Portugal tax system: audit, reporting and optimization of taxation of Portuguese companies and individuals: VAT, income tax and capital gains
Basic taxes (briefly)
|Corporate tax (in detail)||The standard tax rate is 21%. In some regions and for small enterprises, the rate may be lower in terms of part of income.|
|Capital gains tax. Details||Capital gains are included in the general tax base|
|VAT. Details||Стандартная ставка НДС составляет 23%. В отношении некоторых товаров и услуг применяются пониженные ставки в размере 13% и 6%|
|Other taxes||Social contributions, Municipal property tax, Property transfer tax|
|Stamp duty||Rates vary by transaction|
International tax agreement
|Algeria, Angola, Andorra, Austria, Bahrain, Barbados, Belgium, Brazil, Bulgaria, Canada, Cape Verde, Chile, China, Colombia, Croatia, Cuba, Cyprus, Czech Republic, Cote d'Ivoire, Denmark, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Guinea-Bissau, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea (Republic of), Kuwait, Latvia, Lithuania, Luxembourg, Macao (China), Malta, Mexico, Moldova, Montenegro, Morocco, Mozambique, Netherlands, Nigeria, Norway, Pakistan, Panama, Peru, Poland, Oman, Qatar, Romania, Russian Federation, San Marino, Saudi Arabia, Senegal, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Sao Tome and Principe, Timor-Leste, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Venezuela, Vietnam|
|Andorra, Antigua and Barbuda, Bermuda, British Virgin Islands, Cayman, Islands, Gibraltar, Liberia, St. Kitts and Nevis, St. Lucia, Turks and Caicos|
Personal income tax
Portuguese tax residents pay tax on their worldwide income and non-residents on income from sources in Portugal.
Non-residents are subject to 25% tax on their remuneration.
Income tax is paid at progressive rates:
- Income up to EUR 7,112 – 14.5%;
- Income from EUR 7,112 to 10,732 – 23%;
- Income from EUR 10,732 to 20,322 – 28.5%;
- Income from EUR 20,322 to 25,075 – 35%;
- Income from EUR 25,075 to 36,967 – 37%;
- Income from EUR 36,967 to 80,882 – 45%;
- Income over EUR 80,882 – 48%.
Taxpayers with an income of more than EUR 80,000 pay an additional solidarity tax at 2.5% to 5% rate.
Investment income is taxed at 28%, but there is an option to pay tax at progressive rates. If a bank account or investment is located in a jurisdiction blacklisted by Portugal as a “tax haven”, a higher tax rate of 35% applies.
Capital gains are generally taxed at the rate of 28%.
Fifty per cent of capital gains from the sale of real estate are included in the taxable income and taxed at progressive rates. There is a relief for the primary residence.
Non-residents are taxed at 28% rate on 100% of the profits from the disposal of Portuguese assets.
Individuals who have moved to Portugal are eligible for a special preferential tax regime, subject to certain conditions. Their remuneration for work in a number of industries can be taxed at the rate of 20%, and their foreign income is exempt from taxation.
Corporate income tax
Corporate income tax is paid on the company’s worldwide income.
There is an optional regime to exclude from the tax base the profits and losses allocated to foreign permanent establishments, subject to certain conditions.
The standard tax rate is 21%. The rate may be lower in some regions and for small businesses in relation to some part of the income.
There is a state surtax levied at rates from 3% to 9% on profits exceeding certain thresholds, as well as surtaxes of up to 1.5% at the level of municipalities. Some regions also charge a regional surtax.
In relation to some expenses (representation expenses, undocumented expenses and others), companies are required to pay tax calculated as a percentage of such expenses.
Dividends received are exempt from tax if the conditions for the substantial participation exemption are met: the participation interest is at least 10%, the holding period is at least 1 year, the company is not from a "blacklisted” country and is subject to corporate income tax specified in the EU Parent-Subsidiary Directive or at a rate not lower than 60% of the Portuguese rate, and some other conditions.
Capital gains are generally taxed at regular tax rates.
Profit from the sale of shares may be tax exempt if the conditions for the substantial participation exemption are met: the participation interest is at least 10%, the holding period is at least 1 year, the company is not from a "blacklisted” country and some other conditions.
A foreign company is considered a controlled foreign company if a resident owns, directly or indirectly, at least 25% of its capital, voting rights, or rights to its profits and assets, and the company's profit is taxed at a rate below half of the Portuguese corporate income tax rate, or the company is from a blacklisted jurisdiction.
CFC rules may not apply to EU or EEA companies if a company is established for real economic purposes and conducts the relevant business.
Nor should CFC rules apply if the company's passive income does not exceed 25%. Passive income includes not only interest, dividends, profits from the sale of securities, etc., but also profits from trading with related parties.
Withholding tax on dividends and interest is 25%.
The rate rises to 35% if the recipient is from a blacklisted country. Dividends can generally be exempt from tax if the recipient is from a DTT (double tax treaty) country or from an EU or EEA member state, is taxed in the country of residence at a rate not less than 60% of the Portuguese rate and has held at least 10% of the Portuguese company’s shares for at least a year.
Royalties are subject to 25% withholding tax.
Withholding taxes are reduceable under the applicable double tax treaties and EU directives.
The standard VAT rate is 23%.
Reduced rates of 13% and 6% apply to some goods and services.
Social security contributions
Social security contributions, including contributions to cover pension, family, and unemployment benefits, are paid by employees at the rate of 11% and by employers at the rate of 23.75% of the employee’s remuneration.
Employers must also purchase insurance against occupational accidents; the premiums vary by industry.
Municipal property tax
The annual property tax is generally levied at the rate of 0.8% in rural areas and at the rates from 0.3% to 0.45% in urban areas.
There is also an additional municipal property tax on land for development and residential property.
The rates vary depending on the category of the owner and the value of the property.
Property transfer tax
When transferring real estate located in Portugal, a municipal tax is levied at rates of up to 6.5% for urban real estate, 5% for rural real estate, and 10% if the buyer is a company from a blacklisted country.
Stamp duties are payable on various transactions and documents.
The rates vary greatly depending on the transaction.
Double tax agreements
Portugal has tax treaties with 94 countries:
79 DTCS: Algeria, Andorra, Austria, Bahrain, Barbados, Belgium, Brazil, Bulgaria, Canada, Cape Verde, Chile, China, Colombia, Croatia, Cuba, Cyprus, Czech Republic, Cote d'Ivoire, Denmark, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Guinea-Bissau, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Kazakhstan, Korea (Republic of), Kuwait, Latvia, Lithuania, Luxembourg, Macao (China), Malta, Mexico, Moldova, Montenegro, Morocco, Mozambique, Netherlands, Norway, Pakistan, Panama, Peru, Poland, Qatar, Romania, Russian Federation, San Marino, Saudi Arabia, Senegal, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Sao Tome and Principe, Timor-Leste, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Venezuela, Vietnam.
16 TIEAs: Andorra, Anguilla, Antigua and Barbuda, Belize, Bermuda, Cayman Islands, Dominica, Gibraltar, Guernsey, Isle of Man, Jersey, Liberia, Saint Kitts and Nevis, Saint Lucia, Turks and Caicos Islands, Virgin Islands (British).
Portugal has no exchange control.
Taxes of Portugal
|Min. rate for corporate tax||21%|
|Capital gains tax||Regular rate|