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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Portugal VS COUNTRY B Italy

Side-by-side analysis of income tax, effective rates, and take-home pay for Portugal and Italy in 2026.

Daniel · CountryTaxCalc Updated October 2026 Tax Comparison 2026
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OVERVIEW
Portugal is cheaper than Italy at €60,000 and €90,000 under the standard tax system, but Italy is cheaper at €30,000 and at €150,000. Italy's IRPEF (23%–43%) combined with INPS employee contributions (9.19%, +1% above €56,224, up to a ceiling of about €122,295) and regional/municipal surcharges produces a higher effective rate than Portugal's IRS plus 11% employee SS in the middle of the range. At €30,000: Italy saves €1,416/year. At €60,000: Portugal saves €1,493/year. At €90,000: Portugal saves €2,065/year. At €150,000: Italy saves €1,206/year. (Portugal figures are IRS plus 11% employee social security from our verified Portugal calculator; Italian figures are from our verified Italy calculator for a single Rome-resident private-sector employee, IRPEF plus Lazio and Roma surcharges plus INPS, net of standard employment credits; Italy's local surcharges vary by region and municipality.) The major exception: Italy's impatriati regime (50% income exclusion for qualifying new residents for 5 years) can make Italy materially cheaper than Portugal for eligible arrivals at mid-to-high incomes. Portugal's IFICI (20% flat for qualifying sectors for 10 years) offers a competing incentive — broader in duration (10 vs 5 years), lower in rate (20% vs standard Italy under impatriati).
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.

🇵🇹
COUNTRY A
Portugal
TAX RATE
48%
Top IRS Rate

IRS 12.5%–48% (9 brackets); employee SS 11%; solidarity surcharge 2.5%–5% above €80,000; IFICI regime (NHR successor from 2024) offers 20% flat for qualifying professions for 10 years

🇮🇹
COUNTRY B
Italy
TAX RATE
43%
Top IRPEF Rate

IRPEF 23%–43% + INPS employee contributions 9.19% (+1% above €56,224, to a ceiling of about €122,295); regional surcharge 1.23%–3.33%; municipal surcharge 0%–0.9%; impatriati regime 50% exemption for qualifying new residents for 5 years. Italian figures are for a resident of Rome (Lazio); regional and municipal surcharges differ elsewhere.

TYPICAL ANNUAL DIFFERENCE
Moving from Italy → Portugal at €90,000
€2,065

That's €172 back in your pocket

Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.

GROSS INCOME
🇵🇹 PT TAX
🇮🇹 IT TAX
SAVINGS
10-YEAR
€30,000
€8,111
€6,695
€1,416 cheaper in IT
€14,160
€60,000
€21,975
€23,468
€1,493 cheaper in PT
€14,930
€90,000
€37,185
€39,250
€2,065 cheaper in PT
€20,650
€150,000
€70,530
€69,324
€1,206 cheaper in IT
€12,060
💡

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🇵🇹

Portugal Pros & Cons

+ PROS
  • Cheaper at the middle incomes shown under the standard system: Portugal saves €1,493/year at €60,000 and €2,065/year at €90,000 versus Italy, although Italy is cheaper at €30,000 (by €1,416) and at €150,000 (by €1,206). Italy's IRPEF reaches 33% above €28,000 and 43% above €50,000, while INPS contributions (9.19%, +1% above €56,224) and the regional/municipal surcharges add further layers — producing a combined burden at €90,000 (€39,250) that is €2,065 above Portugal's €37,185 (IRS plus 11% social security)
  • IFICI regime — 20% flat for 10 years versus Italy's impatriati 5 years: Portugal's IFICI (NHR successor) provides 20% flat IRS for qualifying technology, research, regulated professions, and investment workers for 10 years. Italy's impatriati provides 50% income exclusion for 5 years (potentially 10 with property purchase or child). Portugal's IFICI offers a lower flat rate (20%) for twice the duration — more valuable for most earners over a career. At €90,000 under IFICI: Portugal ≈ €27,900 (20% IRS ≈ €18,000 plus €9,900 social security; not engine-verified) versus Italy's standard €39,250
  • No regional surcharge variation: Portugal applies a national IRS schedule with the solidarity surcharge as the only high-income addition. Italy's regional IRPEF surcharge varies from 1.23% (Sardinia) to 3.33% (most regions) — adding location-dependent cost. Portugal's tax burden is uniform nationally, simplifying financial planning
  • EU access and lower cost of living: Portugal is an EU member with freedom of movement across 26 member states and EUR currency. Portugal's cost of living — Lisbon and Porto included — is generally 15–30% below equivalent Italian cities. Portugal's tax-and-social-security saving over Italy is €1,493–€2,065/year at the €60,000 and €90,000 benchmarks (Italy is cheaper at €30,000 and €150,000), so the lower cost of living adds to that advantage at those incomes
− CONS
  • No equivalent to Italy's impatriati 50% exclusion for new arrivals: Italy's impatriati regime provides a 50% income exemption for qualifying relocating professionals for 5 years. At €90,000 under impatriati: Italy's effective taxable income = €45,000, producing total burden of approximately €15,000–€17,000 — cheaper than Portugal's standard €37,185 and than Portugal's IFICI total of about €27,900 (20% IRS plus 11% social security). For eligible arrivals: Italy's impatriati can be cheaper than Portugal during the regime period
  • Solidarity surcharge adds to high-income burden: Portugal's 2.5% surcharge above €80,000 adds to the IRS rate at senior professional salaries. At €90,000: ~€3 surcharge; at €150,000: ~€1,338. This narrows Portugal's advantage versus Italy somewhat at high incomes
  • Employee SS 11% uncapped: Portugal's 11% employee SS with no ceiling adds substantially to the total burden. At €150,000: Portuguese SS = €16,500 versus Italian INPS ≈ €11,900 (9.19%, +1% above €56,224, up to a ceiling of about €122,295). Above the Italian INPS ceiling: Portugal's ongoing 11% SS is a significant structural disadvantage versus Italy at very high incomes — helping explain why Portugal's €2,065 advantage at €90K turns into an Italian advantage of €1,206 at €150K
  • IRS 48% above €86,634 of taxable income: Portugal's top bracket combined with solidarity surcharge and uncapped SS produces a combined effective marginal rate of around 56% at €150,000. Italy's marginal rate (about 52.6% between roughly €60,000 and €100,000 including Rome surcharges, about 47% at €150,000 once INPS stops) is lower than Portugal's at the top, which is why Italy is cheaper at €150,000 — Portugal's advantage is concentrated in the middle incomes
🇮🇹

Italy Pros & Cons

+ PROS
  • Impatriati regime: 50% income exclusion for qualifying new residents for 5 years: Italy's regime dei lavoratori impatriati (Legislative Decree 209/2023 reform) provides a 50% reduction on taxable income for qualifying new residents who have not been Italian tax residents for the prior 3 years, commit to residing in Italy for at least 2 years, and carry out their work predominantly in Italy. At €90,000: effective taxable income = €45,000, total burden approximately €15,000–€17,000 — cheaper than both Portugal's standard €37,185 and Portugal's IFICI total of about €27,900 (20% IRS plus 11% social security) for the 5-year impatriati period
  • Forfettario flat-rate regime for self-employed up to €85,000/year: Self-employed workers earning under €85,000/year can pay 15% flat (5% for first 5 years of new businesses) on a percentage of revenue under Italy's regime forfettario — with no VAT and no IRPEF. A €60,000 freelancer under forfettario pays approximately €6,300 flat, dramatically lower than Portugal's €15,400 at the same gross income. This is a compelling advantage for independent contractors that Portugal has no equivalent to
  • No annual wealth tax on financial assets: Italy has no annual net wealth tax on domestic financial portfolios — IVAFE applies only to foreign financial assets at 0.2%. Portugal's IRS taxes investment income at 28% flat but has no separate annual asset tax. Both countries avoid annual wealth tax — an advantage shared versus countries like Norway or historical France
  • Lifestyle and regional cost variation: Italy's regional variation means cities like Bologna, Turin, and smaller cities offer significantly lower living costs than Portugal's Lisbon (which has seen major price appreciation). Southern Italy and Sicily provide Mediterranean quality of life at costs potentially below Portugal's major cities for similar lifestyle
− CONS
  • IRPEF 43% + INPS 9.19% + regional/municipal surcharges — high combined burden: Italy's standard combined employee burden at €90,000 is approximately €39,250 (Rome resident basis) — €2,065 above Portugal's €37,185 (IRS plus 11% social security). IRPEF at 33% from €28,000 to €50,000 and 43% above, INPS at 9.19% (+1% above €56,224), and regional/municipal surcharges pile up to an effective rate of about 43.6% at €90,000 versus Portugal's 41.3%
  • Regional IRPEF surcharge varies 1.23%–3.33%: Italy's autonomous regions set their own IRPF surcharge, creating meaningful geographic tax variation. High-surcharge regions (Lazio 3.33%, Campania 3.33%) add materially above the national IRPEF rate. Low-surcharge regions (Sardinia 1.23%) offer partial relief. Portugal has no regional income tax variation — national IRS is uniform
  • Impatriati regime narrowed since 2022 reform: Italy's impatriati regime (as reformed by Legislative Decree 209/2023) requires: not having been Italian resident for prior 3 years (down from 5), committing to 2 years of Italian residency, and working predominantly in Italy. Extensions to 10 years require property purchase or a minor child. The previous broader eligibility and 10-year standard duration have been restricted — some applicants who would have qualified under pre-2022 rules may not qualify today
  • Employer INPS ~30% creates gross salary ceiling pressure: Italy's very high employer social security (approximately 23–33% depending on sector and employment type) constrains gross salary competitiveness versus Portugal, where employer SS is approximately 23.75%. Italian employers face a higher burden per employee, which can limit the gross salary offered for equivalent employer cost — affecting the take-home pay comparison at the total compensation level
FAQ

Frequently Asked Questions

Is Portugal or Italy cheaper for income taxes?

Under the standard tax system it depends on income: Italy is cheaper by €1,416 at €30K, Portugal is cheaper by €1,493 at €60K and €2,065 at €90K, and Italy is cheaper again by €1,206 at €150K (Rome-resident basis). The exception: Italy's impatriati regime (50% exclusion for qualifying new residents for 5 years) can make Italy cheaper than Portugal during the regime period — at €90,000 under impatriati, Italy's total burden drops to approximately €15,000–€17,000 versus about €27,900 for Portugal under IFICI (20% IRS plus 11% social security). Standard system: Portugal wins in the middle of the range. Regime comparison: Italy's impatriati comes out cheaper than IFICI at €90K.

How does Portugal's IFICI compare to Italy's impatriati regime?

Portugal's IFICI: 20% flat IRS for qualifying professionals in technology, research, regulated professions, and investment; 10 years; no minimum income; applies to employees and self-employed. Italy's impatriati: 50% income exclusion on IRPEF/surcharges; 5 years (extendable to 10 with property or child); qualifying employees and self-employed; no minimum income. At €90,000: IFICI produces Portugal total ≈ €27,900 (20% IRS plus 11% social security); impatriati produces Italy total ≈ €15,000–€17,000. Italy's impatriati has a higher exclusion percentage but shorter base duration — at €90,000 it gives lower total tax than IFICI during its 5 years, while IFICI runs for 10 years.

What is Italy's forfettario regime and why is it relevant to freelancers?

Italy's regime forfettario allows self-employed workers and sole traders earning under €85,000/year to pay 15% flat tax (5% for first 5 years of new businesses) on a portion of revenue, with no VAT obligations and simplified bookkeeping. Coefficient varies by sector (~67%–86% of revenue is the taxable base). A €60,000 freelancer at a 70% coefficient pays ~€6,300 flat — vs Portugal's €15,400 standard rate at the same gross income. Portugal has no equivalent freelancer flat-rate regime — the forfettario is a decisive advantage for self-employed professionals considering Italy.

How do capital gains taxes compare between Portugal and Italy?

Portugal taxes capital gains on listed shares at 28% flat (savings base). Italy taxes listed share gains at 26% flat sostitutiva. Primary residence: both countries exempt. For large one-off listed equity gains: Italy's 26% is marginally cheaper than Portugal's 28%. For property gains: Portugal taxes at 50% added to income (effectively 24%–48% depending on IRS bracket); Italy taxes at 26% flat sostitutiva for most cases or at standard IRPEF rates for short-term property. Italy's CGT rate is generally lower than Portugal's for both equity and property investors.

Is Lisbon or Milan more expensive to live in?

Milan and Lisbon are broadly comparable, with Milan slightly more expensive in most categories. Central Lisbon rent: 1-bed €1,300–€2,200; central Milan €1,500–€2,500. Groceries: broadly similar to slightly more expensive in Milan. At €90,000: Portugal saves €2,065/year in income tax and social security (Rome-resident Italian basis; Milan's local surcharges differ). Given similar living costs, this translates into a net financial advantage of roughly €2,000/year for Portugal over Milan at this income level.

What are the tax implications for Portuguese citizens moving to Italy?

Portuguese citizens are EU citizens and may live and work in Italy under EU freedom of movement. Portuguese IRS residency ceases when habitual residence moves to Italy. Italian IRPEF residency triggers at 183 days or registration at Italian comune. New arrivals from Portugal may qualify for Italy's impatriati regime if not previously Italian resident for 3 years. The Portugal-Italy Double Tax Agreement prevents double taxation. Portuguese SS entitlements and IRS obligations on Portuguese-source income continue under treaty rules.
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