# Portugal Scraps Flat 28% Capital Gains Tax for Non-Resident Sellers

> Non-resident property sellers in Portugal no longer pay a flat 28% — worldwide income now sets a progressive rate of 12.5%–48% on half the gain.

- Source: https://www.growinportugal.com/news/portugal-scraps-flat-28-capital-gains-tax-for-non-resident-p-2026-10-16
- Publisher: GrowIN Portugal (https://www.growinportugal.com)
- Published: 2026-10-16
- Last reviewed: 2026-10-16
- Language: en

> **Key figures — as of 2026-10-16:** Flat 28% non-resident rate **abolished from 1 January 2023** — Autoridade Tributária Circular Letter 20255/2023 confirms the change; non-residents now pay progressive IRS rates of **12.5%–48%** on just **50% of the gain**, the same exclusion residents get; worldwide income is used only to set the tax **bracket**, not taxed itself; 2026 top-rate threshold sits at **€86,634**.

## The flat rate is gone — and many sellers still don't know it

Foreigners selling a house in the Algarve or a flat in Lisbon often still budget for a flat 28% tax bill. That assumption has been wrong since 1 January 2023. Portugal's 2023 Finance Act brought the 50% exclusion and progressive rates to all sellers, regardless of residency, and the Portuguese Tax Authority confirmed the framework in Circular Letter No. 20255 in April 2023. Three years on, the old shortcut is still circulating in expat forums, estate agent brochures and even some professional advice.

The change didn't come from nowhere. The European Court of Justice ruled in Case C-388/19 MK v Autoridade Tributária in March 2021 that even offering resident treatment as an option didn't fix the problem — the default rules had to change. Before that, residents paid progressive tax on 50% of their property gains while non-residents paid 28% on 100%, and Brussels judges decided that gap breached EU free-movement-of-capital rules.

## What actually replaced it

Under the current regime, non-residents selling Portuguese real estate are taxed on only 50% of the gain, at progressive IRS rates — the same 50% inclusion residents get. The catch — and the part that keeps catching people out — is how the rate itself gets picked. The applicable progressive rate is determined by reference to your worldwide income, so a high earner abroad can still land in an upper band on the taxable half.

Portugal doesn't tax a non-resident's foreign salary, pension or dividends directly. It simply uses that income to decide which slice of the IRS scale applies to the Portuguese gain. Capital gains obtained on the sale of real estate by non-residents are subject to PIT on 50% of the capital gains realised, and such gains are subject to the general progressive tax rates which can go up to 48%, plus a solidarity rate of up to 5%, meaning an effective tax rate of up to 26.5%.

For context on where that scale tops out: the top rate threshold is set at €86,634 for 2026, and the budget later in the year will adjust these brackets for 2027 transactions.

## GrowIN's calculation: same house, same gain, different tax bill

Here's the part that matters for planning. Take two non-residents who each sell a Portuguese property with an identical net gain of €100,000. After the 50% exclusion, both have exactly €50,000 entering the Portuguese tax calculation. Nothing about the property, the sale price or the paperwork differs.

Seller A has modest income abroad — a small pension, say — and that €50,000 slice lands near the bottom of the scale, close to the 12.5% band: roughly €6,250 in tax. Seller B earns a substantial salary or has other income well above the €86,634 threshold; the identical €50,000 slice gets taxed near the top marginal rate, close to 48%: roughly €24,000. Same Portuguese transaction, same €50,000 taxable amount — a gap of nearly **€18,000** driven entirely by income earned outside Portugal. That spread is GrowIN Portugal's own illustration of the bracket range, not a quoted example from any single source, and actual liability depends on exact income, deductions and the year's confirmed IRS tables — but it shows why "flat 28%" is now actively misleading.

**"A flat tax rate is simple to explain and increasingly wrong to apply — Portugal's capital gains system now runs on your global income, not just your Portuguese address,"** says GrowIN Portugal Editorial.

## Filing mechanics non-residents shouldn't skip

Nothing is withheld automatically at the signing of the deed. Sellers must declare the sale themselves. Nothing is withheld at completion; Anexo G is filed between 1 April and 30 June the following year, and the assessment follows. That means a non-resident who sells in 2026 won't know the final tax bill until well into 2027, after Finanças processes the worldwide-income declaration alongside the Portuguese gain.

Common mistakes: assuming the old 28% still applies and overpaying via a cautious self-estimate; failing to declare foreign income at all (which can trigger a reassessment at the top rate by default); and missing deductible acquisition and improvement costs, which — unlike the headline rate — haven't changed.

## What to watch next

The 2027 State Budget, expected towards the end of 2026, will reset the bracket thresholds again, and reinvestment relief for primary residences remains a separate, disputed area worth checking with a tax professional before any sale completes. Anyone relying on older guides, including some still quoting the flat rate, should treat those figures as expired.

For the full breakdown of IRS brackets, deductions and filing deadlines relevant to a Portuguese property sale, see GrowIN's [tax & NIF](/tax-and-nif/) hub — and get professional advice before signing anything, since outcomes depend entirely on each seller's individual income picture.

## Sources

- [Your Overseas Home — Capital Gains Tax on Property in Portugal (2026 guide)](https://www.youroverseashome.com/portugal/articles/capital-gains-tax-portugal-property/)
- [Greenback Tax Services — Portugal Capital Gains Tax Guide 2026–2027](https://www.greenbacktaxservices.com/country-guide/portugal/portugal-capital-gains/)
- [Chambers Practice Guides — Private Wealth 2026, Portugal](https://practiceguides.chambers.com/practice-guides/private-wealth-2026/portugal/trends-and-developments)
- [Portal das Finanças (Autoridade Tributária)](https://www.portaldasfinancas.gov.pt)

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© GrowIN Portugal. Cite as: GrowIN Portugal, "Portugal Scraps Flat 28% Capital Gains Tax for Non-Resident Sellers", https://www.growinportugal.com/news/portugal-scraps-flat-28-capital-gains-tax-for-non-resident-p-2026-10-16