IRS

10% withholding tax on residential rents in Portugal

By Simples IRS teamPublished 11 November 2026Updated 11 November 20266 min read

What changed in 2026

Decreto-Lei n.º 97/2026, of 20 May added a new 10% withholding tax rate to the IRS Code for rents covered by the new article 45-C of the EBF (CIRS, article 101(1)(f)). For other rents, withholding is still 25% (point (e) of the same paragraph).

The same decree-law lowered the IRS rate on those rents: instead of the 25% rate for residential letting (CIRS, article 72(2)), it becomes 10%, «salvo quando seja aplicável uma taxa mais favorável» (unless a more favourable rate applies) (EBF, article 45-C(1)).

Rent	Withholding tax	IRS rate on the rent
Housing-only contract, rent up to €2,300 a month	10%	10% (or the lower rate it already has)
Other residential rents (for example, above the limit)	25%	25%, with the reductions for long permanent-housing contracts
Non-residential rents (for example, a shop or an office)	25%	28%

For the exact rates for your contract, read article 72 of the IRS Code.

Which contracts are covered

Contracts exclusively for housing: residential letting, letting for residential subletting and residential subletting (DL n.º 97/2026, article 2(1)(b)).
Monthly rent up to 2.5 times the minimum monthly wage set for 2026 (DL n.º 97/2026, article 2(2)(a)). The 2026 minimum monthly wage on the mainland is €920 (Decreto-Lei n.º 139/2025), so the limit is 2.5 × €920 = €2,300 a month.
It does not have to be a permanent home. Article 45-C refers to letting «exclusivamente» (exclusively) for housing. A permanent home is only required for the rate reductions on contracts of 5, 10 or 20 years or more (CIRS, article 72(3) to (5)).
Old contracts count too. The preamble of the decree-law says the reduction covers «contratos de arrendamento já em curso» (leases already in progress).

How the €2,300 limit is counted

The value of furniture, equipment and services linked to the home is added to the rent, even if they are in a separate contract (DL n.º 97/2026, article 3(1)).
If there are several tenants on the same contract, the total counts, not each person’s share (article 3(2)).
The annual amount counts, divided by the number of months elapsed in each year (article 3(3)). In a full year, that is at most 12 × €2,300 = €27,600.
The limit may be updated by ministerial order (portaria) (article 2(3)). Check the amount in force in the year of the rents.

When the tenant is a company

The AT has already answered two requests for binding rulings (informação vinculativa) on contracts with companies for the home of a managing partner or an employee (case no. 30723 and case no. 30751). According to the AT, the 10% rate can apply if:

the contract identifies by name and NIF the person who will live in the home;
the contract says the home is only for that person to live in and expressly prohibits subletting, assigning the contract and any commercial, industrial or service use;
the home is never used, even partly, as the company’s registered office or for its business. If it is, the letting is no longer residential and the rate goes up to 28%.

The AT also points out that, because it is a tax benefit, the 10% rate depends on the general rules of article 14 of the EBF, in particular having no debts to the Finanças.

From when and until when

Publication: 20 May 2026, in the Diário da República (the law was corrected by Declaração de Retificação n.º 26/2026/1, of 13 July, which does not change these rules).
Effect: the new point in article 101 and article 45-C apply from 1 January 2026 (DL n.º 97/2026, article 18(2)).
End: it applies to rents received until 31 December 2029 (EBF, article 45-C(1)).

Example with figures

A company rents a home for an employee to live in, identified in the contract, for €800 a month.

	From 2026 (10%)	With the old rate (25%)
Monthly rent	€800	€800
Withholding tax	€800 × 10% = €80	€800 × 25% = €200
The company pays the landlord	€800 − €80 = €720	€600
The company pays the Finanças by the 20th of the following month	€80	€200

Over a full year, the company withholds 12 × €80 = €960 on €9,600 of rent. Withholding is an advance payment: the landlord declares the rents and the withholding in Anexo F of the IRS return and the final tax is calculated there.

What the withholding tenant does

Withholds 10% on each rent payment (CIRS, article 101(1)(f), and article 98(1)).
Pays the amount withheld to the Finanças by the 20th of the following month (CIRS, article 98(3)).
Keeps a record of landlords, with the name, NIF, date and amount of each payment (CIRS, article 119(1)(a)).
By 20 January of the following year, gives the landlord a document with the year’s rents and the tax withheld (article 119(1)(b)).
By the end of February of the following year, files with the AT the return of rents paid and withholding (article 119(1)(c)(ii)). This is the Modelo 10 return, where rents have code F.

If the tenant is a private individual without formal accounts, none of this applies: they pay the full rent to the landlord.

What the landlord does

Reports the contract to the Finanças by the end of the month after it starts, as well as changes and the end of the contract (Stamp Duty Code, article 60). The AT mentions this obligation (the Modelo 2 declaration) in both binding rulings.
Issues a receipt for every rent payment on the official form or, if exempt from the electronic rent receipt and not issuing it, files the annual return of rents received by the end of February, the Modelo 44 (CIRS, article 115(5)).
Declares the rents in Anexo F of the IRS return, at the amount before withholding, together with the withholding made (Anexo F has columns for the gross amount and for withholding tax). They can deduct the expenses in article 41 of the IRS Code, such as condominium fees, IMI (municipal property tax) and maintenance work.
Chooses how to be taxed. The rate is 10%, unless a more favourable rate applies (EBF, article 45-C(1)). The IRS Code also allows, as an option, adding residential rents to other income (englobamento, aggregation, article 72(13)).

See the tax deadlines in the calendar

Frequently asked questions

Has withholding tax on rents gone down to 10%?

Yes, since 1 January 2026, on rents from housing-only contracts with rent up to €2,300 a month. On other rents it is still 25% (CIRS, article 101(1)(e) and (f)).

I am a private tenant. Do I have to withhold IRS from the rent?

No. Only those who have, or should have, formal accounts withhold, such as companies (CIRS, article 101(1)).

What is the rent limit in 2026?

2.5 times the minimum monthly wage set for 2026 (€920), that is, €2,300 a month. Furniture, equipment and services paid to the landlord also count, even under a separate contract.

My rent is over €2,300 a month. What happens?

The 10% rate does not apply to that contract. Withholding stays at 25% and the rents follow the rates in article 72 of the IRS Code.

Does it apply to contracts signed before 2026?

Yes. The decree-law says it covers contracts already in progress, for rents received from 1 January 2026.

How long does the 10% rate last?

It applies to rents received until 31 December 2029 (EBF, article 45-C).

Does it have to be a permanent home?

Article 45-C does not require it: it refers to letting exclusively for housing. A permanent home only counts for the rate reductions on long contracts (CIRS, article 72(3) to (5)).

Can I rent to a company and get the 10% rate?

According to the AT, yes, if the contract identifies by name and NIF who will live in the home, says the home is only for that person to live in, and the home is not used as the company’s registered office or for its business.

By when does the tenant pay over the tax withheld?

By the 20th of the month after the rent is paid (CIRS, article 98(3)).

Official sources

Every figure on this page comes from these sources (official documents, in Portuguese). Updated on 11 November 2026