Englobamento

Englobamento is a Portuguese tax election that allows taxpayers to include (aggregate) capital gains and other investment income into their general taxable income, subject to progressive IRS rates (14.5%–48%) instead of the default flat 28% autonomous rate.

When englobamento benefits prediction market traders

Choosing englobamento makes sense when your total income (including prediction market gains) falls into tax brackets below 28%. For 2024, this generally benefits taxpayers with total income below approximately €27,000.

The trade-off

• Without englobamento: Prediction market gains taxed at flat 28% regardless of your total income
• With englobamento: Gains added to your total income, taxed at progressive rates from 14.5% to 48%

Higher earners should almost always use the flat 28% rate. Lower earners can save significantly with englobamento.

Important: All or nothing

If you elect englobamento, it applies to all capital income in that category — you cannot selectively aggregate only your prediction market gains while keeping dividends at the flat rate. This is a key planning consideration.

NHR regime

Under Portugal's Non-Habitual Resident (NHR) regime (or its successor), foreign-source capital income may be exempt from Portuguese tax entirely. Prediction market gains from U.S. platforms could potentially qualify, though the NHR regime has been significantly modified starting in 2024.

Worked example

Maria earns €22,000 salary and €8,000 from prediction markets (€30,000 total):

• Without englobamento: Prediction market gains taxed at flat 28% = €2,240
• With englobamento: €30,000 total income falls in lower progressive brackets, effective rate on the €8,000 might be ~20% = €1,600
• Savings: ~€640 by choosing englobamento

But if Maria earned €60,000 salary instead:

• Without englobamento: Still 28% on €8,000 = €2,240
• With englobamento: €8,000 taxed at marginal rate of ~37% = €2,960
• Loss: €720 — englobamento would cost more

How Portugal compares to other European countries

Portugal's 28% flat rate is comparable to Germany (~26.4% Abgeltungsteuer), Italy (26% imposta sostitutiva), and Sweden (30% inkomst av kapital). The englobamento option is unique — most countries don't let you choose between flat and progressive rates for the same type of income.

Frequently asked questions

Can I undo an englobamento election?

The election is made annually on your tax return. You can choose englobamento one year and opt out the next. However, within a single year, the election applies to all income in the same category.

Do I report prediction market income as "mais-valias" (capital gains)?

This depends on classification. Prediction market contracts could be classified as mais-valias de valores mobiliários (capital gains from securities) or as other income. Consult a Portuguese tax advisor (contabilista certificado) for proper classification.