Generally speaking, you will find below the main types of company taxes in Portugal :
- IRC – Corporate income tax
- VAT – Value Added Tax
- IMT – Municipal Tax on the Onerous Transfer of Property
- IMI – Municipal Property Tax
- Imposto do Selo – Stamp duty
English-speaking accountant for the taxation of your company in Portugal
It is important to be aware that when setting up a business in Portugal you will have tax ideas specific to your country that may not be applicable or simply different in Portugal. I don’t know of any company that is not accompanied internally or externally by an accountant who is fully conversant with the functioning of the Portuguese tax system and the techniques specific to the country or to your company to make it as advantageous as possible for you.
If you are not fluent in Portuguese, then it is better to choose an English-speaking tax and accounting support as you will certainly have many questions throughout the different stages of your company’s life. You can therefore use the button below and the associated form to be contacted by an English-speaking accountant and tax expert based in the Lisbon area. He will be able to inform you and accompany you on all the questions of company creation, company purchase, taxation, accounting or HR accounting management.
Corporate Income Tax (IRC)
IRC is the main annual corporate tax in Portugal.
The corporate tax rate is 21% on the net profit of the previous year’s operation, which also includes the municipal surcharge of 1.5% in most municipalities, on taxable profit.
In addition, for amounts in excess of 1,500,000 (one million five hundred thousand euros) of taxable income, there is an additional growth table that can reach up to 9%.
For small and medium-sized enterprises (SMEs), the rate is reduced by 17% for the first €15,000 (fifteen thousand euros) of taxable base.
Before the IRC, there are several situations to be taken into account in the first years of the company such as the Special Payment on Account, which occurs when the company does not obtain a positive result (results in loss during the year, which is often the case for SMEs in the first years) but is only applicable from the 3rd year of activity.
In 2018 this tax was at least 850€ (Payable in 2 instalments). This amount can be higher for a higher turnover over the period.
VAT – Value Added Tax
VAT in Portugal is applied on expenditure or consumption and taxes this value by the percentage “added” by the transactions made to the taxpayer.
It is a tax that is paid at all stages of the economic cycle, from producer to retailer. Nor is it cumulative, since its payment is divided between the various players in the economic circuit according to the tax credit method.
In mainland Portugal, there are only 3 VAT percentage rates:
- Normal – 23
- Intermediate – 13%.
- Reduced – 6%
In the autonomous regions, Madeira and the Azores, the rates are slightly lower.
IMT – Municipal Tax on the Transfer of Property
IMT occurs on onerous transactions / transfers on the ownership of real estate, i.e. in the purchase and sale of houses, shops, land, collections and so on.
The basic fees are :
- Urban properties not exclusively intended for housing or other oneroustion acquisitions – 6.5%
- Rural Buildings – 5%.
- Buildings (urban or rural) or other acquisitions where the purchaser is resident in offshore territory – 10%.
In some cases it is possible to benefit from an LMI exemption:
- Buildings held for resale
- Rural buildings purchased by Young Farmers
- Individually classified buildings of national, public or municipal interest
- Real estate acquired by credit institutions in the course of enforcement, bankruptcy/insolvency or payment in execution proceedings
- Cooperation and company restructuring
- Fonds d’investissement immobilier pour la location de logements (FIIAH) (Real Estate Investment Trust for Rental Housing)
- Urban rehabilitation
- Tax treatment of investment promotion
- Tourist Utility
- Forestry activity
You should always consult your accountant, the tax authorities, the municipality and all parties involved in each type of transaction to clarify exactly what type of exemption is possible.
IMI – Municipal Property Tax
IMI has existed in Portugal since 2003 and its implementation is quite complex. The payment frequency is always annual, but the calculation is based on several factors such as location, type of use, value, etc. The payment frequency is always annual.
In general, the base rates are :
- Rural Buildings 0.8%
- Urban Buildings 0.3% – 0.45%
- Rural or urban buildings owned by offshore companies 7.5%
There is an IMI simulator available directly in the Portal das finanças, you can access it HERE.
IMI is also subject to other percentage (%) considerations as well as certain exemption situations, which are very similar to the LMI rules :
- Tourist use
- Tax treatment of investment promotion
- Hospitals and health units made up of ECEs
- Urban buildings used for the production of energy from renewable sources
- Urban buildings with energy efficiency
- Rural buildings that provide ecosystem services
- Buildings used for agricultural, forestry or silvicultural purposes
- Buildings allocated to the supply, sanitation and water management activity
- Historic store properties
As far as the value of tax assets is concerned, if it is less than €125,000, the IMI is also exempt. For example, when buying a first house as a permanent dwelling, with a value of less than €125,000, the IMI is exempt for the first 3 years.
Stamp duty – Imposto do Selo
The stamp tax is the oldest tax in the Portuguese tax system and was created by charter on 24 December 1660.
It is a tax that has evolved over time, creating situations of disagreement, and there are a large number of requests, rates, specificities and observations that businesses in Portugal have to pay attention to regarding it.
You will find in Portuguese on the Portal das Finanças a huge amount of information on the imposto do Selo HERE.
There are other taxes to be taken into consideration, either in the individual (person) field or in the field of company taxation in Portugal, below some other elements :
- IRS – Personal Income Tax in Portugal
- CEI – Excise Tax
- TA – Customs duties
- PT – Expiration and Prescription
- ADT – Double Taxation Treaties
Among many others. This is why it is always preferable to be accompanied by a professional. If you don’t speak the language, have an English-speaking accountant from Lisbon accompany you, who you can contact on this site.
English-speaking tax or accounting support
By validating the contact form, you authorize me to forward your request to an English-speaking person who will be able to contact you directly. This person is a professional who offers paid services whose price varies according to your requests, needs and projects. Nothing is automated: these are people I know, based in Lisbon and who are qualified to accompany you in your approach & your project.
Essencial Portugal is a website that connects individuals/companies with trusted, certified professionals in Portugal to carry out projects in the country. Only these certified and approved professionals are able to inform you, offer and invoice these services.
