UK Pension Tax in Portugal 2026 -- IFICI Regime, Treaty Rules and Reporting

Last reviewed: 26 April 2026

UK pension Portugal tax in 2026 is one of the most searched topics among British nationals retiring to Portugal, and rightly so -- the interaction between the UK-Portugal Double Taxation Convention, the Portuguese IFICI regime (which replaced the former NHR in January 2024), and the Portuguese IRS (Imposto sobre o Rendimento das Pessoas Singulares) is complex and has changed significantly since NHR’s abolition. UK nationals who retired to Portugal under NHR and received UK pension income tax-free (NHR’s 10% flat rate on foreign pension income was replaced in 2024) now face a materially different tax position. For the full pension management context for UK nationals abroad, see our UK pension abroad guide. For the complete Portugal relocation guide, see our moving to Portugal from the UK guide.

UK pension Portugal tax is primarily determined by the UK-Portugal DTC, signed in 1968 and updated by the 2000 Protocol. The DTC allocates taxing rights on different categories of UK pension income between the UK and Portugal, and the correct categorisation of each pension type (private vs government service) is the foundation of any Portuguese tax planning for UK retirees. Unlike Spain (where NHR’s replacement is Beckham Law, targeted at employed individuals), Portugal’s IFICI regime (Incentivo Fiscal à Investigação Científica e Inovação) primarily targets scientific, technology, and highly qualified professional workers, not retirees drawing pension income. This means the majority of UK retirees in Portugal in 2026 pay Portuguese IRS at standard progressive rates on their private pension income.

UK-Portugal DTC: how pension taxing rights are allocated

The UK-Portugal Double Tax Convention (DTC), available in full on the GOV.UK treaty pages, allocates taxing rights on pension income through Article 18. Article 18(1) provides that "pensions, other than Government service pensions, and other similar remuneration paid to a resident of one of the territories in consideration of past employment shall be taxable only in that territory." For a UK national resident in Portugal, private pension income (occupational scheme pensions, SIPP drawdown, purchased annuities) is therefore taxable only in Portugal (the territory of residence) -- not in the UK. The UK pension administrator must pay the pension gross (without UK PAYE deduction) once an NT (No Tax) code has been obtained from HMRC, using form DT-Individual (Portugal) which requires the Autoridade Tributária e Aduaneira (AT -- Portuguese tax authority) to certify the Portuguese certificate of fiscal residency (Certificado de Residência Fiscal).

Article 18(2) of the UK-Portugal DTC covers government service pensions: "Pensions paid by, or out of funds created by, the United Kingdom or a political subdivision or local authority thereof to an individual in respect of services rendered to the United Kingdom or subdivision or authority shall be taxable only in the United Kingdom." Government service pensions -- NHS pensions, civil service pensions, teachers’ pensions, armed forces pensions, police pensions, local authority pensions -- are therefore taxable only in the UK, not in Portugal. A UK national resident in Portugal who receives a UK teacher’s pension pays UK income tax on that pension and does not include it in the Portuguese Modelo 3 IRS return. Application for an NT code for government service pensions is not appropriate; the government service pension should be paid under normal UK tax code arrangements, with Portuguese residency confirmed to HMRC using the DT-Individual form for other pension types.

Portuguese IRS rates on private pension income in 2026

Portuguese IRS (income tax) is levied on private pension income at standard progressive rates. The 2025/26 IRS rates (Autória Tributária e Aduaneira published schedule, Portal das Financas) are: 13.25% on EUR 0-7,703; 18% on EUR 7,703-11,623; 23% on EUR 11,623-16,472; 26% on EUR 16,472-21,321; 32.75% on EUR 21,321-27,146; 37% on EUR 27,146-39,791; 43.5% on EUR 39,791-51,997; 45% on EUR 51,997-81,199; 48% above EUR 81,199. A "social security contribution" surcharge of 2.5% applies to pension income above EUR 25,700. These rates are state-level; mainland Portugal does not apply autonomous regional rates (unlike the Spanish autonomous community system). Pension income is also subject to deductions: the pension income abatement (dedução específica) of EUR 4,283.14 is subtracted before applying rates, per the IRS code 2025/26. A UK national receiving EUR 20,000 in private pension income pays approximately EUR 2,100 in Portuguese IRS after the abatement, at the 23-26% marginal rate.

The UK State Pension is taxable in Portugal under Article 18(1) of the UK-Portugal DTC (the Autoridade Tributária treats the UK State Pension as a private pension, not a government service pension, for DTC purposes -- consistent with the Spanish position and the OECD Model Commentary interpretation). UK State Pension for 2025/26 is £221.20 per week (approximately EUR 13,200 per year at April 2026 GBP/EUR rates), which when added to Portuguese abatement falls at the lower IRS rate bands. On EUR 13,200 of State Pension income less the EUR 4,283.14 abatement = EUR 8,917 net taxable; the IRS on EUR 8,917 is approximately EUR 1,185 at the 13.25% base rate. State Pension is paid gross by DWP to Portuguese residents; no NT code is required for the State Pension itself.

IFICI regime (NHR replacement): does it help pension income?

Portugal’s Non-Habitual Resident (NHR) regime -- which provided a 10% flat rate on foreign pension income for up to 10 years -- was abolished for new applicants from 1 January 2024 under Law 82/2023. The replacement regime, IFICI (Incentivo Fiscal à Investigação Científica e Inovação), is targeted at scientific researchers, technology workers, startup founders, qualified workers in designated activities (as defined by Decreto-Lei 44/2024), and senior professionals in technology, finance, and specified industries. The IFICI regime provides a flat 20% IRS rate on qualifying employment income for 10 years; it does not provide a preferential rate on foreign pension income. UK retirees drawing pension income who move to Portugal after January 2024 are not eligible for the IFICI pension benefit and pay standard IRS rates on their private pension income.

UK nationals who registered for NHR before 31 December 2023 continue to benefit from their existing 10-year NHR period under the transitional arrangements in Law 82/2023; their foreign pension income continues to benefit from the 10% NHR flat rate until their NHR period expires. This transitional protection is important for UK nationals who took up NHR before the 2024 deadline and are still within their 10-year NHR window. The Autoridade Tributária confirmed the transitional rules in its published guidance on the Portal das Financas (at portaldasfinancas.gov.pt); UK NHR holders should confirm their NHR expiry date and plan their pension drawdown strategy around the transition from 10% to standard IRS rates at expiry.

Modelo 3 filing and NT code process

UK nationals resident in Portugal who receive UK private pension income must file an annual Portuguese IRS return (Modelo 3) via the Portal das Financas by 30 June of the year following the income year (e.g., 2025 income declared by 30 June 2026). The Modelo 3 includes Anexo J (foreign income annex) for declaring UK pension income and any other foreign-source income. UK pension income is declared in gross (before UK tax) in Anexo J; Portuguese IRS is then calculated on the gross amount using the IRS scale. A foreign tax credit (credit for UK tax paid on government service pensions or any dual-taxed income) is claimed in Anexo J to eliminate double taxation where the DTC assigns taxing rights to the UK. Private pension income should be declared gross after obtaining the NT code and ensuring the pension is paid without UK PAYE deduction.

The NT code application for UK nationals resident in Portugal is submitted via HMRC form DT-Individual (Portugal). The form requires: the applicant’s UK National Insurance number; UK pension reference; the name of the pension scheme/administrator; certification by the Autoridade Tributária (AT) on the Certificate of Fiscal Residency (Certificado de Residência Fiscal); and a declaration of Portuguese tax residency. The AT issues the Certificate of Fiscal Residency on request at any Financas office or via the Portal das Financas; the certificate confirms the individual’s NIF and Portuguese tax residency status as of the date of issue. HMRC processes DT-Individual (Portugal) applications within 6-10 weeks; during the processing period, the pension administrator withholds PAYE which is subsequently reclaimed via a UK Self Assessment return or HMRC non-resident repayment claim.

UK pension lump sums and Portuguese IRS

UK pension lump sums received by Portuguese tax residents are taxable in Portugal under the UK-Portugal DTC Article 18(1) as private pension income. Portugal’s IRS code does not provide a tax-free lump sum equivalent to the UK’s Pension Commencement Lump Sum (PCLS, up to £268,275 tax-free in the UK under the Lump Sum Allowance following Finance Act 2024). The full lump sum amount is added to the Portuguese resident’s IRS income for the year of receipt and taxed at the applicable progressive rate -- potentially at the 48% top rate for large lump sums added to otherwise moderate pension income. UK nationals who are considering taking a PCLS while Portuguese tax resident should take specialist dual UK-Portuguese tax advice before making the withdrawal; the Portuguese IRS charge on the PCLS can significantly erode the value of the UK tax-free lump sum. Phased drawdown over multiple tax years (rather than a single large lump sum) may reduce the Portuguese IRS burden by spreading income across lower rate bands.

Declaring UK assets: the Declaracao de Rendimentos in Portugal

Portugal does not operate an equivalent to Spain’s Modelo 720 overseas asset declaration; Portuguese tax residents are not required to file a separate annual declaration of all overseas assets. Instead, all foreign income (pensions, rental, dividends, interest, capital gains) is declared in the annual Modelo 3 IRS return via Anexo J (Rendimentos Obtidos no Estrangeiro -- Income Obtained Abroad). UK bank accounts, UK investments, and UK pensions do not require separate standalone reporting beyond their income declaration in Anexo J. However, Portugal participates in the OECD Common Reporting Standard (CRS); the Autoridade Tributária receives annual CRS data from UK financial institutions for Portuguese-resident account holders, allowing cross-referencing with Modelo 3 declarations. UK nationals in Portugal who fail to declare UK investment income or pension income in Modelo 3 Anexo J risk AT compliance enquiries based on CRS data.

This article is for general information only and does not constitute tax, legal, financial or immigration advice. Rules and rates change; verify with the primary sources cited or consult a qualified adviser before acting.

FAQ

Is my UK private pension taxable in Portugal?

Yes. Under Article 18(1) of the UK-Portugal DTC, private pension income (occupational scheme pensions, SIPP drawdown, annuities) paid to a Portuguese resident is taxable only in Portugal. Apply to HMRC for an NT (No Tax) code using form DT-Individual (Portugal) to ensure the pension is paid gross. Declare the full gross pension in the annual Modelo 3 IRS return (Anexo J) by 30 June of the following year. Portuguese IRS rates on pension income reach 48% above EUR 81,199.

Is my UK government service pension (NHS, teachers, civil service) taxed in Portugal?

No. Article 18(2) of the UK-Portugal DTC assigns taxing rights on UK government service pensions exclusively to the UK. A UK national resident in Portugal who receives a NHS pension or teachers’ pension pays UK income tax on that pension and does not declare it in the Portuguese Modelo 3. Government service pensions are defined as pensions paid by the UK government, political subdivisions, or local authorities in respect of services rendered to those bodies.

Does the IFICI regime help UK retirees with pension income in Portugal?

Generally no. Portugal’s IFICI regime (introduced by Law 82/2023 to replace NHR from January 2024) provides a 20% flat rate on qualifying employment income for technology, science, and designated professional activities. It does not generally provide a preferential rate on foreign pension income. UK retirees who move to Portugal after January 2024 pay standard IRS rates on private pension income. UK nationals who registered for NHR before 31 December 2023 continue to benefit from transitional NHR rules (10% flat rate on foreign pensions) until their 10-year NHR period expires.

When must UK expats file their Portuguese tax return?

The annual Modelo 3 IRS return must be filed by 30 June of the year following the income year via the Portal das Financas (portaldasfinancas.gov.pt). Foreign income (including UK pension income) is declared in Anexo J. The deadline for paying any IRS due is 31 August if assessment is not received by 31 July. Late filing carries a penalty of EUR 200-2,500 depending on the delay and whether HMRC’s AT cross-references flag undeclared income.

How do I get an NT code for my UK pension paid in Portugal?

Submit HMRC form DT-Individual (Portugal) with: your UK National Insurance number; pension scheme reference; certification of Portuguese tax residency by the Autoridade Tributária (Certificado de Residência Fiscal); and a declaration of Portugal as your country of tax residence. HMRC processes DT-Individual forms in 6-10 weeks. During processing, the pension administrator withholds PAYE which is reclaimed via a UK Self Assessment return or HMRC non-resident repayment claim. The NT code instructs the administrator to pay the pension gross going forward.

Is a UK pension lump sum tax-free in Portugal?

No. UK pension lump sums (including the Pension Commencement Lump Sum up to £268,275 which is tax-free in the UK) are taxable in Portugal as pension income under Article 18(1) of the UK-Portugal DTC. The full lump sum is added to IRS income in the year of receipt and taxed at the applicable progressive rate (up to 48%). The UK’s PCLS tax-free treatment does not transfer to Portuguese residency. Phased drawdown over multiple tax years can reduce the Portuguese IRS charge by spreading income across lower rate bands.

Sources

1. GOV.UK -- UK-Portugal Double Taxation Convention (1968, Protocol 2000) (verified 26 April 2026)
2. Portal das Financas -- Modelo 3 and IRS 2025/26 rates (verified 26 April 2026)
3. GOV.UK -- Portugal tax treaty technical notes (verified 26 April 2026)
4. HMRC -- DT digest: UK-Portugal treaty Article 18 (verified 26 April 2026)
5. OECD -- Model Tax Convention Article 18 pension commentary (verified 26 April 2026)