INSS Retirees in Portugal: Income Tax at Progressive Rates in 2026

For years, anyone receiving an INSS retirement pension while living in Portugal saw 25% of the benefit withheld at source, with no exemption bracket and no deductions. A retiree with a benefit of R$4,000 per month lost R$1,000 every month, while a neighbor with the same amount, resident in Brazil, paid much less or nothing. That difference is gone. In 2026, retirement pensions paid to residents abroad follow the progressive table, with the new tax reduction table. In this article we explain what changed, how the calculation works, what is needed for the new rule to be applied to your benefit and how to claim back what was over-withheld in recent years.

From 25% to the progressive table: what changed

The old rule

Article 7 of Law 9,779/1999 (Lei), as worded by Law 13,315/2016, subjected retirement and pension income paid to residents abroad to withholding income tax at a flat rate of 25%. There was no exemption bracket, the progressive table did not apply, and the rate was the same for someone receiving one minimum wage or the INSS ceiling.

STF Topic 1,174

In ARE 1,327,491 (general repercussion Topic 1,174), the Full Court of the Brazilian Supreme Federal Court (STF), in the virtual session held from October 11 to 18, 2024, declared this 25% flat rate unconstitutional. The original case was, in fact, that of an INSS retiree living in Portugal. The decision became final on November 28, 2024, with no modulation of its effects. The Office of the Attorney General of the National Treasury (Procuradoria-Geral da Fazenda Nacional) added the topic to its list of matters in which it waives contesting and appealing (Opinion SEI 453/2025/MF), which means that the Federal Government no longer disputes the thesis in court proceedings.

RFB Normative Instruction 2,299/2025

The Brazilian Federal Revenue Service (Receita Federal) adapted its rules through RFB Normative Instruction 2,299/2025 (Instrução Normativa RFB), published in the Federal Official Gazette (Diário Oficial da União) on December 18, 2025 and in force since that date. It amended the sole paragraph of Article 19 of RFB Normative Instruction 1,500/2014, which now provides that income paid to residents abroad is subject to exclusive withholding tax:

• at a rate of 25%, if it derives from work, whether or not there is an employment relationship, or from the provision of services;
• under the progressive tables in Annex II, subject to the reduction table in Annex X, if it derives from retirement pensions and other pensions.

Taxation remains exclusively at source. A retiree who is a nonresident does not file an annual adjustment return in Brazil on this income: the tax withheld by the INSS is final.

How the calculation works in 2026

The monthly progressive table in force since May 2025, reproduced in Annex II of RFB Normative Instruction 1,500/2014, is as follows:

• up to R$2,428.80: exempt;
• from R$2,428.81 to R$2,826.65: 7.5%, with a deductible amount of R$182.16;
• from R$2,826.66 to R$3,751.05: 15%, with a deductible amount of R$394.16;
• from R$3,751.06 to R$4,664.68: 22.5%, with a deductible amount of R$675.49;
• above R$4,664.68: 27.5%, with a deductible amount of R$908.73.

The reduction table created by Law 15,270/2025 (Lei) and valid since January 1, 2026 (Annex X) is applied to the tax so calculated. For taxable income of up to R$5,000.00 per month, the reduction is up to R$312.89, so that the tax due is zero. Between R$5,000.01 and R$7,350.00, the reduction is R$978.62 minus 0.133145 times the income, and it decreases until it disappears. Above R$7,350.00 there is no reduction. In any case, the reduction cannot exceed the tax itself.

Three examples

The examples below use the gross amount of the benefit, without considering deductions, and are intended only to give an order of magnitude:

• Benefit of R$3,000: under the table, the tax would be R$55.84; the reduction eliminates it. Under the old rule, the withholding was R$750 per month.
• Benefit of R$4,000: under the table, R$224.51, also eliminated by the reduction. Previously, R$1,000 per month.
• Benefit of R$8,000: with no reduction, the tax is at most R$1,291.27, compared with R$2,000 at the 25% rate.

The difference accumulated over a year is significant, especially for those receiving mid-range benefits. It is also this difference, multiplied by the years in which 25% was withheld, that may be recovered, as we will see below.

The new rule applies only to nonresidents

The applicable table depends on the INSS treating the beneficiary as a resident abroad. And, for the Receita Federal, living in Portugal is not enough: the person must be a tax nonresident of Brazil. Under SRF Normative Instruction 208/2002 (Instrução Normativa SRF), anyone who leaves the country permanently becomes a nonresident on the date of departure; anyone who leaves temporarily becomes a nonresident only from the day after completing twelve consecutive months of absence (Article 3).

The departure is formalized through the Notice of Definitive Departure from the Country (Comunicação de Saída Definitiva do País), to be filed by the last day of February of the following year (Article 11-A), and through the Definitive Departure Tax Return (Declaração de Saída Definitiva do País). In addition, the person must notify the paying source of the date of definitive departure (Article 10, § 1). Without these steps, the retiree may continue to be treated as a resident of Brazil, with withholding as a resident and an obligation to file returns. Our page on tax residence between Brazil and Portugal explains in detail how residence is determined in both countries.

If your situation is unclear, for example because you left Brazil years ago and never filed the departure notice, it is worth reviewing it before asking the INSS for any correction. Learn about our work with INSS retirees in Portugal.

And in Portugal, is the pension subject to IRS?

The Convention between Brazil and Portugal for the avoidance of double taxation (Decree 4,012/2001 (Decreto)) settles the question. Under Article 18(2), pensions paid under the social security legislation of a State may be taxed only in that State. An INSS retirement pension paid to someone living in Portugal is therefore taxed only in Brazil.

There is, however, one detail. Article 23(4) allows the country of residence to take the exempt income into account when calculating the tax on the taxpayer's other income. Because a resident of Portugal is taxed on their worldwide income, including income earned abroad (Article 15 of the IRS Code), the INSS pension may have to be reported on the IRS return and may affect the rate applicable, for example, to employment or rental income in Portugal. Pensions are category H income (Article 11 of the CIRS).

The firm provides legal advice on how the pension is classified under the convention; how to report it in Portugal is handled in coordination with the client's accountant.

Refund of the 25% withheld in recent years

Anyone who, while residing abroad, had 25% withheld from their retirement pension paid more than would have been due under the progressive tax table. The National Tax Code (Código Tributário Nacional) grants the right to a refund of tax paid unduly or in excess (Article 165), and this right is extinguished after five years (Article 168). In practice, each monthly withholding has its own deadline, and the oldest months progressively can no longer be recovered.

1. Administrative claim: a refund of tax withheld at source on income subject to exclusive taxation is requested through the PER/DCOMP program or, if it cannot be used, by form, according to the guidance of the Brazilian Federal Revenue Service (Receita Federal) on undue or excess withholding.
2. Lawsuit: if the administrative claim is not feasible or is denied, an action for refund of undue payment (ação de repetição de indébito) may be filed in the Federal Courts. With the PGFN's waiver of defense and appeal, the dispute tends to focus on the calculation.

The central point, whichever route is taken, is evidence: that the beneficiary resided abroad in each period and how much was withheld each month.

Common mistakes

• Assuming the correction is automatic. If the INSS has no record that the beneficiary lives abroad, it may apply the rules for residents, and the situation is only clarified with the appropriate documentation.
• Never having filed the definitive departure. Without the notice and the departure return, non-resident status is difficult to demonstrate before the Receita Federal.
• Letting time go by. The five-year period runs month by month, and each month that becomes time-barred is an amount that can no longer be claimed.
• Confusing an INSS retirement pension with a private pension plan. The convention treats social security pensions, private pensions and civil servants' pensions differently (Articles 18 and 19), and the classification changes which country may tax them.
• Forgetting the IRS. Even if taxed only in Brazil, the pension may have to be reported in Portugal for rate purposes.

Document checklist

• Benefit award letter and benefit number (NB);
• INSS income and withholding statements for each year in which 25% was deducted;
• Month-by-month payment statements, if available on Meu INSS;
• Receipts for the Notice and the Definitive Departure Return (Comunicação e Declaração de Saída Definitiva do País), if already filed;
• Proof of residence in Portugal: residence card, certificate of residence from the parish council (junta de freguesia), tax residence certificate issued by the Tax Authority (Finanças);
• Identity document and a CPF in good standing;
• IRS returns filed in Portugal, for the accountant.

When it makes sense to consult a lawyer

Not every case requires legal assistance. But it tends to make a difference when the 25% withholding continued in 2026, when there are several years of withholdings to recover, when the definitive departure was never formalized, when the retiree also receives a private pension or a civil servant's pension, or when the administrative claim was denied. In these scenarios, a joint review of the social security, tax and residence situation avoids incomplete claims and allows the appropriate route to be chosen.

• Normative Instruction RFB 2,299/2025 (Instrução Normativa) (DOU of December 18, 2025), Art. 1 (new wording of Art. 19, sole paragraph, of IN 1,500/2014) and Annex I
• RFB Normative Instruction 1,500/2014, Art. 19, sole paragraph, and Annexes II and X
• Law 15,270/2025 (Art. 3-A of Law 9,250/1995 — monthly tax reduction table)
• Law 9,779/1999, Article 7 (as worded by Law 13,315/2016)
• STF — ARE 1,327,491, General Repercussion Theme 1,174
• PGFN — Opinion (Parecer) SEI 453/2025/MF
• Normative Instruction SRF 208/2002 (Arts. 3, 10 and 11-A)
• Decree 4,012/2001 — Brazil–Portugal Convention (Arts. 18, 19 and 23)
• National Tax Code (Código Tributário Nacional) (Arts. 165 and 168)
• Receita Federal — Undue or excess withholding (PER/DCOMP)
• IRS Code (Código do IRS), Art. 15 (scope of taxation)
• IRS Code, Art. 11 (category H — pensions)

Sene & Araújo Sociedade de Advogados team. Content prepared and reviewed by the firm's lawyers, admitted to the Brazilian Bar Association (OAB) and the Portuguese Bar Association (Ordem dos Advogados), with offices in São Paulo and Albufeira. The provisions cited were checked against the official sources listed above. Meet the team.