Does Portugal have a Double Taxation Treaty with United Kingdom?

Yes, Portugal and United Kingdom have a Double Taxation Treaty (DTT) signed in 1968. This treaty prevents most double taxation by allocating taxing rights between the two countries and allowing foreign tax credits.

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United Kingdom Expats in Portugal — Tax Guide 2026

By Taxpert Editorial · Last reviewed: 26 April 2026

British nationals represent one of the largest expat communities in Portugal, particularly in the Algarve and Lisbon. The UK-Portugal double taxation treaty provides a solid framework for avoiding double taxation, but Brexit has changed the residency landscape — UK nationals no longer have EU freedom of movement and must apply for Portuguese residency via D7, D8, or other visa routes. This guide covers the key tax considerations for Brits living in Portugal.

Double Taxation Treaty: Yes (1968)
Tax relief mechanism: Treaty FTC

Key facts

UK-Portugal DTT signed 1968 (updated protocols) — covers most income types
Post-Brexit: UK nationals need a Portuguese residence permit (D7, D8, or work permit)
UK state pension: taxable in Portugal as Category H (foreign pension)
ISA accounts: Not recognized as tax-free in Portugal — interest and gains are taxable
UK property rental income: taxable in both UK and Portugal (FTC applies)
NHR Legacy: UK nationals who registered before Jan 2024 enjoy 10% on foreign pensions
IFICI: Open to new applicants from 2024 for qualifying activities
Non-domicile status ends in UK at departure — Portugal's tax system is domicile-neutral

Income type treatment

Employment

UK-source employment (remote working for UK employer): Portugal taxes at standard rates (or 20% IFICI if qualifying). UK also taxes UK-source employment income under treaty Article 15. FTC applies to reduce double taxation.

Pension

UK state pension: Portugal has primary taxing rights — taxable as Cat. H at progressive rates. No longer eligible for NHR Legacy 10% treatment for new arrivals. UK government pensions (civil service, military) are only taxable in the UK under the treaty. Private UK pensions (occupational, personal): Portugal has taxing rights; UK withholds 20% basic rate which is credited as FTC.

Dividends

UK dividends: Portugal taxes at 28% (or aggregation). UK has dividend allowance (£500 in 2024) then UK rates apply. The treaty's dividend article limits UK withholding to 15%. FTC reduces the combined burden.

Rental income

UK rental income: Taxable in the UK under the treaty (property income generally taxed at source). Also reportable in Portugal as Cat. F foreign income. FTC is applied in Portugal for UK tax already paid, often eliminating double taxation.

Capital gains

UK property gains: UK CGT applies (28% on residential property for higher-rate taxpayers). Portugal may also tax these — treaty allocation depends on whether property is used as a permanent home. UK shares: Portugal 28% on gains; UK CGT may also apply. ISA accounts lose their UK tax-free status in Portuguese tax eyes — gains and income are taxable.

Watch-outs for United Kingdom expats

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ISA accounts: The UK treats ISA returns as tax-free, but Portugal does not recognize this exemption. Income and gains from ISAs must be declared and taxed in Portugal.

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UK pension tax relief: Contributions made while UK-resident are fine. However, if you contribute to a UK pension while Portuguese-resident, Portugal may not recognize the tax relief and could tax the contribution year.

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UK property: Capital gains from UK property are split between countries. UK CGT (possibly at 28%) may apply even as a non-UK-resident on UK residential property. Combined with Portugal's potential 28%, this needs careful management — though the FTC usually prevents full double taxation.

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Split-year treatment: HMRC may grant split-year treatment in your year of departure — this affects which period of income is UK-taxable. Portugal's system does not have formal split-year treatment but AT generally accepts the fiscal year start date.

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National Insurance: UK NIC may continue to apply for several years if working for a UK employer. Portugal has its own social security system. 'Detachment' rules under a Social Security Agreement may allow continued UK NIC payment and exemption from Portuguese SS.

Recommended regimes

IFICI (for qualifying tech/professional roles earning >€65k in Portugal)
Standard IRS (for retirees with UK pensions — IFICI provides no benefit for foreign pensions)

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 United Kingdom and Portugal change frequently. Always consult a qualified tax advisor with expertise in both United Kingdom and Portuguese tax law before making tax decisions.