IRC: the Portuguese corporate tax
IRC (Imposto sobre o Rendimento das Pessoas Coletivas) is the equivalent of Spanish corporate tax. The general rate is 21% —according to the Portuguese Autoridade Tributária e Aduaneira (AT)—, applicable to your company's profits.
Some municipalities also apply a municipal surcharge of up to 1.5% on profits, and there is a state surcharge for profits above 1.5 million euros.
SMEs and companies in inland areas can benefit from a reduced rate of 17% on the first €50,000 of profit.
VAT in Portugal: rates and registration
Portuguese VAT —regulated by the Código do IVA— has three rates depending on the category of goods and services. In Madeira and the Azores the rates are slightly lower.
Key points
- Standard rate: 23% (mainland)
- Intermediate rate: 13%
- Reduced rate: 6%
- Madeira and Azores: 22% / 12% / 5%
IRS: the Portuguese personal income tax
IRS taxes the income of individuals. If you invoice as a self-employed person or receive dividends from your LDA, this is the tax that applies to you. It is progressive, with brackets ranging from 13% to 48%.
Dividends distributed to partners are taxed at 28% (withholding rate), or you can include them in your IRS if it is more beneficial.
Other taxes and obligations
Having local advice avoids filing errors and penalties. At Filnet we include it in the monthly taxation plan.
Key points
- IMI: municipal property tax
- IMT: property transfer tax
- Social Security: 34.75% (23.75% employer + 11% employee)
- SAF-T: mandatory electronic invoicing
Double taxation treaty with Spain
Spain and Portugal have a treaty to avoid double taxation. If your company pays IRC in Portugal and you are a tax resident in Spain, you will not pay twice on the same profits.
