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Personal Income Tax (IRS) was instituted via Decree-Law 442-A /88 of 30 November.

Personal Income Tax (IRS) is applied to the annual amount of income earned by individual persons, within six categories.

Residents are taxed on their total earned income (in Portugal and abroad) and non-residents are taxed on income they earn in Portugal (according to IRS categories). In 2009, a special, more attractive regime was created for non-habitual residents.

The characteristics, degree of application and categories of IRS in Madeira are the same as those that apply to Mainland Portugal and the only difference is in the rates that are applied to the income obtained in Madeira.

Bracket Taxable Income (€) Normal Rate (%) Average Rate (%)

1st

up to 7,112

10.15

10.15

2nd

over 7,112 to 10,732

16.1

12.157

3rd

over 10,732 to 20,322

24.51

17.986

4th

over 20,322 to 25,075

32.55

20.747

5th

over 25,075 to 36,967

34.78

25.261

6th

over 36,967 to 80,882

44.78

35.859

7th

greater than 80,882

48.00

-

The amount of taxable income, when greater than €7112, is divided into two parts: one of them being equal to the limit of the higher of the brackets it falls under, subject to the average rate of this bracket; and the other part equal to the remainder, which shall be subject to the normal rate of the bracket that is immediately higher.

For more information about the characteristics, degree of application and categories of IRS in Portugal click here.

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NEWCO is an inward investment services provider specialized in the implementation of foreign investment in Portugal and Malta. With 30 years of experience and know how, we help our clients maximize the opportunities and minimize the risks of operating in a new country, allowing them to stay focused on their business. Contact us to find out how we can help you invest or relocate into Portugal, including Madeira, or Malta.

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