Cabo Verde Personal Income Tax Guide 2026

Overview — Direção Nacional de Receitas do Estado (DNRE)

The Direção Nacional de Receitas do Estado (DNRE) administers all domestic tax collection in Cabo Verde including personal income tax, corporate tax, VAT (IVA), and property taxes. Tax residents are taxed on worldwide income; non-residents are taxed only on Cabo Verde-source income. Residency is determined by physical presence of 183 days or more in a calendar year, or having a permanent home in Cabo Verde. Employees have tax withheld at source under the IRS system. Self-employed individuals and business owners file annual returns directly with DNRE. The currency is the Cabo Verdean Escudo (CVE), pegged to the Euro at 1 EUR = 110.265 CVE.

IRS Tax Brackets 2026 — Annual Rates

Cabo Verde uses a progressive annual bracket system with 5 bands and a top marginal rate of 27.5%. For 2026, the IRS brackets are:

• 0% — up to CVE 1,000,000 per year
• 15% — on CVE 1,000,001 to 2,000,000
• 20% — on CVE 2,000,001 to 5,000,000
• 24% — on CVE 5,000,001 to 10,000,000
• 27.5% — above CVE 10,000,000

Effective tax rates are moderate due to the CVE 1,000,000 tax-free threshold. A taxpayer earning CVE 3,000,000/year pays approximately CVE 350,000 in IRS — an effective rate of ~11.7%. The moderate top rate of 27.5% makes Cabo Verde competitive for high earners compared to many OECD jurisdictions.

Personal Deductions & Allowances

Before applying the IRS brackets, taxpayers may claim certain personal deductions to reduce taxable income:

• Dependant deduction — per-child allowance for dependent children under 18 (or up to 25 if in full-time education)
• Health expenses — medical and health insurance premiums paid
• Education expenses — school fees and educational costs for dependants
• Social security contributions — mandatory social security contributions are deductible
• Life insurance premiums — premiums paid on qualifying life insurance policies

Deductions are subject to annual limits set by the DNRE. Self-employed individuals may also deduct actual business expenses if they maintain proper books of account, rather than claiming standard personal deductions.

IRS Withholding & Filing

Employers must withhold IRS monthly from employee salaries and remit it to DNRE by the 15th of the following month. The employer calculates monthly tax on gross salary using the IRS withholding tables, applies applicable deductions, and remits the net tax. Employees receive annual tax summaries from their employers. Self-employed individuals must file self-assessment returns annually by 31 May. Estimated tax is payable in quarterly instalments. The annual return must be filed regardless of whether all tax was withheld at source. Failure to remit IRS attracts penalties and interest.

FAQs

What deductions can I claim as an employee?

Employees can claim deductions for social security contributions, health expenses, education costs for dependants, and life insurance premiums. These are claimed in the annual tax return to reduce taxable income.

How does the CVE 1,000,000 exemption work?

The first CVE 1,000,000 of annual income is entirely tax-free. Only income above this threshold is subject to the progressive IRS rates. This provides significant relief for low and middle-income earners.

What if I have multiple income sources?

All employment income, business income, and investment income must be aggregated in your annual IRS return. Different types of income may be subject to different withholding regimes, but all must be declared.

Disclaimer

This guide provides general information about Cabo Verdean personal income tax for the 2026 tax year. Tax laws, rates, and regulations may change. Always consult with a qualified Cabo Verdean tax advisor or the Direção Nacional de Receitas do Estado for advice specific to your situation. InvestmentKit does not provide tax advice.