What is the tax rate on rental income in Portugal for non-residents in 2026?

Three rates coexist. Residential leases at a moderate rent, a ceiling professional summaries consistently state at €2,300 a month (2.5 times the 2026 national minimum wage), are taxed at a flat 10% under Decreto-Lei 97/2026, applying retroactively to income from 1 January 2026 and scheduled through 31 December 2029. Residential leases above the ceiling remain at 25%, the rate set by Lei 56/2023 that applied to all residential leases in 2024 and 2025. Commercial and other non-residential lets are taxed at the general 28% rate. The rate is the same whether the landlord is resident or not; what changes for a non-resident is that the flat rate is usually final. Verified 19 August 2026; the moderate-rent regime is recent, so confirm the live position with a Portuguese tax adviser before relying on it.

Do longer leases still get a lower tax rate?

Yes, and the mechanism matters. The IRS Code (article 72) grants percentage-point reductions off the 25% residential base rate by contract duration: minus 10 points for leases of 5 to 10 years (with a further 2 points per renewal, capped at 10), minus 15 points for 10 to 20 years, and minus 20 points for 20 years or more - taking the effective rate to 15%, 10% and 5% respectively. These are reductions against the 25% base, not against the new 10% moderate-rent rate; the law applies whichever regime is more favourable, so a 20-year moderate-rent lease pays 5%, not zero.

What expenses can a landlord deduct in Portugal?

Article 41 of the IRS Code allows deduction of expenses actually incurred and paid to obtain or secure the rental income - in practice maintenance and conservation, condominium charges, insurance including rent-guarantee insurance, and the IMI on the let property. The code expressly excludes financing costs, so mortgage interest is not deductible - the most commonly misstated point on English-language Portugal sites - and also excludes furniture, appliances and decoration, depreciation, and the AIMI surcharge. Conservation works done in the 24 months before the lease starts are deductible too, provided the property was not used for anything else in between. Keep documentary proof of every expense; it is mandatory.

Is tax withheld from my rent before I receive it?

Only when your tenant is a business. Withholding applies where the tenant is an entity with, or required to have, organised accounts - a company, or a sole trader with organised accounting - under article 101 of the IRS Code; a private individual tenant does not withhold anything. For the general case the withholding rate on rents is 25%, operating as a payment on account that is squared off against your final liability in the annual return, with any excess refundable. For moderate-rent leases under the new 10% regime, the applicable withholding rate is still being clarified in practice, so we deliberately do not state one; ask your adviser or your tenant’s accountant which rate they will apply.

Does a non-resident landlord have to file a Portuguese tax return?

Yes, in the case that actually applies to most foreign owners. A non-resident must file where they received Portuguese income that was not subject to final withholding at source - and rent paid by a private individual tenant is exactly that. The return is the Modelo 3 with Anexo F for rental income, filed exclusively online through the Portal das Finanças in a single window from 1 April to 30 June of the year after the income year. A non-resident whose only Portuguese income was rent fully withheld at source by a corporate tenant may not need to file; confirm your case before skipping it.

Do I need a fiscal representative to receive rent as a non-resident?

If you are resident outside the EU and EEA and have Portuguese tax obligations - which a landlord earning Portuguese rent does - appointing a Portuguese fiscal representative is mandatory under article 19 of the Lei Geral Tributária. Since Decreto-Lei 44/2022 the obligation can be lifted by adhering to the tax authority’s electronic notification channels instead. How that dispensation is applied to an active non-EU taxpayer varies in practice, so before relying on it, confirm with a Portuguese adviser that electronic notifications alone cover your situation. EU and EEA residents may appoint one voluntarily but are not required to.

Is Airbnb income taxed the same way as a long-term rental?

No. Licensed short-let (Alojamento Local) income is business income, Category B, not rental income, Category F. Under the simplified regime, 35% of gross AL income from an apartment or house is taxable, rising to 50% for properties in a designated containment area - the higher coefficient is a penalty for containment zones, not a benefit. The Category F rates and deductions on this page do not apply to AL at all, and the choice between running a property as a long-term lease or an AL is in large part this tax difference. Our Alojamento Local licence guide covers the other half of that decision.

Tax guide · rates verified 19 August 2026

Rental income tax in Portugal for non-resident landlords

By Matan Gvili, Real Estate Advisor

Portugal changed the tax on residential rents in May 2026, retroactively to the start of the year, and most English-language guides have not caught up. This guide states the rules as verified against the consolidated tax code and the decree itself on 19 August 2026: the rates by lease type, what a landlord may and may not deduct, when tax is withheld at source, when a non-resident must file, and who needs a fiscal representative. It is a guide by an independent advisory, not tax advice.

Quick answer

Since 1 January 2026, residential rental income in Portugal is taxed at a flat 10% where the monthly rent does not exceed roughly €2,300, under Decreto-Lei 97/2026, down from the 25% of 2024-25, which still applies above the ceiling. Commercial lets stay at 28%. Expenses paid to earn the rent are deductible; mortgage interest is not. Verified 19 August 2026.

The rates, as in force on 19 August 2026

Lease situation	Rate today	In force since	Instrument
Residential lease, moderate rent (ceiling stated by professional summaries at €2,300/month)	10%	1 Jan 2026 (retroactive; enacted 20 May 2026; runs to end-2029)	Decreto-Lei 97/2026
Residential lease above the moderate-rent ceiling	25%	1 Jan 2024	Lei 56/2023 (CIRS art. 72)
Commercial / non-residential lease	28%	long-standing	CIRS art. 72(1)
Long-duration residential leases (5-10 / 10-20 / 20+ years)	−10 / −15 / −20 points off the 25% base → 15% / 10% / 5%	1 Jan 2024	CIRS art. 72(3)-(5)

The duration reductions are percentage-point cuts against the 25% base, not standalone rates, and the law applies whichever regime is more favourable - so they never take a moderate-rent lease below its own best rate, and nothing goes to zero. The rates are identical for residents and non-residents; for a non-resident the flat rate is usually final. Short-let Alojamento Local income is taxed on entirely different rules (Category B) - see the FAQ.

What the 2026 change is worth, on a real lease

Take a €1,500-a-month residential lease - €18,000 a year, comfortably inside the moderate-rent ceiling. Deduct a typical €2,110 of allowable costs (IMI, condominium, insurance, a repair), and the taxable base is €15,890. At the 10% rate in force since 1 January 2026 the tax is €1,589, about 8.8% of the gross rent - our calculation, method as shown. Under the 25% rate that applied in 2024 and 2025 the same lease carried €3,973. The regime applies to existing contracts with no need to re-sign, and because most Portuguese long-term rents sit far below the ceiling, most foreign landlords with a single let property qualify.

The May 2026 change, and a misattribution to avoid

The 10% moderate-rent rate was introduced by Decreto-Lei n.º 97/2026 of 20 May 2026, the same housing decree that set the flat 7.5% non-resident IMT, applying retroactively to rental income from 1 January 2026 and scheduled to run to 31 December 2029. Several widely-read Portuguese outlets attribute the change to the 2026 State Budget; we checked the budget law's text, and it does not touch the rental-rate article at all. The operative instrument is the decree. The moderate-rent ceiling is defined by reference to the national minimum wage, stated consistently across professional summaries as €2,300 a month for 2026; the regime is new, so have a Portuguese adviser confirm the ceiling for your rent level before you rely on it.

Deductions: what counts, and the exclusion everyone gets wrong

Portugal taxes net rental income. Article 41 of the IRS Code allows every expense actually incurred and paid to obtain or secure the rent - maintenance and conservation, condominium charges, insurance including rent-guarantee cover, and the IMI on the let property are the everyday examples. It expressly excludes financing costs, which means mortgage interest is not deductible in Portugal, unlike in several countries foreign landlords come from; it also excludes furniture and appliances, depreciation, and the AIMI surcharge. Works done to the property in the 24 months before the lease begins are deductible as well, provided the property was not used for anything else in the meantime. Every deduction needs a document behind it.

The rate fell, the paperwork did not. The deduction file you keep is worth as much as the regime you qualify for.

Withholding: it depends on your tenant, not on you

Whether tax is taken off the rent before you see it depends entirely on who your tenant is. An entity with organised accounts - a company renting for staff, a business tenant - must withhold at source under article 101 of the IRS Code, at 25% in the general case, and the withheld amount is a payment on account squared off in your annual return, with any excess refunded. A private individual tenant withholds nothing, which is why most foreign landlords receive gross rent and settle the tax through the return. For moderate-rent leases under the new 10% regime, which withholding rate applies is still being clarified in practice, and we deliberately do not state one here rather than risk misstating your cash position.

Filing, the EU asymmetry, and the fiscal representative

The return is the Modelo 3 with Anexo F, filed exclusively online in a single national window from 1 April to 30 June for the previous year's income. A non-resident must file whenever Portuguese income was not fully and finally withheld at source, and rent from a private tenant is the standard example. Two residence-based rules then split the audience. Landlords resident in another EU or EEA state may elect taxation at Portugal's progressive resident rates instead of the flat rate, an option the IRS Code does not extend to landlords resident outside the EU and EEA - relevant after Brexit to UK owners, and to US, Canadian and Brazilian landlords, who cannot use it. And an owner resident outside the EU/EEA with Portuguese tax obligations must appoint a Portuguese fiscal representative under article 19 of the Lei Geral Tributária, unless the electronic-notifications dispensation of Decreto-Lei 44/2022 covers them - a dispensation applied unevenly in practice for active taxpayers, so confirm it for your case before going without one.

Putting it together

A non-resident letting a Portuguese home long-term in 2026 typically keeps more of the rent than in any recent year: a moderate-rent lease pays a flat 10% on net income, deductions still work, and the effective rate on a documented lease runs in single digits. The gross side of that arithmetic, what homes actually rent and sell for by municipality, is in our Rental Yield Index, and the cost side of holding the home is in the Annual Cost of Owning data page. Portugal Property Invest is an independent advisory and referrer, not a tax adviser; we connect owners to licensed Portuguese accountants and lawyers, and the numbers above should be confirmed for your own case before you act on them. Rates on this page were verified against the consolidated code and the decree on 19 August 2026; the rental-rate block is scheduled for re-verification by November 2026.

Sources

Decreto-Lei n.º 97/2026, de 20 de maio - the 10% moderate-rent regime, retroactive to 1 January 2026, sunset 31 December 2029. diariodarepublica.pt
CIRS art. 72.º (25% residential base per Lei 56/2023, 28% general rate, duration-reduction ladder, EU/EEA option), art. 41.º (deductions and exclusions, 24-month look-back), art. 101.º (withholding), art. 31.º (AL simplified-regime coefficients) - Autoridade Tributária consolidated code, verified 19 August 2026. portaldasfinancas.gov.pt
Lei Geral Tributária art. 19.º and Decreto-Lei n.º 44/2022 - fiscal representation and the electronic-notifications dispensation.
Autoridade Tributária, IRS 2026 filing calendar - Modelo 3 window 1 April to 30 June, online only. portaldasfinancas.gov.pt
Corroborating professional summaries on the moderate-rent ceiling: PwC Worldwide Tax Summaries (Portugal) and Portuguese law-firm analyses of DL 97/2026, cross-checked 19 August 2026. taxsummaries.pwc.com

Frequently asked questions

What is the tax rate on rental income in Portugal for non-residents in 2026?: Three rates coexist. Residential leases at a moderate rent, a ceiling professional summaries consistently state at €2,300 a month (2.5 times the 2026 national minimum wage), are taxed at a flat 10% under Decreto-Lei 97/2026, applying retroactively to income from 1 January 2026 and scheduled through 31 December 2029. Residential leases above the ceiling remain at 25%, the rate set by Lei 56/2023 that applied to all residential leases in 2024 and 2025. Commercial and other non-residential lets are taxed at the general 28% rate. The rate is the same whether the landlord is resident or not; what changes for a non-resident is that the flat rate is usually final. Verified 19 August 2026; the moderate-rent regime is recent, so confirm the live position with a Portuguese tax adviser before relying on it.
Do longer leases still get a lower tax rate?: Yes, and the mechanism matters. The IRS Code (article 72) grants percentage-point reductions off the 25% residential base rate by contract duration: minus 10 points for leases of 5 to 10 years (with a further 2 points per renewal, capped at 10), minus 15 points for 10 to 20 years, and minus 20 points for 20 years or more - taking the effective rate to 15%, 10% and 5% respectively. These are reductions against the 25% base, not against the new 10% moderate-rent rate; the law applies whichever regime is more favourable, so a 20-year moderate-rent lease pays 5%, not zero.
What expenses can a landlord deduct in Portugal?: Article 41 of the IRS Code allows deduction of expenses actually incurred and paid to obtain or secure the rental income - in practice maintenance and conservation, condominium charges, insurance including rent-guarantee insurance, and the IMI on the let property. The code expressly excludes financing costs, so mortgage interest is not deductible - the most commonly misstated point on English-language Portugal sites - and also excludes furniture, appliances and decoration, depreciation, and the AIMI surcharge. Conservation works done in the 24 months before the lease starts are deductible too, provided the property was not used for anything else in between. Keep documentary proof of every expense; it is mandatory.
Is tax withheld from my rent before I receive it?: Only when your tenant is a business. Withholding applies where the tenant is an entity with, or required to have, organised accounts - a company, or a sole trader with organised accounting - under article 101 of the IRS Code; a private individual tenant does not withhold anything. For the general case the withholding rate on rents is 25%, operating as a payment on account that is squared off against your final liability in the annual return, with any excess refundable. For moderate-rent leases under the new 10% regime, the applicable withholding rate is still being clarified in practice, so we deliberately do not state one; ask your adviser or your tenant’s accountant which rate they will apply.
Does a non-resident landlord have to file a Portuguese tax return?: Yes, in the case that actually applies to most foreign owners. A non-resident must file where they received Portuguese income that was not subject to final withholding at source - and rent paid by a private individual tenant is exactly that. The return is the Modelo 3 with Anexo F for rental income, filed exclusively online through the Portal das Finanças in a single window from 1 April to 30 June of the year after the income year. A non-resident whose only Portuguese income was rent fully withheld at source by a corporate tenant may not need to file; confirm your case before skipping it.
Do I need a fiscal representative to receive rent as a non-resident?: If you are resident outside the EU and EEA and have Portuguese tax obligations - which a landlord earning Portuguese rent does - appointing a Portuguese fiscal representative is mandatory under article 19 of the Lei Geral Tributária. Since Decreto-Lei 44/2022 the obligation can be lifted by adhering to the tax authority’s electronic notification channels instead. How that dispensation is applied to an active non-EU taxpayer varies in practice, so before relying on it, confirm with a Portuguese adviser that electronic notifications alone cover your situation. EU and EEA residents may appoint one voluntarily but are not required to.
Is Airbnb income taxed the same way as a long-term rental?: No. Licensed short-let (Alojamento Local) income is business income, Category B, not rental income, Category F. Under the simplified regime, 35% of gross AL income from an apartment or house is taxable, rising to 50% for properties in a designated containment area - the higher coefficient is a penalty for containment zones, not a benefit. The Category F rates and deductions on this page do not apply to AL at all, and the choice between running a property as a long-term lease or an AL is in large part this tax difference. Our Alojamento Local licence guide covers the other half of that decision.

Working out whether letting is worth it?

Gross yields by municipality from official INE data, and the running costs that turn gross into net - both as free datasets.

Rental Yield Index Complete buyer guide