Paying Taxes in Portugal
Overview of the taxes a company must pay in Portugal and the main tax obligations of businesses. Contact our team for help with taxes and company formation.
The favorable tax regime makes Portugal a preferred business destination among the European countries for many foreign entrepreneurs. Our agents for starting a company in Portugal can provide information about the taxes a company needs to pay in this country. Also, assistance in company formation in Portugal is at the disposal of foreigners looking to start a business in Portugal.
| Quick Facts | |
|---|---|
| Standard corporate income tax (CIT) rate in Portugal | 19% in 2026 (mainland; 15% on the first EUR 50,000 for SMEs; planned to fall to 17% by 2028). |
CIT regional reduced rates | Madeira and Azores: 13%; SMEs 10.5% on the first EUR 50,000 (2026) |
Standard VAT | 23% |
| Reduced VAT rates | 6% and 13%, applied to food, tourism, and certain services |
| Dividend tax in Portugal | 28% – It is applied to investment income (dividends, interest, capital gains). |
| Special tax regime for foreign residents | IFICI (“NHR 2.0”) – 10 years of benefits for qualifying highly skilled/innovation activities; NHR closed to new applicants from 2024 |
| Mandatory social security contributions in Portugal | – Employer – 23.75%; – Employee – 11%. |
| Where to submit documents for income tax returns | Our law firm in Portugal can assist you submit these files on the official tax portal. |
| What is the IRS (personal income tax) filing deadline? | Between April and June. It applies to income from the previous year. |
| Local additional taxes (derrama) in Portugal | Municipalities may apply an additional profit tax (up to 1,5%). |
| Property tax (IMI) in urban areas | It varies between 0.3% and 0.45% and is applied annually to the property’s value. |
| Property tax (IMI) in rural areas | 0.8%, and it is also applied annually to the property’s value. |
| Additional luxury property tax (AIMI) | Applies to high-value properties (over EUR 600,000 per person). |
| Simplified system for freelancers in Portugal | Not all income is taxed. For freelancers, 75% of income is considered taxable. |
| Taxation for freelancers | A standard coefficient is applied to determine the taxable portion of income. |
What is the corporate income tax in Portugal?
The corporate income tax rate in Portugal is set at 19% in 2026 (15% on the first EUR 50,000 for SMEs) and it is applicable to the taxable incomes of companies with establishments in Portugal. It is good to know that a reduced corporate income tax of 13% is applicable to businesses in Madeira, the autonomous region, (10.5% on the first EUR 50,000 of taxable income for SMEs). A corporate income tax of 13% (10.5% for SMEs on the first EUR 50,000) is imposed in the Azores, a Portuguese region that has a special tax regime.
What is the non-habitual residents regime in Portugal?
The non-habitual residents regime (NHR) closed to new applicants from 2024 (existing beneficiaries keep it until their 10 years end) and was replaced by IFICI (“NHR 2.0”); it offered a series of tax advantages for residents in Portugal for the first 10 years. For example, the incomes are levied at a 20% tax rate no matter the amount of the registered revenues. Tax exemptions are applicable to dividends and other investment revenues of foreigners in Portugal. A beneficial tax treatment is provided to individuals who contributed to pension funds in Portugal.
Tax facts in Portugal
The following tax matters should be in the attention of all foreign investors looking to register a company in Portugal. Before that, we remind that our company formation agents in Portugal can help them in setting up a company. Here is important information about the taxation in Portugal:
- • a tax rate of 28% is applicable to capital gains, dividends and interests generated from investments in Portugal;
- • the VAT rate in Portugal is set at 6% for fresh food category, hotel accommodations, and specific health services;
- • the wealth tax was introduced in 2017 and it applies to individuals at 0.7% on property value above EUR 600,000, 1% above EUR 1 million and 1.5% above EUR 2 million;
- • the inheritance tax has a 10% rate and it is not applicable for assets distributed in the family.
You should request complete information about the taxes you need to pay in Portugal from our team of company incorporation representatives in Portugal. Feel free to contact us at any time.
Gabriel Guimarães Barreto, Attorney at Law · 2 October 2026Gabriel has a law degree from Pontifícia Universidade Católica do Rio de Janeiro, and currently is a Master’s Degree candidate of Corporate Sciences at the University of Lisbon.