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Pimentão vs. pimento

The difference between pimentão and pimento is primarily regional. In Brazilian Portuguese, the word pimentão is the standard term for the fresh bell pepper vegetable. In European Portuguese (Portugal), the fresh vegetable is called pimento. Additionally, in Portugal, pimentão often refers specifically to the ground spice (paprika) or a specific paste made from peppers.

Pimentão

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In Brazil, this is the common term for the hollow, blocky vegetable (bell pepper/capsicum) used in salads and cooking. In Portugal, this word usually refers to massa de pimentão (pepper paste) or paprika powder, rather than the fresh vegetable.
Você prefere pimentão amarelo ou vermelho na salada?
(Do you prefer yellow or red bell pepper in the salad?)
O preço do pimentão subiu muito na feira esta semana.
(The price of the bell pepper went up a lot at the market this week.)
Minha mãe faz um pimentão recheado que é delicioso.
(My mother makes a stuffed bell pepper that is delicious.)
Para esta receita portuguesa, usamos massa de pimentão.
(For this Portuguese recipe, we use bell pepper paste.)

Pimento

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This is the standard word in European Portuguese for the fresh bell pepper/capsicum. While this word exists in Brazilian dictionaries, it is rarely used in daily conversation in Brazil.
Em Portugal, é comum assar o pimento para retirar a pele.
(In Portugal, it is common to roast the bell pepper to remove the skin.)
Corte o pimento em tiras finas antes de colocar na frigideira.
(Cut the bell pepper into thin strips before putting it in the frying pan.)
O pimento verde tem um sabor mais intenso que os outros.
(The green bell pepper has a more intense flavor than the others.)
Não gosto de comida com muito pimento.
(I do not like food with too much capsicum.)

Summary

Use pimentão if you are speaking Brazilian Portuguese to refer to the vegetable. Use pimento if you are speaking European Portuguese to refer to the same vegetable. In Portugal, reserved pimentão for processed pepper products like pastes or dry spices.