A UK IT contractor becomes resident in Portugal if they stay there more than 183 days in any 12 month period starting or ending in the year, or keep a home there that suggests they mean to live in it habitually. They can stop being UK resident under the automatic overseas tests, and if both countries claim them, the 2025 UK and Portugal convention, in force since 29 December 2025, settles residence.

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When do you stop being UK resident?

The statutory residence test applies to each UK tax year. HMRC says you are usually non resident if you spend fewer than 16 days in the UK, or 46 days if you were not UK resident in the 3 previous tax years. You are also usually non resident if you work full time abroad, averaging at least 35 hours a week, and spend fewer than 91 days in the UK with fewer than 31 days on which you work more than 3 hours in the UK.

Otherwise you may still be UK resident under the 183 day, home or sufficient ties tests, and UK residents pay UK tax on worldwide income. A year of departure may qualify for split year treatment. HMRC asks leavers to file form P85, or the SA109 residence pages if they file Self Assessment.

When do you become resident in Portugal?

Article 16 of the Portuguese personal income tax code (CIRS) makes you resident for a year if either of these applies:

  • you stay in Portugal more than 183 days, consecutive or not, in any 12 month period starting or ending in that year
  • you stay fewer days but have, on any day of that period, a home in conditions suggesting a current intention to keep and occupy it as your habitual residence

A day counts if it includes an overnight stay. A new resident is resident from the first day of their stay, unless they were resident on any day of the previous year. Article 15 of the CIRS taxes residents on all their income, including income obtained abroad, and non residents only on income obtained in Portugal.

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Which treaty applies, and how does the tie breaker work?

gov.uk’s “Portugal: tax treaties” page lists the 2025 UK and Portugal convention, signed on 15 September 2025. It entered into force on 29 December 2025 and has effect in the UK for Income Tax and Capital Gains Tax from 6 April 2026, and in Portugal from 1 January 2026. The page still shows the 1968 convention for earlier years. Under Article 4(2) of the new convention, someone resident in both countries is treated as resident only in:

  1. the country where they have a permanent home available to them
  2. if they have a home in both, the country with which their personal and economic relations are closer
  3. failing that, the country where they have a habitual abode
  4. then the country of nationality, and if still unresolved, the tax authorities decide by mutual agreement

Article 27 denies treaty benefits where obtaining them was one of the principal purposes of an arrangement. For how credit relief works in practice, see foreign tax credit relief.

How is pay from your own UK company taxed under the treaty?

Under Article 14, salary is taxed where the employment is exercised. While you remain UK resident, short spells working in Portugal stay outside Portuguese tax only if you are there no more than 183 days in any 12 month period starting or ending in the fiscal year, your employer is not Portuguese resident and no Portuguese permanent establishment bears the cost. Article 15 lets the UK tax directors’ fees paid by a UK company, and under Article 21 each country gives credit for the other’s tax on the same income.

What happens to your UK company and IR35?

HMRC treats a company incorporated in the UK as UK resident, and a company can also be resident where its central management and control is. The Portuguese corporate tax code treats entities with their head office or effective management in Portugal as resident. If both countries claim your company, Article 4(3) of the convention asks the tax authorities to agree its residence, considering its place of effective management, place of incorporation and other factors. Article 5 defines a permanent establishment as a fixed place of business through which the business is wholly or partly carried on. See company residence.

For IR35, HMRC’s manual says a non UK resident worker working outside the UK is unlikely to fall within the UK tax or National Insurance charge, so the off payroll rules will not apply. Where the client has no UK residence or UK permanent establishment, Chapter 10 does not apply and your company must consider Chapter 8. See IR35 when the client is overseas.

Do you pay UK National Insurance or Portuguese social security?

gov.uk says you usually pay social security in the country you work in. HMRC can issue a certificate of coverage, also called a PDA1, so you keep paying only UK National Insurance if you are employed by a UK employer or self employed in the UK and go to work temporarily in an EU country for up to 2 years. Employees use form CA3822, after the employer confirms eligibility on CA3821, and self employed people use CA3837. You cannot apply more than 12 months ahead. Without a certificate, expect Portuguese social security to apply. More detail is in National Insurance when working abroad.

For voluntary contributions, HMRC’s NI38 guidance says that for tax years from 2026 to 2027 onwards you can only pay voluntary Class 3 contributions for periods abroad, and the residence or contribution condition is now 10 years rather than 3.

Is there a special tax regime for people moving to Portugal?

The non habitual resident regime is closed to new entrants: the paragraphs of Article 16 that set it up were revoked by Law 82/2023, with transitional rules for some people. Its replacement is IFICI, the tax incentive for scientific research and innovation in Article 58.º A of the Tax Benefits Statute. The Autoridade Tributária leaflet dated March 2025 says:

  • you must become Portuguese resident and not have been resident in any of the five previous years
  • you must carry out an eligible activity, such as a highly qualified profession meeting qualification and experience rules, or a post in a certified company or startup
  • net employment and business income from eligible activities obtained in Portugal is taxed at 20%
  • most foreign employment, business, investment, property and capital gains income is exempt, with a 35% rate for income from entities in clearly more favourable tax regimes
  • it lasts 10 consecutive years, and you register through the Portal das Finanças by 15 January of the year after becoming resident

Whether a contractor billing through a UK company has eligible income is a question for a Portuguese adviser.

Point Position
Portuguese residence More than 183 days in any 12 month period, or a habitual home
UK non residence (working abroad) Full time work abroad, fewer than 91 UK days, fewer than 31 UK work days
Treaty 2025 convention, in force 29 December 2025, UK effect from 6 April 2026
Company tie breaker Mutual agreement, Article 4(3)
Social security UK certificate for temporary work up to 2 years, otherwise usually Portugal
IFICI 20% on eligible income for 10 years, register by 15 January

How might this work in practice?

Illustration only. Priya runs a UK limited company supplying software testing to a UK bank. She moves to Lisbon in June 2026, signs a one year lease and works from there full time. In 2026 to 2027 she spends 40 days in the UK, working on 12 of them, so she meets the full time work abroad test and is not UK resident. She has a habitual home in Lisbon, so Portugal treats her as resident from her first day there. She agrees with an adviser where her company is managed and asks a Portuguese adviser whether her work is an eligible IFICI activity before the 15 January deadline.

What should you check before you go?

  • Track UK days and UK work days by tax year, and Portuguese days in each 12 month period
  • File P85 or the SA109 residence pages
  • Apply for a certificate of coverage, or register for Portuguese social security
  • Diary the 15 January IFICI registration deadline if it may apply
  • Keep travel and work records, because HMRC can open a check into a return after a move abroad, and an accountant’s fees for dealing with it can be insured through tax investigation insurance

Portuguese rules change often. The IFICI details come from the March 2025 Autoridade Tributária leaflet, so confirm the position with an adviser in Portugal before relying on it. If you are weighing up other countries, compare working from Spain.

Frequently asked questions

Can I still join the non habitual resident regime?

Not as a new entrant. The provisions were revoked by Law 82/2023, and IFICI is the main regime for qualifying newcomers.

Does the old 1968 treaty still apply for 2026 to 2027?

No. The 2025 convention has effect in the UK for Income Tax from 6 April 2026, so it governs the 2026 to 2027 tax year.

Will Portugal tax me from the day I arrive?

If you meet the Article 16 tests, you are resident from your first day of stay, unless you were resident on any day of the previous year.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 6 November 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.