Portugal vs Austria: The European Tax League, Edition 10
The European Tax League. Every week we pick one European country and compare it head to head against Portugal's IFICI expat regime. Same salary. Same rules. No bias. Just the math.
Austria is one of the most beautiful countries in Europe. The tax bill is not.
Vienna. The opera. The coffee houses. The Alps. The Ringstrasse. Austria consistently ranks among the highest quality of life destinations in the world. And then you open your payslip.
Progressive income tax up to 50% on salaries around €500K. No competitive flat-tax expat regime for inbound international talent. No equivalent of Portugal's IFICI, Spain's Beckham Law, the Dutch 30% Ruling or Sweden's Expertskatt.
Austria looked at every other European country building competitive expat regimes and decided not to build one.
Here is what that decision costs you.
What is Portugal's IFICI regime?
IFICI, Portugal's Non-Habitual Resident successor regime also referred to as NHR 2.0 or Portugal's 20% flat tax, gives qualifying individuals a 20% flat rate on qualifying Portuguese source employment and self-employment income in eligible activities for 10 years. Most qualifying foreign-source income categories are exempt from Portuguese income tax entirely for the duration of the regime.
IFICI applies to individuals who become Portuguese tax residents for the first time, or who have not been tax resident in Portugal in the previous 5 years, and who perform a qualifying professional activity with an eligible entity.
Eligibility depends on your professional profile, income structure and activity type. Check your eligibility at expatico.eu/eligibility.
Does Austria have an expat tax regime?
Austria applies its normal progressive income tax rates to inbound workers. There is no special flat rate for foreign talent comparable to IFICI, the Beckham Law, the Dutch 30% Ruling or Sweden's Expertskatt.
Austrian tax law does provide a specific flat-rate professional expenses allowance for qualifying expatriate employees. This is a deduction of 20% of a defined calculation base, capped at €10,000 per year, to cover assignment-related costs such as dual household expenses and trips home. This is a small deduction mechanism, not a separate low-tax regime. It does not change the underlying progressive rates and does not exempt foreign-source income. For a senior executive on a €500K salary, a €10,000 deduction is immaterial.
The honest answer: Austria has a defined expatriate category in tax law with a modest expenses allowance, but no competitive flat-tax regime for high-earning international talent. Saying Austria has no expat regime at all is slightly too absolute. Saying Austria has nothing competitive for high earners is accurate.
Can a freelancer qualify for IFICI in Portugal?
Yes. IFICI covers both qualifying employment income and qualifying self-employment income from eligible activities. Freelancers and independent contractors can qualify, provided their activity falls within the eligible categories and they perform their work through a qualifying entity.
Austria has no equivalent mechanism. Self-employed individuals and freelancers in Austria are taxed under the standard progressive system with no flat-rate alternative.
Austria's tax rates in 2026
Austria uses a seven-bracket progressive income tax system. 0% applies up to approximately €12,816. Rates rise progressively from 20% to 48% across the middle brackets. The 50% rate applies on income between approximately €99,266 and €1,000,000. The 55% rate applies on income above €1,000,000. This is a temporary solidarity surcharge that has been repeatedly extended.
On a €500K salary the applicable marginal rate is 50%, not 55%. The 55% rate only kicks in above €1 million. The effective rate on €500K, combining all brackets, sits in the range of 45% to 48%.
🇦🇹 Vienna, standard rates for international executives:
→ Progressive system: 50% marginal rate on income above ~€99K (55% above €1M)
→ No competitive flat-tax expat regime
→ Small expat expenses allowance: 20% flat-rate deduction capped at €10,000/year. Marginal, not a regime.
→ Foreign income taxed on worldwide income for residents. Relief via double taxation treaties only. No domestic exemption for foreign-source income.
→ Take-home on a €500K salary: ~€265K
How does IFICI compare to Austria?
🇵🇹 Lisbon, IFICI (NHR successor, Portugal 20% flat tax):
→ 20% flat on qualifying Portuguese source employment and self-employment income
→ 0% exemption on most qualifying foreign-source income for 10 years (subject to applicable treaties; pensions and blacklisted jurisdictions excluded)
→ No salary cap. No minimum salary requirement.
→ No employer tie. Generally portable across qualifying employers.
→ Duration: 10 years
→ Deductions available under standard Portuguese rules
→ No wealth tax (AIMI applies to high-value real estate only)
The comparison is not close. 20% vs 50%. Zero foreign income tax vs treaty-dependent relief. 10 years of certainty vs a permanent progressive system with no end date.
Is IFICI better than Austria's tax system?
Yes. Decisively, for any high earner with significant income.
Austria offers no competitive equivalent to IFICI. The small €10,000 expat expenses allowance does not change this picture in any meaningful way for someone on a €500K salary.
The only scenario where Austria competes is quality of life. And even then, Portugal consistently ranks highly on liveability metrics while offering dramatically better tax treatment.
The numbers
Illustrative figures based on a €500K salary under each regime's best available treatment. Individual outcomes depend on income structure, personal circumstances and applicable rules. This is not tax advice.
· Vienna (standard rates) · Lisbon (IFICI)
Applicable marginal rate · ~50% (on €500K salary) · 20% (qualifying activity)
Expat regime · Small expenses allowance (€10K cap) · IFICI 20% flat
Rate on qualifying foreign income · Treaty relief only. No domestic exemption · 0% qualifying categories
Illustrative take-home on €500K · ~€265K · ~€400K-€500K
Duration · Permanent progressive system · 10 years
Illustrative gap: up to ~€235K per year in Portugal's favour.
That is not a tax difference. That is a different financial life.
What is the deadline to apply for IFICI in Portugal?
The IFICI application must be filed with the Portuguese Tax and Customs Authority (Autoridade Tributária e Aduaneira) by 15 January of the year following the year you became a tax resident in Portugal. Missing this deadline means losing the regime for that tax year.
The application is submitted through Portal das Finanças (portaldasfinancas.gov.pt). You must register as a Portuguese tax resident first.
What happens if I leave Portugal during my IFICI 10 years?
If you cease to be a Portuguese tax resident during the IFICI period, the regime is suspended. If you return to Portugal and re-establish tax residency within the IFICI period, the regime can resume. Specific rules apply and professional advice is strongly recommended before any change of residency status during an active IFICI period.
Do I need to be employed by a Portuguese company to qualify for IFICI?
No. IFICI does not require employment by a Portuguese company in all cases. You must perform a qualifying professional activity with an eligible entity. This can include foreign companies with a permanent establishment in Portugal or other qualifying structures. The key requirement is the nature of the activity, not the nationality of the employer. Independent contractors and self-employed professionals performing qualifying activities can also access IFICI.
Check your specific situation at expatico.eu/eligibility.
The full standings
# · Country · Take-home on €500K · Regime · Duration · Notes
1 · 🇵🇹 PORTUGAL · €400K-€500K · IFICI · 10 yrs · 0% on qualifying foreign income
2 · 🇨🇭 SWITZERLAND (Zug) · ~€375K-€390K · Ordinary cantonal rates · No expat regime · Wealth tax applies
3 · 🇫🇮 FINLAND · ~€375K · Key Employee · 7 yrs · 25% flat, no deductions, min €5,800/mo
4 · 🇩🇰 DENMARK · ~€335K-€345K · Forskerordningen · 7 yrs · 32.84% effective, no deductions
5 · 🇳🇱 NETHERLANDS · ~€330K · 30 Ruling · 5 yrs · €233K salary base cap
6 · 🇫🇷 FRANCE · ~€300K-€330K · Impatriate Regime · 8 yrs · 50% exemption cap, employer-tied
7 · 🇧🇪 BELGIUM · ~€300K-€320K · STRIT · 5+3 yrs max · Min €70K salary, 150km rule
8 · 🇸🇪 SWEDEN · ~€285K-€305K · Expertskatt · 7 yrs · SEK 88,800/mo eligibility floor
9 · 🇬🇧 UK · ~€275K · FIG regime · 4 yrs foreign income only · 45% on UK source from day 1
10 · 🇩🇪 GERMANY · ~€262K · Standard progressive PIT · No expat regime · 47.5% top rate
11 · 🇦🇹 AUSTRIA · ~€265K · Standard progressive PIT · No competitive expat regime · 50% on €500K; 55% above €1M
Next edition: Portugal vs Italy 🇮🇹. Italy has two expat regimes. One is legendary. One is controversial. Both lose to IFICI.
Is IFICI right for you?
IFICI eligibility depends on your professional profile, residency history, income structure and qualifying activity. The regime is powerful. It requires proper setup to access the full benefit.
At Expatico, we help founders, executives and high earners assess whether they qualify, structure their move to Portugal correctly, and access the full range of Portuguese incentives, covering IFICI applications, company incorporation, talent sourcing and grant access.
Check your eligibility in 2 minutes: expatico.eu/eligibility
Book a free call with our team to discuss your specific situation: expatico.eu
📖 Read all editions of The European Tax League at expatico.eu/blog
*Disclaimer: Figures are illustrative estimates based on standard assumptions for qualifying employment income under each regime's best available treatment. Tax outcomes depend on individual circumstances, income structure, applicable treaties, deductions and anti-abuse rules. This is not tax advice — consult a qualified advisor before making relocation decisions. IFICI applies to qualifying employment and self-employment income in specific eligible activities; other Portuguese-source income may be taxed at different rates.*