Portugal is giving you money back

Some good news for a change, and it lands in your pay packet. It's Thursday, 10 September. Twenty-eight degrees. Air quality: 21 (Good). Here's what you need to know.

🗞️ INCOME TAX IS COMING DOWN IN PORTUGAL FROM NOVEMBER

After a summer dominated by rising prices, Portugal is about to hand a little back. Prime Minister Luís Montenegro announced on Monday a reduction in personal income tax, IRS, worth around €400 million, that takes effect in November. Most people who earn a salary or pension taxed here will see the benefit before the year is out.

The cut lowers the rates across several of the middle income brackets, the bands that cover the bulk of ordinary earners. Because it applies to the whole of 2026 but only kicks in from November, the benefit reaches people in two stages. From November, employers apply lower withholding rates, so the monthly tax taken from salaries drops and take-home pay rises slightly. Then, because tax was over-withheld earlier in the year at the old rates, the difference comes back as a larger refund when people file their IRS next spring.

In plain terms: from November your monthly payslip should show a little more, and you should also see a bigger refund than usual when you settle your taxes in 2027. The government has framed the cut as targeted at middle-income earners.

For the many readers here who work for a Portuguese employer, freelance under the local system, or draw a pension taxed in Portugal, this is a rare piece of policy that leaves you marginally better off rather than worse. It does not undo the pressure from rents, fuel and the general cost of living that has run through the news all year, but a lower tax bill is a lower tax bill.

One caveat worth keeping in mind: this applies to income taxed under the normal IRS rules. If you are on a special regime, such as the old non-habitual resident scheme or its successor, your situation is different, and it is worth checking with an accountant how the change interacts with your arrangement.

Bottom line: income tax comes down from November, most salaried workers and pensioners will feel it first in their monthly pay and again in next year's refund, and for once the direction of travel on cost of living is the right one.

⚡ QUICK HITS

The EU is moving to rein in short-term rentals. Under a new Affordable Housing Act, the European Commission is giving cities a legal framework and standardised data-sharing so local authorities can see exactly how many properties are being let short-term on platforms like Airbnb and Booking.com, and enforce their own limits. It is aimed squarely at the housing pressure these platforms are blamed for worsening in cities such as Lisbon, where the alojamento local (short-term rental) market has hollowed out parts of the centre. It will take time to filter into Portuguese law, but it hands councils a tool they have long said they lacked. For readers who rent, hold an AL licence, or simply live next to a building full of lockboxes, it is a shift worth watching.

Portugal is bringing in a new tourist tax. Tomar, the historic town in the Santarém district, has approved a charge of €2 per person per night, applied year-round and capped at five consecutive nights, with exemptions including one for pilgrims and, after public feedback, a minimum age raised to 13. The town recorded around 171,000 overnight stays last year, and the council expects the tax to raise close to €300,000 a year, to be spent on tourism, public spaces and cultural activity. It joins the long and growing list of Portuguese municipalities, Lisbon and Porto among them, now charging visitors a nightly fee. If you host paying guests or run a short-term rental, it is worth knowing your local rate and who has to collect it.

The government has explained why it will not follow Spain with big fuel-tax cuts. After this week's record fuel prices and the road protests, ministers were pressed on why Portugal has not slashed fuel duty the way Spain did. The answer, in short, is money: the government argues Spain's approach is expensive and hard to reverse, that Portugal's public finances and its hard-won budget surplus do not leave room for a large permanent cut, and that its existing ISP discount mechanism already cushions the sharpest rises. Whether that satisfies drivers who just watched diesel hit an all-time high is another matter.

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🍽️ SPOT OF THE DAY

THE BEER STATION (ROSSIO)

The Beer Station is a small craft-beer bar tucked into a kiosk at Largo Duque de Cadaval, right beside Rossio station, down a quiet dead-end street with tables out front and no traffic going past. It would be easy to walk straight past on your way to a train, which would be a mistake, because it is one of the best places in the centre to drink Portuguese craft beer.

The focus is firmly on the local scene, which has come a long way from the days when Sagres and Super Bock were the only games in town. There are around a dozen taps and dozens more in bottles and cans, from Lisbon breweries like Dois Corvos and Musa through to smaller producers around the country. The taps lean heavily on IPAs, including the hazy kind so cloudy and orange you could mistake the glass for orange juice, alongside bright, sharp sours you probably only want two-thirds of rather than a full pint. The staff know the list and will happily steer you based on what you usually drink.

September is here, and summer officially over but the warm evenings didn’t get the memo yet, so you might as well make the most of it: grab a cold one and take one of the outside tables on the square while it lasts.

→ Find them here ←

Insider tip: it is right next to Rossio, so it works perfectly for a beer before a day trip out of the station, to Sintra, say, rather than killing time on the platform. Check the current hours on the link before you go, and leave yourself enough time to actually catch the train.

📅 WHAT'S ON

See you tomorrow morning.

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