From Dutch taxes to Portuguese opportunities: Why investing in real estate in Portugal is becoming increasingly attractive

In recent years, investing in real estate in the Netherlands has become less and less attractive. Whereas private investors used to be able to count on stable rental income and favourable tax rules, the government is now putting an end to many of these benefits. The increase in the Box 3 tax, the abolition of the exemption on income tax from rental income, and the new points system of Minister Hugo de Jonge have a significant impact on the return on privately owned real estate.

The pressure on Dutch real estate investors is increasing

1. Heavier Box 3 levy
   In Box 3, the tax authorities calculate with fictitious returns that are often much higher than the actual return of real estate investors. This will increase the tax burden considerably, even if rental income remains the same.
2. Disappearance of tax exemption on rental income
   Previously, rental income in private was untaxed in many cases. That advantage has disappeared, so that renting out in the Netherlands has a direct impact on your net proceeds.
3. Points system and regulation of rents
   The new home valuation system (points system) determines whether a home may be rented out in the free sector or falls into the regulated sector. As a result, many homes are forced to shift to lower rents, which means that future rental income will fall considerably.

Portugal as a new home for real estate investors

These developments are causing more and more investors to shift their focus abroad. Portugal, and in particular the Algarve, is high on the list.

• Lower tax environment for foreign investors.
• Strong demand for rental properties due to tourism and expats.
• Attractive property prices compared to other southern European regions.
• Stable yield (yield), often higher than in the Dutch market.

A calculation example

Comparison of real estate returns: The Netherlands vs. Portugal

Situation:

• Purchase price of the house: € 300,000
• Rental income: €1,500 per month (€18,000 per year)
• Maintenance & other costs: € 2,000 per year
• No mortgage, so full equity.

1️⃣ Netherlands – after recent changes

Gross rental income:
€ 18,000 per year

Maintenance costs:
€2,000 → Net Rent Before Tax = €16,000

Box 3 tax:

• Fictitious return on real estate (2025): 6.17% of €300,000 = €18,510
• Tax on this fictitious return (32% in 2025) = €5,923

Net proceeds:
€16,000 – €5,923 = €10,077 per year

Return on equity:
€10,077 ÷ €300,000 = 3.36%

And then there is a good chance that the rent will have to be reduced due to the points system, which will make the return even lower.

2️⃣ Portugal – Algarve, long term rentals

Gross rental income:
€1,800 per month (€21,600 per year)

Maintenance & management:
€2,500 → Net Rent Before Tax = €19,100

Non-resident tax (IRS):
28% on net rent = € 5,348

Net proceeds:
€19,100 – €5,348 = €13,752 per year

Return on equity:
€13,752 ÷ €300,000 = 4.58%

📈 Conclusion

• Netherlands (after changes): 3.36% return
• Portugal (long-term rental): 4.58% return
• Difference: In this example, Portugal yields +36% more net return , without taking into account any increase in the value of the property.

And for holiday rentals in Portugal (high season prices, good occupancy rate), the return can even go up to 6–8%.

Westmark Makelaardij – return since 2017

At Westmark Makelaardij, we have been supporting investors since 2017 in achieving a good return on their real estate in Portugal.
We offer:

• Assistance with buying & selling – We find properties with proven rental potential.
• Rental management – Maximize your income with short and long-term rentals.
• Property management – From maintenance to key management, completely unburdened.

💡 Our goal: to ensure that your financial goals are achieved, with a stable and predictable return.

Ready to make the switch?

Whether you want to switch from the Dutch market due to tax pressure, or simply look for new opportunities with higher returns: Portugal offers plenty of opportunities. With Westmark Makelaardij as a partner, you have one point of contact for purchase, rental and property management.

📞 Schedule a no-obligation consultation today and discover how your money can work harder in Portugal than in the Netherlands.