If you're considering relocating to Southern Europe, understanding how taxation differs between Spain and Portugal is essential.
Both countries offer beautiful weather, excellent healthcare, and vibrant cultures, but their tax systems vary significantly, especially for foreign residents.
This guide breaks down expat taxes in Spain vs Portugal, including income tax rates, residency rules, and expat-specific regimes like Portugal's Non-Habitual Resident (NHR) scheme.
Whether you're retiring, working remotely, or moving with your family, here’s what you need to know in 2025.
Residency and tax liability
Spain
In Spain, you’re considered a tax resident if:
- You spend more than 183 days in the country in a calendar year, or
- Your primary economic interests, such as your job, investments, or family, are located in Spain.
Once you qualify as a tax resident, you’re liable to pay tax on your worldwide income. This includes:
- Employment income (in Spain or abroad)
- Rental and investment income
- Capital gains from selling assets
- Pensions, including those paid from foreign sources
Spain also applies wealth and inheritance taxes, which are assessed at the regional level and vary significantly across the country. For more information, visit the Agencia Tributaria, Spain’s tax authority.
Portugal
In Portugal, you’re considered a tax resident if:
- You stay in the country for more than 183 days in a calendar year (consecutive or not), or
- You own or rent a permanent home in Portugal, which is considered your main residence.
Tax residents in Portugal are also liable for worldwide income, including pensions and foreign rental income. However, Portugal was long known for its expat-friendly Non-Habitual Residency scheme, which provided generous tax breaks for new residents.
Although the scheme has been phased out for new applicants as of 2024, it continues to benefit those who enrolled previously. More detail is available on the Portal das Finanças, the official site of the Portuguese tax office.
Income tax rates
Spain
Spain’s tax system is progressive and features both national and regional brackets. The 2025 national income tax bands range from:
- 19% on income up to €12,450
- Up to 47% for income exceeding €300,000
In addition, each autonomous community can impose its own regional rates, which may increase the total burden. For example, high earners in Catalonia or Valencia may face slightly higher combined rates than those in Madrid.
Spain also provides allowances and deductions for dependents, contributions to pension plans, and charitable donations.
Portugal
Portugal also operates a progressive income tax structure:
- Rates start at 14.5%
- Rise to a maximum of 48% for income over €80,000
For those who qualified for the NHR scheme before 2024, several preferential rates still apply:
- Foreign pensions taxed at 10% flat rate
- Certain types of foreign income (such as dividends, royalties, and capital gains) may be exempt under specific treaty agreements
- Portuguese-sourced income from high-value professions taxed at a flat 20%
Although new applications for NHR are no longer accepted, the Portuguese government may unveil a replacement programme.
Non-habitual residency (Portugal) vs standard expat taxation (Spain)
The NHR regime in Portugal was a major draw for foreign retirees and professionals, offering a 10-year period of tax relief. Key benefits included:
- Flat 10% tax on foreign pension income
- Tax exemptions or reduced rates on qualifying foreign-sourced income
- Flat 20% income tax for qualified professionals working in Portugal
Though the NHR closed to new applicants from 2024, those already accepted retain their 10-year tax benefit period. The new NHR scheme launched last year in Portugal is more specific and is aimed at highly qualified professionals in scientific research and innovation sectors.
Spain does not offer a retirement-based tax relief scheme. However, the Beckham Law (originally introduced for footballers) is available to certain foreign workers. It allows eligible individuals to:
- Be taxed only on Spanish-sourced income
- Enjoy a flat tax rate of 24% for six years (on income up to €600,000)
This regime is useful for high-earning professionals being relocated to Spain but does not apply to retirees or self-employed individuals.
Wealth and inheritance taxes
Spain
Spain levies a wealth tax on worldwide assets for residents. The general thresholds are €700,000 exemption, plus €300,000 exemption on your main residence.
Rates range from 0.2% to 3.5%, depending on asset value and region. Some regions, like Madrid, offer near-complete relief for wealth tax, while others enforce full rates.
Spain also has inheritance and gift taxes, with the amount depending on the heir’s relationship to the deceased and regional regulations.
Portugal
Portugal remains favourable for high-net-worth expats:
- No wealth tax
- No inheritance tax for spouses, children or parents
- A 10% flat stamp duty applies to inheritances or gifts to others
This tax framework offers clear planning advantages for families passing on property or financial assets.
Capital gains and dividends
Spain
Spain taxes capital gains as follows:
- 19% up to €6,000
- 21% from €6,001 to €50,000
- 23% to 28% for larger amounts in 2025
Dividends are taxed at the same rates. Certain exemptions apply if proceeds from a main residence are reinvested into another primary home.
Portugal
Portugal applies a 28% flat rate on:
- Capital gains for non-residents
- Dividends for both residents and non-residents
However, residents can benefit from lower effective rates, especially if reinvesting profits or using tax treaties.
Social security and health contributions
Spain
Social security is mandatory if you're working. Contributions range from 6% to 30%, depending on employment type.
Access to the public healthcare system is available once enrolled and private health insurance is required for residency under some visa types.
Portugal
Portugal’s SNS (Serviço Nacional de Saúde) is accessible to residents who contribute to social security via employment or have legal residency and register with the health system.
Non-EU retirees must initially obtain private insurance as part of their visa process. After gaining residency, access to public healthcare becomes available.
Property taxes and costs
Spain
Owners must pay annual property tax (IBI), based on the cadastral value, as well as rental income tax if leasing. There’s also a non-resident imputed income tax if the home isn’t rented.
Portugal
Portugal charges IMI (municipal property tax), typically ranging from 0.3% to 0.8%. There’s also a stamp duty on purchases, and AIMI (extra property tax) may apply to properties worth over €600,000.
Should you choose Spain or Portugal for expat tax benefits?
In 2025, the gap between Spain and Portugal is narrower than in previous years due to the phase-out of Portugal’s NHR regime. However, Portugal still generally offers:
- Lower tax burden on wealth and inheritance
- More favourable treatment for retirees already under NHR
- Simpler processes for tax residency and asset management
Spain, on the other hand, may be better for expats seeking broader regional choice and a slightly better healthcare infrastructure.
Final tip: Always consult a tax adviser with expertise in cross-border issues before relocating. The right choice depends on your specific financial profile, retirement goals, and lifestyle priorities.