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Calculadora Capital

Foreign Tax Credit Calculator (Portugal)

Received dividends, interest or capital gains from outside Portugal with tax already withheld there? Article 81.º of the Portuguese income tax code credits that tax against your IRS, but only up to two limits. Enter the gross income, what was withheld and the treaty cap: the calculator shows the credit, what you still owe here and, above all, why any uncredited part is uncredited.

Enter the GROSS income, before the foreign withholding: that is what Portuguese tax is charged on (art. 22.º, n.º 6). Confirm the treaty cap in the tax authority's summary table of treaties; 15% is the most common cap on dividends paid to an individual.

Foreign tax credit allowed
€150.00
Still due in Portugal
€130.00
Portuguese tax on the income (28%)€280.00
Eligible foreign tax€150.00
Total tax borne€430.00
Total effective rate43%
You keep€570.00

€150.00 was withheld above what the treaty allowed. With a 15% cap, the treaty only authorised the source country to charge €150.00, and Portugal credits only up to that amount (art. 81.º, n.º 2). That excess is not claimed from the Portuguese tax authority: it is claimed from the tax authority of the country that withheld it, normally by proving Portuguese tax residence. If it is not claimed, it is lost.

Without the credit you would pay €580.00 of tax on this income, here and abroad. The credit is worth €150.00.

One income, from one country, in euros. Not computed: currency conversion (each amount at the rate of its own operation date), the rest of the taxpayer's IRS, the 50% inclusion of Portuguese and EU dividends under englobamento (art. 40.º-A, which has its own calculator), the amount of the five-year carry-forward, the exemption method for IFICI beneficiaries (art. 81.º, n.º 4) and the treaties that give the credit to the source state (n.º 10).

Informative estimate based on the Portuguese income tax code. Not tax or financial advice.

What the foreign tax credit is

As a Portuguese tax resident you declare your worldwide income here. If the country where the income arose also taxed it, the same euro was taxed twice. Article 81.º of the IRS code fixes that not with an exemption but with a credit: the tax paid abroad is set against the IRS due here. The word credit is literal, and it is the source of nearly every misunderstanding: it is deducted from the Portuguese tax, so it only exists as far as there is Portuguese tax to deduct it from.

The rule: the lesser of two amounts

Article 81.º, n.º 1 says the credit is the lesser of two amounts: the income tax paid abroad, and the fraction of the Portuguese tax corresponding to that income. If €150 was withheld and the Portuguese tax on the same income is €280, the credit is €150 and you pay the remaining €130 here. If €350 was withheld and the Portuguese tax is €280, the credit is €280, you pay nothing here, and Portugal does not hand back the remaining €70.

The treaty cap, which decides most real cases

Paragraph 2 of the same article adds the limit that almost never gets explained: where a double-taxation treaty exists, the deduction cannot exceed the tax paid abroad under the terms provided by that treaty. Portugal credits the tax the treaty authorised the source country to charge, not what it charged. If the treaty sets 15% and 30% was withheld, half of that withholding never enters the Portuguese calculation. The calculator reports that excess separately from the other one, because the remedies differ: the excess above the treaty is claimed from the source country, while the excess caused by too little Portuguese tax is a Portuguese matter.

The income counts gross, not net

Article 22.º, n.º 6 is explicit: where this credit applies, income counts at its amounts gross of the taxes paid abroad. Portuguese tax is therefore charged on the amount before the withholding, not on what reached your account. Declaring the net amount both understates the income and forfeits part of the credit you were entitled to. That is why the first field on this calculator asks for the gross amount.

The Portuguese rate: 28% or englobamento

For investment income or a capital gain earned through a foreign broker there is no Portuguese withholding, and the 28% autonomous rate of article 72.º applies, which is the calculator default. You may instead opt for englobamento, taxing the income at the progressive rates: in that case enter the rate that applies to you. For dividends from Portuguese or EU companies, englobamento counts only half the income, halving the effective rate. That comparison has its own calculator, the one on dividends and IRS, and it belongs there.

When the credit does not fit: the five-year carry-forward

Where the credit cannot be used because there is too little Portuguese tax in the year the income was included in taxable income, paragraph 3 allows the remainder to be deducted over the following five years. The wording refers to income included in taxable income, which only happens under englobamento, which is why the calculator flags the carry-forward only in that case. How much is actually recovered depends on the following years, and is not derivable from what you entered here.

Worked example

You received €1,000 of dividends from US shares and the United States withheld 30%, that is €300. The Portugal-US treaty caps at 15% the tax the source country may charge an individual, so the eligible tax is €150, not €300. The Portuguese tax on the gross €1,000, at the 28% autonomous rate, is €280. The credit is the lesser of €150 and €280, that is €150, and you pay the remaining €130 in Portugal. In total you bear €430 on €1,000, an effective rate of 43%, leaving you €570. The €150 withheld above the treaty cap is not recoverable in Portugal: it has to be claimed from the US tax authority. Had you filed form W-8BEN with your broker, the withholding would have been 15%, that is €150: the Portuguese tax due would be exactly the same €130, but the total would fall to €280 and the effective rate to 28%. In this case the form is worth precisely €150.

Frequently asked questions

Does Portugal refund the tax I paid abroad?
No. Article 81.º grants a credit set against the Portuguese tax on that same income, and never more than it. If the eligible foreign tax exceeds the Portuguese tax, the credit reduces your IRS to zero and Portugal does not refund the difference.
30% was withheld and the treaty says 15%. What happens to the other 15%?
Portugal credits only the 15% the treaty allowed the source country to charge, because that is what article 81.º, n.º 2 requires. The remaining 15% has to be claimed from the tax authority of the country that withheld it, normally by proving Portuguese tax residence. If it is not claimed, it is lost.
Where do I find the treaty cap for my case?
In the summary table of treaties published by the Portuguese tax authority, which lists, treaty by treaty, the maximum rates for dividends, interest and royalties. Every treaty has its own: 15% is the most common cap on dividends paid to an individual, and is the calculator default, but always confirm the one for the country involved.
Do I declare the gross amount or what I received?
The gross amount, before the foreign withholding. Article 22.º, n.º 6 of the IRS code requires income to be taken at its amounts gross of taxes paid abroad. You declare the gross figure and report the tax withheld separately, as that is what generates the credit.
What if there is no treaty with the source country?
Without a treaty the paragraph 2 cap does not apply, so the whole tax paid abroad is eligible. The paragraph 1 limit still holds: the credit never exceeds the Portuguese tax on that income. Choose "No" in the treaty field to see that scenario.
Does an Irish accumulating ETF give me this credit?
No, because no dividend is paid to you and no tax is withheld from you. The US withholding on the dividends of the shares the fund holds happens inside the fund, between the United States and Ireland, and is not your tax, so it cannot be credited against your IRS. Your taxable income only arises when you sell the units, as a capital gain.
Does this calculator work for foreign salaries or pensions?
The mechanics of the credit are the same for every income category, and you can use it by entering the applicable Portuguese rate instead of 28%. But for employment income and pensions that rate depends on englobamento with the rest of your income and on the specific deductions, which this page does not compute, so the result is an order of magnitude rather than your assessment.
I benefit from IFICI. Does this credit apply to me?
As a rule no. For beneficiaries of the article 58.º-A regime of the tax benefits statute, foreign income in categories A, B, E, F and G is relieved by the exemption method rather than the credit method, under article 81.º, n.º 4. The income is then exempt but still counts towards the rate applied to the rest.

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Author: Thorben Rasmus Idel · Reviewed by: Nahar Geva · Last reviewed: 2026-08-11