Portugal › Glossary › Category E — Investment Income
Category E — Investment Income
Capital and investment income — interest, dividends, and profit distributions. Often taxed at a flat 28% autonomous rate.
Legal basis: Art. 5–7 CIRS; Art. 72(1) CIRS
Category E (Categoria E) covers passive investment income: dividends, interest, profit distributions, and returns on financial instruments. By default, Portuguese-source Category E income is subject to a 28% autonomous (flat) tax rate withheld at source. Taxpayers may elect to aggregate (englobamento) Category E income into their overall IRS return and apply progressive brackets — this is sometimes advantageous for lower-income taxpayers. Foreign-source dividends and interest may be eligible for a Foreign Tax Credit under applicable double taxation treaties. Under NHR Legacy, qualifying foreign-source Category E income was exempt. Under IFICI, foreign-source investment income does not receive the 20% flat rate and is generally taxed at 28% or via aggregation.
Example
A resident receiving €10,000 in Portuguese dividends pays €2,800 (28%) withheld at source. If they elect englobamento and are in the 20% bracket, they may owe less — but must consider the impact on their total tax.
Related terms
Apply this to your actual income
Use the free Portugal tax calculator to see how Category E — Investment Income affects your IRS — all calculated in your browser.