Portugal vs Spain Tax Comparison

Portugal and Spain have emerged as Europe's premier destinations for expats, remote workers, and high-net-worth individuals seeking tax efficiency. Both countries compete for the same profiles—entrepreneurs, digital nomads, investors, and retirees—but their tax regimes differ significantly.

This is not a question of one country being universally "better." Rather, the right choice depends on your income mix, asset composition, and residency timeline. A founder with significant capital gains might prefer Portugal's structure. A high-earning professional on Spanish employment might benefit from the Beckham Law.

This comprehensive comparison examines income tax, wealth tax, inheritance treatment, corporate tax, and real-world cost considerations. By the end, you will understand where each jurisdiction wins and where it costs you more.

The Flagship Regimes Both countries offer headline-grabbing flat tax rates designed to attract foreign talent: Aspect Portugal (IFICI) Spain (Beckham Law) Tax Rate 20% flat 24% flat Duration 10 consecutive years 6 consecutive years Foreign Income Coverage Exempt (with blacklist exception) Exempt for non-Spanish-sourced income Eligibility Skilled professionals, researchers, innovators Employed or assigned to Spanish territory Regional Variation None—flat nationwide None—flat nationwide Renewal Not renewable after 10 years Not renewable after 6 years Portugal's IFICI Advantage: The 10-year duration provides substantially longer tax stability.

If you plan to remain in the Iberian Peninsula for a decade, IFICI's length is a material advantage. The 20% rate is also 4 percentage points lower than Beckham. However, IFICI has narrowed eligibility. It excludes passive investors and retirees, focusing on skilled workers and founders with demonstrable income-generation activities.

Spain's Beckham Law Appeal: Although the rate is 24% (vs. IFICI's 20%), Beckham has broader eligibility. The requirement is simply a Spanish employment contract or assignment, not proof of innovation or research credentials.

Spain's impatriate regime parameters should be checked against current AEAT and BOE updates for the filing year before relying on historical summaries.

Standard Income Tax Rates Beyond the Flat Regimes If you do not qualify for IFICI or Beckham, standard progressive rates apply: Portugal (IRS): - Progressive resident rates updated annually, with upper marginal rates reaching 48% depending on bracket and surtax conditions.

Spain (IRPF) 2025–2026:

• Up to €12,450: 19%
• €12,451–€20,200: 24%
• €20,201–€35,200: 30%
• €35,201–€60,000: 37%
• €60,001–€300,000: 45%
• €300,001+: 47% Spain allows autonomous communities (regions) to set additional surcharges. For example, Madrid applies lower regional rates to attract residents, while Catalonia imposes higher marginal rates

Portugal has no regional variation.

The Headline Rates Aspect Portugal Spain General Rate 28% flat (on securities) 19–28% progressive Long-Held Securities Treatment depends on current Portuguese securities rules and elections 19–28% framework (check current-year brackets) Resident vs Non-Resident Residents taxed on worldwide gains Residents taxed on worldwide; non-residents on Spanish assets only Holding Period Benefits Yes—50% exclusion if held >1 year No—rate depends on income bracket alone Portugal note: securities taxation may need to be modeled under current-year Portuguese rules; do not assume fixed inclusion percentages without verifying applicable provisions.

This structure particularly benefits long-term wealth builders who reinvest regularly. Spain's Complexity: Spain's progressive structure means capital gains are taxed according to your overall income bracket. High earners face 28% on all gains. However, individuals with lower baseline income may see 19–21% rates.

Under the IFICI or Beckham regimes, capital gains on foreign investments are exempt. This is a critical lever for those with international portfolio diversification.

The Headline Difference Portugal has zero wealth tax. Spain maintains an active wealth tax regime. Spain's Wealth Tax (Patrimonio) 2025:

• National Rate: 0.2%–3.5%
• Regional Variation: Significant. Cantabria, Madrid, Extremadura, and Andalucía offer 100% relief (0% effective rate)

Catalonia applies 0.2%–3.5%.

• Exemptions: €700,000 per person + €300,000 for primary residence
• Applies to: Both residents and non-residents (non-residents pay only on Spanish assets) Spain wealth-tax and solidarity-tax details should be validated against BOE/AEAT current legal sources

Spain's Solidarity Tax (Impuesto de Solidaridad): Individuals with net wealth exceeding €3 million pay an additional progressive tax:

• €3M–€3.6M: 1.7%
• €3.6M–€4.6M: 2.1%
• €4.6M+: 3.5% This tax applies nationwide, even in regions offering wealth tax relief

Practical Impact: A €5 million net worth in Madrid would owe:

• Wealth tax: €0 (100% relief)
• Solidarity tax: ~€64,000 (on €3.3M over threshold, at blended rates)
• Effective rate: 1.28% annually The same €5 million in Lisbon owes €0 in any wealth tax

Over 10 years, that difference compounds to over €600,000 in avoided taxes—before considering savings on capital gains or income tax.

The Decisive Difference Portugal offers unmatched generosity for family wealth transfers: Heir Type Portugal Spain Spouse €0 7.65%–34% (regional) Children €0 7.65%–34% (regional) Parents €0 7.65%–34% (regional) Grandparents/Grandchildren €0 7.65%–34% (regional) Other Family 10% flat (stamp duty) 7.65%–87.6% (regional, varies by relationship) Unrelated Recipients 10% flat 7.65%–87.6% (regional) Portugal's Advantage is Overwhelming: Direct lineal descendants in Portugal pay absolutely nothing.

A €2 million estate transfers to your spouse and children at zero cost. Spain's Complexity: Spain's rates are among Europe's highest and vary dramatically by region. Madrid offers lower rates (~7.65% for close relatives), while other regions impose 15%–34% on the same estate.

Example Scenario A €5 million estate distributed equally to three children: Portugal: €0 tax Madrid (Spain): ~€125,000–150,000 in inheritance tax Catalonia (Spain): ~€375,000–500,000 in inheritance tax For families with significant wealth intending multi-generational wealth transfer, Portugal's zero inheritance tax creates an unmatched advantage.

Standard Rates Entity Type Portugal (IRC) Spain (IS) Standard Rate 21% plus applicable municipal/state surtaxes 25% (with specific reduced-regime cases) Reduced Rate 17% (certain startups, first 12 months) 17% (micro-enterprises on first €50k) Regional Variation None None (but municipal surcharges vary) Portugal's Advantage: Portugal's corporate tax framework is generally competitive, but effective rates depend on IRC plus municipal/state surtaxes and company profile.

Additionally, Portugal offers accelerated depreciation schedules and R&D credits that reduce taxable income for innovative companies. Spain's Complexity: Spain's standard corporate rate is generally 25%, with specific reduced regimes and transitional rules depending on entity type and legal updates. Dividend Treatment Both countries levy taxes on dividend distributions.

However, if your company operates under IFICI or Beckham, dividends from foreign-source investments are typically exempt. This is a material advantage for entrepreneurs with international portfolio companies.