to aggregation and specific regimes. Any rate reduction needs separate verification of its conditions and territorial scope; do not assume it applies to property abroad. ## How Portugal taxes different types of foreign income Residents generally declare foreign-source income in Portugal, but the treatment depends on category, treaty, and filing-year rules. That means foreign employment income, pensions, rental income, dividends, interest, and gains should not be treated as one pool. ## What counts as a foreign dividend in Portugal? A dividend is a company's profit or reserves paid to you as a shareholder, in cash or in kind. Distributions from investment funds, including ETFs, are taxed in the same category, as capital income. - Dividends and fund distributions: 28%, or progressive rates if you choose to aggregate. On aggregation, a dividend counts at only 50% when it comes from an EU or EEA company that pays corporate tax there; a fund exempt from corporate tax does not qualify. - Accumulating funds and ETFs: nothing is taxed while the fund reinvests. The gain is taxed when you sell or redeem the units, as a capital gain at 28%, with the holding-period relief explained in [the capital gains guide](/guides/capital-gains-tax-portugal/). - Dividends or distributions from an entity in a listed tax haven: 35%. Tax withheld abroad is credited up to the Portuguese tax on that income and within the treaty limit. ## How treaties prevent double taxation A double taxation treaty is a bilateral agreement between two countries that helps determine taxing rights and the relief route for each income category. Treaty analysis is article-specific and should be done income stream by income stream. Some income types may end up taxed primarily in one country, while other streams remain taxable in both countries with relief on the Portugal side. Where credit relief applies, the usable Portuguese credit is generally limited to the lower of the foreign tax paid and the Portuguese tax attributable to that same income. Where reduced withholding or other treaty treatment is being relied on, the return and supporting records should show how that route was reached. ## Claiming a foreign tax credit in Portugal The foreign tax credit (crédito de imposto por dupla tributação internacional) is claimed on your [Portuguese IRS return](/guides/irs-2026-portugal/). The credit is generally the lower of the foreign income tax paid and the Portuguese tax attributable to that income. Where a treaty applies, it also cannot exceed the tax the treaty allows the source country to charge; tax withheld above that limit is not credited in Portugal and normally has to be reclaimed in the source country. If the Portuguese tax for the year is too low to absorb the credit, the unused part can be carried forward to the next five years, within the same annual limits. ## How to report foreign income and claim the credit You report foreign income on Anexo J of your IRS return (Modelo 3), filed on the Portal das Finanças between 1 April and 30 June of the following year. Each person who received foreign income has an Anexo J of their own. - Put each income on its own line, in the table for its category (employment, pensions, business, rent, investment income or gains), with the code of the country it came from. - Enter the gross amount, before any foreign tax, in euros at the official exchange rate of the day it was paid or made available to you, or at the 31 December rate if that day cannot be proved. - Enter the tax paid in that country in the column beside it. That is how you claim the credit: the tax authority calculates it from these figures when it assesses your return. Keep the original documents that prove each income and the tax paid on it, issued by the tax authority of the country concerned. They are not sent with the return, but the tax authority can ask for them. ## Anexo J and special-regime reporting Anexo J is the ordinary foreign-income annex to Modelo 3. It separates employment, pensions, business income, rent, investment income and gains, and includes foreign-account identification. The correct return depends on the income and regime: NHR or IFICI cases can also require Anexo L, and an exclusion or special reporting instruction can change the relevant annex. Quadro 11 also identifies covered foreign deposit or securities accounts you own, benefit from or are authorised to operate, including accounts at foreign branches of Portuguese institutions, even if they produced no income. Do not omit reportable income merely because it is exempt. Complete any required cross-references between annexes without counting the income twice in the tax calculation. A later source-country refund or amended assessment may require the Portuguese credit to be revisited. Next step **Your Portuguese return, foreign income included.** We prepare your IRS return with Anexo J, claim the credit for tax paid abroad, send it for your approval and file it. [Order your 2026 return](/services/annual-portugal-tax-return-expats/) ## Five checks before declaring foreign income ### Not filing Anexo J when foreign income should be declared Treaty protection does not replace the filing analysis, and missing the annex can create avoidable compliance problems. ### Declaring income under the wrong regime or category Legacy NHR and IFICI interactions should be tested stream by stream and year by year. Where regime-specific treatment is being relied on, the return and supporting records should be reviewed carefully before filing. ### Applying a domestic option without checking whether it fits the asset and income year Capital Gains and other category-sensitive items should be tested against the specific domestic rules that apply to the asset and the income year. ### Claiming credit for tax that was not actually paid Where source-country withholding has been reduced, stopped, or reclaimed, the Portuguese credit position should be reconciled to the evidence available for that income stream. ### Failing to coordinate with the source country Where another jurisdiction still has reporting or withholding steps, the Portugal return should be prepared from the same data set and evidence file. ## Double taxation relief by income type | Income type | Typical Portuguese treatment direction | Core records needed | | --- | --- | --- | | Employment income | Often foreign-tax-credit method or treaty allocation depending on work pattern and treaty article. | Employment contract, payslips, source-country tax records, and work-location evidence. | | Dividends and Interest | Treaty-limited withholding plus domestic credit mechanics where foreign tax was paid. | Payer statements, withholding certificates, and treaty/article mapping by income stream. | | Rental income | Source-country taxation often remains relevant, with Portugal-side reporting and relief review. | Lease records, local tax evidence, expense schedules, and source-country return support. | | Pensions | Depends on treaty article, pension type, and any regime-specific domestic treatment. | Pension statements, payer letters, withholding records, and treaty article notes. | | Capital gains | Highly asset-specific; confirm domestic rule, treaty article, and income-year treatment. | Acquisition records, disposal records, valuation support, and source-country tax evidence where relevant. | ## The records behind your Anexo J Anexo J should be prepared as a reconciliation file, not as a data-entry exercise. A complete file includes: - Source country and income category mapping - Gross income in source currency and EUR conversion method - Foreign tax withheld, paid, and timing evidence - Treaty article reference used for each stream - Final Portuguese tax effect by category ## Frequently asked questions ### Does Portugal tax all my worldwide income from the day I become tax resident? Yes, as a rule: from the day residence begins, a resident is taxed on worldwide income, including income obtained abroad, but the reporting and tax effect depend on the income category, any special regime such as IFICI, the current filing instructions and any treaty that applies. Once residency begins, foreign income should be reviewed stream by stream rather than assumed to follow one blanket rule. ### How does the foreign tax credit work in Portugal if I already paid tax abroad? Eligible tax paid abroad can reduce the Portuguese tax calculated on that income. The return needs the income and foreign tax paid to be identified separately for each source. ### What is Anexo J (Annex J) and who needs to file it? Anexo J ordinarily reports foreign income by category. Quadro 11 also identifies covered foreign deposit or securities accounts you own, benefit from or are authorised to operate, even if they produced no income. ### Does IFICI exempt all my foreign income from Portuguese tax? No. A qualifying IFICI beneficiary generally receives exemption with progression for foreign-source income in Categories A, B, E, F and G. Category H pensions are excluded, and income paid by entities in listed preferential-tax jurisdictions is subject to the special statutory treatment. Work performed in Portugal is not automatically foreign-source because the payer is abroad. ### What if my income does not fit neatly into a tax-treaty category? The starting point is to identify what the payment is and which treaty rule, if any, covers it. Relief may then come from that treaty, the Portuguese foreign-tax-credit rules or both. ### What sections does Anexo J cover? AT guidance identifies separate sections in Anexo J for employment, pensions, business and professional income, rental income, capital income such as interest and dividends, and capital gains. ### What records do I need for Anexo J? For each income source, keep the country, type of income, gross amount and euro conversion, together with evidence of foreign tax paid and when it was paid. The calculation also records which treaty rule applies and the resulting Portuguese tax treatment. This guide is by **[Telmo Ramos](/about/)**, our founder, an economist and member no. 16379 of the Ordem dos Economistas. ## Related guides - Article · Law as at 13 June 2026 ### [US-Portugal tax treaty, FATCA and FBAR](/insights/us-portugal-tax-treaty-fatca-fbar/) A US citizen resident in Portugal is taxed by Portugal on worldwide income and by the United States as a citizen. - Guide · Law as at 19 October 2026 ### [Portugal capital gains tax 2026: residents and non-residents](/guides/capital-gains-tax-portugal/) Check Portuguese capital gains on property and investments: how tax is calculated, eligible costs, reinvestment conditions and residence status. - Guide · Law as at 15 June 2026 ### [Finnish expat tax in Portugal: pensions & residence](/guides/finnish-expat-tax-portugal/) A Finnish pension paid to a Portuguese resident may be taxed in both countries, because no Finland-Portugal tax convention has applied since 1 January 2019. ## Tell us about your situation We reply within 2 working days with the right service, its price and how to start. ## Tax Consultation A 30-minute call with your adviser, then a follow-up memo within 3 working days after the call. [Book a Tax Consultation](/book/) --- Source: https://taxbordr.com/guides/portugal-foreign-income-tax/ General guidance only. Individual facts govern.