Portuguese taxation continues to be marked by intense legislative, regulatory and case-law activity. In this edition of Perspectives, we highlight some of the most relevant changes and guidance that emerged in July 2026, with particular attention to their practical implications for companies, investors and individuals.
Housing: new tax measures begin to take practical shape In July, the tax measures aimed at increasing the housing supply began to be implemented and clarified by the Tax Authority.
Of particular relevance is the new possibility of excluding from personal income tax (IRS) certain capital gains on real estate where the proceeds are reinvested in properties intended for residential letting.
The binding rulings since published by the Tax Authority clarify different forms of reinvestment, including the acquisition of properties, the acquisition of land followed by construction, the extension or improvement of existing properties, and cases where the proceeds are applied both to a new permanent home and to a property intended for the rental market.
Rules were also issued for the partial refund to individuals of an amount equivalent to the VAT borne on construction contracts for properties intended as their own permanent home.
As these measures are progressively implemented, a prior analysis of the legal conditions of each transaction becomes especially important, since the benefits depend not only on the economic purpose of the investment but also on meeting the applicable timing, substantive and reporting requirements.
Cultural patronage and investment: stronger incentives Law no. 30/2026, of 14 July, approved a new set of incentives for the promotion and enjoyment of, and investment in, culture.
The reform is part of a policy of increasing private participation in the financing of culture and seeks to create more favourable conditions for donations and investment in cultural initiatives.
For companies, investors and entities in the cultural sector, the new framework warrants a reassessment of the structures used for patronage and cultural investment projects, particularly as regards their eligibility and the use of the available tax benefits.
Global Minimum Tax: Portugal continues to implement Pillar Two Portugal continues to implement the regime arising from the OECD's Pillar Two, designed to ensure a minimum level of taxation of large multinational groups.
Ministerial Order no. 318/2026/1, of 30 July, approved the assessment return provided for in the Global Minimum Tax Regime, adding a further piece to the operation of the obligations arising under this system.
For the groups concerned, implementing the global minimum tax requires increasing coordination between tax, financial reporting, accounting systems and internal compliance mechanisms.
More than an additional tax obligation, Pillar Two therefore represents a significant change in how multinational groups must collect, organise and validate the relevant tax information in each jurisdiction where they operate.
Non-habitual residents: late registration and effects of the regime The courts have again ruled on one of the most contentious issues surrounding the Non-Habitual Resident (NHR) regime: the consequences of filing the registration application late.
In a decision published in July, the Supreme Administrative Court held that a late application cannot give the regime retroactive effect, but does not necessarily prevent it from applying to subsequent years in which its requirements continue to be met.
The decision is particularly relevant for taxpayers who met the substantive conditions for the regime but did not register in time, and underlines the need to distinguish between the substantive requirements for the benefit and the formal obligations associated with claiming it.
RFAI: the debate on the concept of "initial investment" continues The Tax Investment Support Regime (RFAI) again featured prominently in the arbitral case law published in July.
The decisions address, among other matters, the scope of the concept of initial investment, the distinction between new investments and mere replacement investments, the eligibility of the assets acquired and the job-creation requirement.
The importance of this case law goes beyond the individual cases. Using the RFAI requires the investment decision and its supporting documentation to be structured from the outset in light of the conditions laid down in the tax regime and the European rules on State aid.
A preventive analysis of investment projects is therefore particularly important to reduce the risk of the tax benefits used being disallowed later.
Dividends paid to non-resident investment funds: case law consolidates July saw the continued publication of arbitral decisions on withholding tax on dividends paid by Portuguese companies to non-resident collective investment undertakings.
The decisions continue to compare the regime in the Tax Benefits Statute for resident undertakings with the principle of free movement of capital enshrined in European Union law, concluding in several cases that the taxation applied to foreign funds is incompatible with Article 63 of the Treaty on the Functioning of the European Union.
The repetition and consistency of these decisions are especially relevant for foreign collective investment undertakings that have suffered withholding tax in Portugal, and may justify examining whether the tax borne can be recovered within the applicable time limits.
Municipal surtax and foreign-source income: a question still evolving The levying of municipal surtax (derrama municipal) on income earned outside Portuguese territory also continued to feature in the case law published in July.
The decisions published form part of a wider debate on the territorial scope of the municipal surtax and on whether it may include income sourced outside the municipality — or outside Portugal altogether.
The issue is particularly relevant for Portuguese companies with international operations, warranting a review of how the municipal surtax has been calculated and, where applicable, an assessment of whether the assessments made can be challenged.
