Portugal vs China: the tax systems compared for Chinese investors and families

Two systems that look alike on paper

China and Portugal both tax individuals on a progressive scale, both charge companies a flat rate in the low twenties, both run a three-rate VAT. The differences are in the details that decide a bill: China’s 60 000 CNY personal deduction and family allowances against Portugal’s 4 587 € and joint filing; China’s flat 20 % on dividends, interest, rent and gains against Portugal’s 28 % and its half-taxed property gains; China’s exchange controls against Portugal’s open capital account. The 1998 convention sets 10 % ceilings on dividends, interest and royalties in both directions and gives pensions to the residence state.

• 3 % to 45 % in China on comprehensive income after 60 000 CNY and family deductions; 12,5 % to 48 % in Portugal after 4 587 €
• 20 % flat on Chinese dividends, interest, rent and gains; 28 % in Portugal, half the gain on property at the progressive rates
• 25 % / 5 % — Chinese corporate tax, and the effective rate for small low-profit companies until 2027; 19 % / 15 % in Portugal in 2026
• 10 % — 10 % — 10 % treaty ceilings on dividends, interest and royalties; construction and service work becomes a permanent establishment after six months

Residence

China treats you as resident if you are domiciled there or spend 183 days in a tax year (Individual Income Tax Law, art. 1); a resident is taxed on worldwide income. A foreigner without domicile escapes Chinese tax on foreign-source income paid abroad until they have been resident 183 days in each of the six previous years without a single absence of more than 30 days — the “six-year rule” the State Taxation Administration applies since 2019. Portugal counts 183 days in any twelve months or a home kept as habitual residence (IRS Code, art. 16.º). Where both claim you, article 4 of the convention decides by permanent home, centre of vital interests, habitual abode and nationality.

Income tax on people

A Shanghai salary of 360 000 CNY (about 46 900 € at the ECB rate of 7,68 CNY per euro on 18 September 2026), with 40 000 CNY of social insurance and housing-fund contributions, leaves 260 000 CNY of taxable income and about 35 100 CNY of tax — under 10 %. The same 46 900 € earned in Portugal costs about 10 400 € of IRS (22 %) and 5 200 € of employee contributions. At 1,2 million CNY (156 000 €) China takes about 25 % and Portugal about 36 %. China’s scale is gentler at every level; Portugal’s bill buys a state pension and health system that Chinese contributions, paid separately, also fund. The personal income tax page has the tables.

Companies and VAT

The corporate tax page and the VAT page go into each.

The convention of 1998

Signed in Beijing on 21 April 1998, approved by Resolução da Assembleia da República n.º 28/2000, in force since 8 June 2000 and applied from 1 January 2001:

• Dividends (art. 10): 10 %. Interest (art. 11): 10 %, exempt when paid to either government or to the People’s Bank of China, the State Development Bank, the Export-Import Bank and the Agricultural Development Bank. Royalties (art. 12): 10 %.
• Permanent establishment (art. 5): a building site, or services through employees on one project, for more than six months — a low threshold that catches Chinese contractors on Portuguese projects and Portuguese consultants in China.
• Employment (art. 15) where the work is done; independent services (art. 14) in the residence state unless there is a fixed base or 183 days in the other.
• Capital gains (art. 13): property and property-rich shares where the property stands; other gains in the residence state.
• Pensions (art. 18) residence state; government pensions (art. 19) paying state unless resident and national of the other; other income (art. 22) residence state.
• Relief (art. 23): credit in both countries; a Chinese company holding 10 % of a Portuguese one credits the underlying Portuguese corporate tax too.

The treaty and dividends page explains how to claim the rates on both sides.

Property

China charges deed tax of 1 % on a home of 140 m² or less (1,5 % above for a first home, 2 % for a second), VAT of 3 % on resale within two years and nothing after, income tax of 20 % on the gain or 1–3 % of the price, and no annual tax on an owner-occupied home. Portugal charges IMT by bracket plus 0,8 % stamp duty — 7,5 % flat for buyers who are not yet tax resident since 25 May 2026 — IMI every year, and tax on half the gain. The property and capital gains page compares a Lisbon and a Shanghai purchase.

Getting money out of China

China limits individuals to USD 50 000 of foreign-currency purchases a year (State Administration of Foreign Exchange rules, art. 2); larger amounts for current-account purposes need documents, and buying property or a business abroad is a capital-account transaction that requires approval (art. 16). Portugal has no exchange controls, but banks ask for the origin of funds and the annual return must list foreign accounts. This shapes every Chinese investment in Portugal, from a golden-visa fund subscription to a flat: the money has to leave China through a permitted channel, and the paper trail follows it to the Portuguese bank.

Incentives

Portugal’s golden visa still exists but no longer accepts property: 500 000 € in a qualifying investment fund, 500 000 € in a company creating five jobs, 500 000 € in research or 250 000 € in culture (Lei n.º 23/2007, art. 3.º, as amended by Lei n.º 56/2023). IFICI gives 20 % for ten years on Portuguese income from listed activities and exempts foreign income; the Madeira free zone taxes licensed companies at 5 % until 2033. The incentives page has the conditions.

Steps for a Chinese investor

Questions from Chinese clients