Choosing between Portugal and Italy as a place to invest, relocate, or manage your assets? One of the most important financial factors to consider is how each country taxes capital gains. Whether you're selling property, stocks, or other investments, the Portugal vs Italy capital gains tax landscape in 2025/2026 presents meaningful differences that can significantly affect your net returns.

In this detailed capital gains tax comparison, we'll walk you through the current rates, exemptions, special regimes, and practical examples for both countries. By the end, you'll have a clear picture of how these two popular Southern European destinations stack up from a tax perspective — and which might be more favorable for your specific situation.

What Is Capital Gains Tax and Why Does It Matter?

Capital gains tax (CGT) is a tax levied on the profit you make when you sell or dispose of an asset that has increased in value. This applies to a wide range of assets, including:

  • Real estate (residential and commercial property)
  • Shares and securities (stocks, bonds, ETFs)
  • Cryptocurrency
  • Business assets
  • Intellectual property and other intangible assets

For investors, expats, retirees, and digital nomads choosing between Portugal and Italy, understanding the tax comparison Portugal Italy framework is essential. Even seemingly small differences in CGT rates or exemptions can translate into thousands of euros saved — or owed — on a single transaction.

Capital Gains Tax in Portugal: 2025/2026 Rules and Rates

Portugal has undergone significant tax reforms in recent years, particularly with the end of the Non-Habitual Resident (NHR) regime for new applicants and the introduction of the Tax Incentive for Scientific Research and Innovation (IFICI) regime. Here's how capital gains are taxed in Portugal for the 2025/2026 tax year.

Tax Residents in Portugal

For Portuguese tax residents, capital gains are generally treated differently depending on the asset type:

  • Real estate capital gains: When you sell property in Portugal, 50% of the capital gain is added to your taxable income and taxed at progressive income tax rates ranging from 14.5% to 48%. This means the effective tax rate on property gains ranges from approximately 7.25% to 24%, plus a potential solidarity surcharge of up to 5% on very high incomes.
  • Financial assets (shares, bonds, funds, crypto): Gains from the sale of securities and other financial instruments are generally taxed at a flat rate of 28%. Taxpayers can opt to include these gains in their general taxable income if that results in a lower rate (englobamento).
  • Holding period considerations: For real estate, there is a reinvestment relief. If you sell your primary residence and reinvest the proceeds in another primary residence within Portugal, the EU, or the EEA within 36 months (or 24 months before the sale), you may be exempt from CGT on the reinvested amount.

Non-Residents in Portugal

  • Real estate: Non-residents are taxed on 50% of the capital gain at a flat rate of 28%, resulting in an effective rate of 14%. However, EU/EEA residents can elect to be taxed under the same progressive rules as residents, which may be more favorable.
  • Financial assets: Non-residents are generally taxed at 28% on Portuguese-sourced capital gains from financial assets, though many gains from shares are exempt if the non-resident is based in a country with a Double Taxation Agreement (DTA) with Portugal and specific conditions are met.

The IFICI Regime (Successor to NHR)

Since 2024, new arrivals to Portugal who qualify for the IFICI regime can benefit from a flat 20% tax rate on eligible employment and professional income for up to 10 years. However, the IFICI regime's treatment of capital gains is more limited than the old NHR regime. Foreign-sourced capital gains may still benefit from exemptions depending on the applicable DTA, but the blanket exemptions of the former NHR program are no longer available for new registrants.

Use our Portugal Capital gains tax Calculator to estimate your potential liability based on your specific situation.

Capital Gains Tax in Italy: 2025/2026 Rules and Rates

Italy has its own complex framework for capital gains taxation, with several categories and special regimes that investors and expats should understand.

Tax Residents in Italy

For Italian tax residents, capital gains fall under the category of "redditi diversi" (miscellaneous income) and are taxed as follows:

  • Real estate capital gains: Gains from the sale of real estate are generally taxable if the property was held for less than five years (unless it was your primary residence for the majority of the holding period). If taxable, the gain can either be included in general taxable income (taxed at progressive rates from 23% to 43%) or taxed at an optional substitute tax of 26%.
  • Financial assets (shares, bonds, crypto): Capital gains from the sale of qualified and non-qualified participations, as well as other financial instruments, are taxed at a flat rate of 26%. Gains from Italian government bonds and certain EU/EEA bonds benefit from a reduced rate of 12.5%.
  • Cryptocurrency: Since 2023 reforms, crypto gains exceeding a de minimis threshold are taxed. For 2025/2026, gains from crypto-assets are taxed at 26%. The Italian government had discussed raising this rate to 42% but, as of the 2025 budget law finalization, the rate remains at 26% with potential future increases under review.
  • Primary residence exemption: If you sell a property that has been your primary residence ("prima casa") for the majority of the ownership period, the gain is fully exempt from capital gains tax, regardless of the holding period.

Non-Residents in Italy

  • Real estate: Non-residents are subject to Italian CGT on gains from Italian property under the same rules as residents. Gains on properties held less than five years are taxable at progressive rates or the 26% substitute tax.
  • Financial assets: Non-residents are generally exempt from Italian CGT on gains from non-qualified participations (holdings below certain thresholds) in Italian companies. Gains from qualified participations (generally above 20% of voting rights or 25% of capital for unlisted companies) may be taxable, subject to applicable DTAs.

The Italian Flat Tax Regime for New Residents

Italy offers an attractive flat tax regime ("regime forfettario dei neo-residenti") under Article 24-bis of the Italian Tax Code. Individuals who transfer their tax residence to Italy and have not been resident in Italy for at least 9 of the previous 10 years can opt to pay a flat annual substitute tax of EUR 100,000 on all foreign-sourced income, including capital gains from foreign assets. Family members can join for EUR 25,000 each.

This regime is valid for up to 15 years and can be extremely advantageous for high-net-worth individuals with significant foreign investment portfolios. Under this regime, foreign-sourced capital gains are effectively covered by the lump-sum payment, regardless of the actual amount.

Use our Italy Capital gains tax Calculator to calculate your estimated tax on Italian capital gains.

Side-by-Side Comparison: Portugal vs Italy Capital Gains Tax

Here's a quick-reference capital gains tax comparison for 2025/2026:

Category Portugal Italy
Real estate (resident, general) 50% of gain taxed at 14.5%–48% (effective ~7.25%–24%) Progressive rates 23%–43% or 26% substitute tax (if held < 5 years)
Real estate (non-resident) 28% on 50% of gain (effective 14%); EU/EEA residents can elect progressive rates Same as resident rules for Italian property
Primary residence exemption Exempt if proceeds reinvested in new primary residence Exempt if primary residence for majority of holding period
Holding period benefit (property) No specific exemption by holding period alone Exempt after 5 years of ownership
Shares/securities (resident) 28% flat (or progressive if elected) 26% flat (12.5% for government bonds)
Shares/securities (non-resident) 28% (often exempt under DTA) Generally exempt for non-qualified participations
Cryptocurrency 28% flat 26% flat
Special regime for new residents IFICI: 20% flat on eligible income (limited CGT benefits) Flat tax: EUR 100,000/year covers all foreign income including gains

Practical Examples: How the Numbers Play Out

Let's look at some concrete scenarios to illustrate the tax comparison Portugal Italy in practice.

Example 1: Selling an Investment Property

Scenario: You purchased an apartment for EUR 200,000 and sell it four years later for EUR 300,000, realizing a EUR 100,000 capital gain. It was not your primary residence.

  • In Portugal (resident): 50% of the gain (EUR 50,000) is added to your taxable income. Assuming you're in the 35% marginal bracket, the tax on the gain would be approximately EUR 17,500 (effective rate of 17.5% on the full gain).
  • In Italy (resident): Since the property was held less than 5 years, you can opt for the 26% substitute tax: EUR 26,000. Alternatively, adding it to general income at a 35% marginal rate would cost EUR 35,000. The substitute tax is clearly better here.
  • Winner: Portugal — a potential saving of approximately EUR 8,500 in this scenario.

But what if you held the property for 6 years?

  • In Portugal: The same 50% inclusion rule applies — approximately EUR 17,500 in tax.
  • In Italy: The gain is fully exempt after 5 years. Tax owed: EUR 0.
  • Winner: Italy — the 5-year exemption is extremely powerful.

Example 2: Selling a Stock Portfolio

Scenario: You sell shares for a gain of EUR 50,000.

  • In Portugal (resident): Taxed at 28% flat = EUR 14,000 (unless englobamento produces a lower result).
  • In Italy (resident): Taxed at 26% flat = EUR 13,000.
  • Winner: Italy — a 2 percentage point advantage on financial gains.

Example 3: High-Net-Worth Expat With Foreign Gains

Scenario: A wealthy individual moves from the UK and realizes EUR 500,000 in foreign-sourced capital gains annually.

  • In Portugal (IFICI regime): Foreign-sourced capital gains may still be taxable depending on the specific DTA. In many cases, the gain would be taxed at 28%, totaling EUR 140,000.
  • In Italy (flat tax regime): All foreign-sourced income, including capital gains, is covered by the EUR 100,000 annual lump sum.
  • Winner: Italy — a saving of EUR 40,000 per year in this scenario, and the advantage grows with larger gains.

You can model your own scenarios using our Portugal Income Tax Calculator and Italy Income Tax Calculator alongside the capital gains calculators.

Double Taxation Agreements and International Considerations

Both Portugal and Italy have extensive networks of Double Taxation Agreements (DTAs) that can significantly affect your capital gains tax liability, particularly if you're a non-resident or have assets in multiple countries.

Key Points to Know

  • Portugal has DTAs with over 80 countries, including all major EU nations, the US, UK, Canada, and Brazil. Under most Portuguese DTAs, capital gains from shares may be taxable only in the country of residence, potentially exempting non-residents from Portuguese CGT on share disposals.
  • Italy has a similarly extensive DTA network covering 100+ countries. Italian DTAs typically follow OECD guidelines, with property gains taxable in the country where the property is located and share gains generally taxable only in the country of residence.
  • EU/EEA residents selling Portuguese property can elect to be taxed as residents, which may provide a lower effective rate. This option is not available for non-EU/EEA residents.
  • Exit taxes: Italy does not currently impose a general exit tax on unrealized capital gains for individuals, though there are provisions for certain corporate situations. Portugal similarly does not impose exit taxes on individuals in most circumstances, though the IFICI regime has specific conditions upon departure.

Common Mistakes to Avoid

  1. Assuming the DTA always eliminates double taxation: DTAs allocate taxing rights but don't always result in zero tax. You may still owe tax in one or both countries.
  2. Forgetting to claim the foreign tax credit: If you're taxed in both countries, you must actively claim relief — it's not automatic.
  3. Ignoring the primary residence definitions: Portugal and Italy define "primary residence" differently for CGT exemption purposes. Verify the rules in the specific country.
  4. Overlooking currency exchange gains: If your assets are denominated in a foreign currency, the exchange rate movement itself can create a taxable gain.
  5. Missing registration deadlines for special regimes: Both the IFICI regime in Portugal and the flat tax regime in Italy have strict application windows and eligibility requirements.

Frequently Asked Questions

Which country has a lower capital gains tax rate on stocks — Portugal or Italy?

Italy has a lower flat rate on stock capital gains at 26% compared to Portugal's 28%. However, Portuguese residents can elect to include gains in their general income (englobamento), which could result in a lower rate for those with modest total income.

Is there a capital gains tax exemption for long-term property holdings?

Yes — but only in Italy. If you hold a property for more than 5 years, the capital gain on sale is fully exempt (unless it was acquired through donation within the last 5 years). Portugal does not offer a general holding-period exemption for property, though reinvestment relief exists for primary residences.

Can I benefit from both countries' special tax regimes?

No. You can only be a tax resident in one country at a time (unless a DTA tiebreaker applies). You would need to choose between the Portuguese IFICI regime and the Italian flat tax regime for new residents. The Italian regime is generally more attractive for individuals with large foreign-sourced capital gains.

How are crypto capital gains taxed in Portugal vs Italy?

Both countries tax cryptocurrency gains at similar rates: 28% in Portugal and 26% in Italy. Italy has a de minimis threshold below which gains may not be taxable, while Portugal taxes all crypto gains above standard personal exemptions.

Do I need to declare capital gains from one country while living in the other?

Yes. As a tax resident of either country, you are generally required to declare your worldwide income, including capital gains from the other country. You would then claim relief under the applicable DTA to avoid or reduce double taxation.

Conclusion: Which Country Is Better for Capital Gains Tax?

The answer depends entirely on your personal circumstances, asset types, and time horizons:

  • Portugal may be better if: You're selling property held for less than 5 years (thanks to the 50% inclusion rule), you have modest financial gains and can benefit from englobamento, or you qualify for the IFICI regime with favorable DTA protections.
  • Italy may be better if: You plan to hold property for more than 5 years (benefiting from the full exemption), you have significant financial asset gains (26% vs 28%), or you're a high-net-worth individual who can leverage the EUR 100,000 flat tax regime to shelter large foreign-sourced capital gains.

Both countries offer compelling advantages, and the optimal choice often comes down to the specific details of your investment strategy, residency plans, and overall wealth structure.

Ready to crunch the numbers? Use our Portugal Capital gains tax Calculator and Italy Capital gains tax Calculator to model your specific scenarios and see exactly how much you'd owe in each country.

This article is for informational purposes only and does not constitute tax advice. Tax laws change frequently; consult a qualified tax professional for advice specific to your situation.