Italy vs Portugal: Tax Comparison
Italy residents earning $400k face ~45.4% effective tax. Moving to Portugal (20% flat (IFICI)) could save you $101,782 per year.
Best for: tech professionals and remote workers who want a European base with EU residency rights, mild climate, and a 20% flat tax rate
Tax Savings at Every Income Level
Side-by-side comparison of annual tax paid in Italy vs Portugal (all amounts in USD).
| Annual Income | Italy Tax | Portugal Tax | Annual Savings |
|---|---|---|---|
| $100,000 | $43,182 (43.2%) | $20,000 (20%) | +$23,182 |
| $150,000 | $66,282 (44.2%) | $30,000 (20%) | +$36,282 |
| $200,000 | $89,382 (44.7%) | $40,000 (20%) | +$49,382 |
| $300,000 | $135,582 (45.2%) | $60,000 (20%) | +$75,582 |
| $400,000 | $181,782 (45.4%) | $80,000 (20%) | +$101,782 |
Side-by-Side Comparison
| Category | Italy | Portugal |
|---|---|---|
| Tax System | Progressive | 20% flat (IFICI) |
| Effective Rate ($400k) | 45.4% | 20% |
| Capital Gains Tax | Yes | 28.000000000000004% |
| Monthly CoL (mid-tier) | $3,000 | $2,800 |
| Min Residency Stay | — | 183 days/yr |
| Visa Complexity | — | 5/10 |
| English Literacy | — | 6/10 |
Why People Move from Italy to Portugal
At $400,000 annual income, Italy residents pay approximately $181,782 in taxes. Relocating to Portugal reduces this to $80,000, a saving of $101,782 per year.
Cost of living is also lower: Portugal costs approximately $2,800/month compared to $3,000/month in Milan / Rome, saving an additional $2,400 per year.
English accessibility in Portugal is moderate (6/10). Learning the local language (Portuguese) will improve your experience.
Leaving Italy: What to Know
Tax Departure Rules for Italy
Italy imposes an exit tax on unrealised gains for individuals holding substantial shareholdings (≥2% in listed companies or ≥5% in unlisted companies) who transfer residence to a non-EU/EEA country. For moves within the EU/EEA, payment can be deferred in instalments.
Capital gains considerations: Italy taxes capital gains on financial assets at 26% (12.5% for government bonds). Non-residents are generally only taxed on Italian real estate gains and gains from substantial shareholdings in Italian companies.
Practical steps when leaving: Deregister from AIRE (Registry of Italians Abroad) or cancel your residence permit, file a final tax return with Agenzia delle Entrate, and notify INPS of your departure. Italian healthcare (SSN) coverage ends upon deregistration.
Living and Working in Portugal
Portugal Tax System
The IFICI regime (formerly NHR 2.0) offers a 20% flat tax rate for qualifying workers in R&D, tech, startups, and innovation sectors. Foreign-sourced income may be fully exempt, making it highly attractive for remote workers with foreign employers.
Lifestyle in Portugal
Portugal offers a European lifestyle with excellent healthcare, a mild climate, and a strong English-speaking expat community, particularly in Lisbon and Porto. It consistently ranks among the top destinations for quality of life in Europe.
Getting started: The D7 Visa (passive income) and Digital Nomad Visa are the main entry points. IFICI eligibility is restricted to specific professional categories — verify your role qualifies before committing to the move.
Italy to Portugal: What You Need to Know
As EU citizens, Italians can freely relocate to Portugal. The IFICI regime reduces the effective rate from Italy's combined ~47% (IRPEF + surcharges) to 20%. Both countries have similar Mediterranean lifestyles.
Net financial benefit: After accounting for both tax savings ($101,782/yr) and cost of living differences (+$2,400/yr), relocating from Italy to Portugal produces a net annual benefit of approximately $104,182 at $400,000 income.
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Frequently Asked Questions
How much tax would I save moving from Italy to Portugal?
At a $400,000 USD annual income, moving from Italy to Portugal could save approximately $102k per year in taxes. Italy has an effective tax rate of ~45.4% at this income level, while Portugal charges 20% flat (IFICI). Actual savings depend on your income type, deductions, and residency status.
What is the tax rate in Portugal?
IFICI (NHR 2.0) from Jan 2024: 20% flat on Portuguese-sourced income for qualifying workers in R&D, tech, startups, innovation. Foreign income exempt. Old NHR closed March 2025.
What is the cost of living in Portugal compared to Italy?
A mid-tier lifestyle in Portugal costs approximately $2,800/month, compared to $3,000/month in Milan / Rome. That's $200 cheaper per month, or $2,400 savings per year.
Do I need a visa to live in Portugal?
D7 Visa or Digital Nomad Visa. IFICI restricted to qualifying sectors. 183 days for tax residency. EU citizens have freedom of movement.
What are the steps to leave Italy for tax purposes?
Deregister from AIRE (Registry of Italians Abroad) or cancel your residence permit, file a final tax return with Agenzia delle Entrate, and notify INPS of your departure. Italian healthcare (SSN) coverage ends upon deregistration. Italy has extensive social security agreements with all EU/EEA countries, plus bilateral treaties with the US, Canada, Australia, Argentina, Brazil, and many others.
What happens to my Italy pension if I move to Portugal?
Italian state pension (INPS) requires a minimum of 20 years of contributions for an old-age pension. Pensions are payable worldwide and subject to bilateral tax treaty provisions. Italy has a 7% flat tax regime for foreign pension income received by new residents of Southern Italian regions.
Will I pay capital gains tax when leaving Italy?
Italy taxes capital gains on financial assets at 26% (12.5% for government bonds). Non-residents are generally only taxed on Italian real estate gains and gains from substantial shareholdings in Italian companies. Italy imposes an exit tax on unrealised gains for individuals holding substantial shareholdings (≥2% in listed companies or ≥5% in unlisted companies) who transfer residence to a non-EU/EEA country. For moves within the EU/EEA, payment can be deferred in instalments.
How do I set up banking in Portugal as an expat from Italy?
Portuguese banks like Millennium BCP, Novo Banco, and ActivoBank all offer English-language services. NIF (tax number) is required before opening an account.
Who is the Italy to Portugal move best suited for?
This relocation route is ideal for tech professionals and remote workers who want a European base with EU residency rights, mild climate, and a 20% flat tax rate. At a $400,000 annual income, the tax savings alone amount to $101,782 per year compared to staying in Italy.