Corporate Income Tax in Portugal

Understanding the nuances of corporate income tax in Portugal is crucial for effectively advising your international clientele or to understand your business as an entrepreneur. Below provides a snapshot of corporate tax implications in Portugal, however, engaging with a professional is advised, as it is likely that not only corporate tax requires consideration.

Taxation of Resident Companies:

Generally, companies considered tax residents in Portugal face taxation on their worldwide income.

Standard Corporate Income Tax Rates:

A flat Corporate Income Tax (CIT) rate of 20% is levied on the total taxable income of companies’ resident in mainland Portugal.

The Autonomous Region of Madeira and the Autonomous Region of the Azores benefit from a reduced standard CIT rate of 14%*, which also applies to Permanent Establishments (PE’s) of foreign entities registered within these regions.

Summary of Key CIT Rates

The corporate income tax rates in Portugal vary significantly and are detailed below:

 Portuguese Mainland CompanyMadeira CompanyInternational Business Centre of Madeira Company (for international activity)
First €50,000 of taxable income (small-medium enterprises)16%11.2%*5%
Taxable income above €50,00020%14%*5%

Note: The rate for companies within the International Business Centre of Madeira (IBC) are subject to specific substance requirements being met.

*The tax rate is applicable from 1 January 2025

Other Tax Rates

Reduced Rates for Small Medium Enterprises and Small Mid-Caps

5% Corporate Tax Rate in the Madeira International Business Centre

Special Rate for Startups

Permanent Establishments

Taxation of Non-Resident Companies

CIT Rates for Inland Territories (SMEs & Small Mid-Caps)

Surtaxes

Reach Out

By staying informed and engaging with an appropriate professional about a jurisdiction’s tax regulations can provide valuable guidance and support to operating a business in Portugal, particularly those involved in international activities or who are not from Portugal. Other taxes (such as VAT, social security on employees, among others) may apply and will need to be considered.

Dixcart Portugal provide a host of accounting, tax and consulting services. Reach out for more information at advice.portugal@dixcart.com.

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