Portugal vs Italy taxes (2026): income, capital gains and flat tax

Portugal vs Italy tax rates at a glance

Tax	🇵🇹 Portugal	🇮🇹 Italy
Income tax	Personal income tax: 12.5% - 48% Non-resident employment rate: 25% Dividend and interest income: 28% Employee social security: 11% Employer social security: 23.75%	Personal income tax: 23% - 43% Regional surtax: 1.23% - 3.33% Municipal surtax: 0% - 0.9% Employee social security: around 10% Tax on wages: withholding applies
Corporate tax	Standard corporate tax: 19% SME rate: 15% Municipal surtax: Up to 1.5% State surtax: 3% - 9% Madeira / Azores: 13.3%	Corporate income tax: 24% IRAP: 3.9% Financial sector IRAP: higher Digital services tax: 3%
Capital gains tax	Default capital gains tax: 28% Property gains taxed: 50% Blacklisted jurisdictions: 35% Non-resident Portuguese securities: 0% / 28%	Capital gains tax: 26% Government bonds: 12.5% Real estate gains: 0% / 26% Crypto gains: 33%
Dividend tax	Individual dividend tax: 28% Portuguese withholding tax: 25% Foreign dividend tax: 28% Blacklisted jurisdictions: 35%	Dividend withholding tax: 26% Foreign dividends: 26% Corporate participation exemption: 95%
Wealth tax	Net wealth tax: 0% AIMI for individuals: 0.7% AIMI for companies: 0.4% AIMI for tax havens: 7.5% IMI urban property: 0.3% - 0.45%	Net wealth tax: 0% IVIE: 1.06% IVAFE: 0.2% IVAFE on privileged regimes: 0.4%
Inheritance / estate tax	Inheritance tax: 0% Stamp duty on free transfers: 10% Spouse / descendants / ascendants: 0% / 0.8%	Spouse and direct descendants: 4% Brothers and sisters: 6% Other relatives up to 4th degree: 6% Other beneficiaries: 8%
VAT / GST / sales tax	VAT: 23%	VAT: 22%
Standard VAT	23% mainland	22%
Top national personal rate	48% plus surcharges	43% plus local taxes

Who wins on each tax

Personal income taxItaly

Italy's national top rate is 43% before local taxes, while Portugal reaches 48% before surcharges.

Corporate taxPortugal

Portugal's mainland corporate rate is generally lower than Italy's IRES plus IRAP burden.

Capital gains taxItaly

Italy's standard 26% financial gains rate is often below Portugal's 28% autonomous rate for many investment gains, though asset and aggregation rules vary.

VATItaly

Italy's 22% standard VAT is slightly below Portugal's 23% mainland rate.

Inbound resident regimesItaly

Italy's EUR 300,000 annual flat-tax regime can be powerful for eligible foreign-income profiles moving after 11 August 2024.

The verdict

On ordinary income, neither country is a low-tax base. Portugal's progressive rates reach 48% before surcharges, while Italy's national IRPEF reaches 43% before regional and municipal additions. Both need modelling, not slogans.

Italy has the stronger high-net-worth inbound regime if you qualify and can justify the cost: for people moving after 11 August 2024, its EUR 300,000 annual substitute tax can cover qualifying foreign income. Portugal's old NHR is closed to new ordinary entrants, and the replacement incentive is narrower.

Portugal can still win for lifestyle-led EU residents who value cost, simplicity and access. Italy wins for people who specifically fit the inbound flat-tax regime or need Italian life, assets or business operations.

How to read this comparison

Portugal and Italy are lifestyle countries first and tax-planning countries only in specific cases. The right answer depends less on the headline top rate and more on whether you qualify for a real incentive regime.

Which one fits you

🇵🇹 Choose Portugal if you're a…

EU residents prioritising lower living costs
Founders comparing ordinary company tax
People who want Portugal's residency and lifestyle rather than a special regime

🇮🇹 Choose Italy if you're a…

High-net-worth inbound residents eligible for the flat-tax regime
People with Italian family, business or real estate reasons
Investors comparing standard financial gains rates

Frequently asked questions

Is Portugal or Italy better for tax?

Italy can be better for eligible high-net-worth new residents using its EUR 300,000 annual substitute tax on qualifying foreign income if they moved after 11 August 2024. Portugal can be better for lower-cost EU living and ordinary corporate tax, but it is not a low-tax country for regular employment income.

Does Portugal still have NHR?

Portugal's old NHR regime is closed to most new entrants. Transitional cases and newer targeted incentives need to be checked against current eligibility rules.

Does Italy tax worldwide income?

Yes. Italian tax residents are generally taxed on worldwide income unless a special inbound regime or treaty position changes the result.