Does Portugal have a Double Taxation Treaty with Israel?

Yes, Portugal and Israel have a Double Taxation Treaty (DTT) signed in 2007. This treaty prevents most double taxation by allocating taxing rights between the two countries and allowing foreign tax credits.

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Israel Expats in Portugal — Tax Guide 2026

By Taxpert Editorial · Last reviewed: 26 April 2026

Israel has a DTT with Portugal (2007). Israeli nationals — including Israeli citizens returning after a period abroad (Toshavim Chozrim) — benefit from a unique Israeli tax incentive: a 10-year exemption on foreign-source income for new or returning residents. This exemption, when combined with Portuguese IFICI, requires careful analysis.

Double Taxation Treaty: Yes (2007)
Tax relief mechanism: Treaty FTC

Key facts

Israel-Portugal DTT signed 2007
Israel's new immigrant exemption: 10-year exemption on foreign-source income for Olim Hadashim and Toshavim Chozrim
Portuguese-source income: Taxable in Portugal from day 1 — Israel's exemption covers foreign-source only
Israeli dividend withholding: 25% (or 30% for substantial shareholders); treaty reduces to 10%
IFICI can complement Israeli planning — Portuguese-source income taxed at 20%

Income type treatment

Employment

Israeli-source employment: Israel taxes. Portugal taxes worldwide; FTC for Israeli tax.

Pension

Israeli pension (Bituach Leumi): Treaty allocates primary rights to Portugal. Israeli withholding FTC.

Dividends

Israeli dividends: 25% Israeli → 10% treaty rate. Portugal 28%. FTC.

Rental income

Israeli rental: Israel taxes (location). Portugal Cat. F; FTC.

Capital gains

Israeli securities: Israel 25% CGT. Portugal 28%. FTC.

Watch-outs for Israel expats

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10-year exemption interaction: Israel's exemption covers foreign-source income for 10 years. If you are Portuguese-resident, Portuguese-source income is NOT covered by Israel's exemption — Portugal taxes it fully. IFICI then provides the 20% flat rate on qualifying Portuguese income.

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Israeli CPA: The interaction between the Israeli 10-year exemption and Portuguese IFICI is complex. Engage advisors in both countries.

Recommended regimes

IFICI (for qualifying professionals earning Portugal-source income)
Standard IRS (for passive income earners)

IFICI regime

20% flat rate for qualifying professionals

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NHR Legacy

For existing holders before Jan 2024

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This guide is for general information only. Tax laws in both Israel and Portugal change frequently. Always consult a qualified tax advisor with expertise in both Israel and Portuguese tax law before making tax decisions.