Consumption taxes

Nature of the tax

Imposto Sobre o Valor Acrescentado (I.V.A.) = Value Added Tax (VAT).

Tax rate

23%

Reduced tax rate

Reduced VAT rates vary between 6% and 13%. They are 13% for catering, petrol and some foodstuffs. The 6% rate applies to most foodstuffs, water, publications, electricity, transport, hotels and leisure.

Other consumption taxes

 A vehicle tax named IUC also apply in Portugal

Corporate taxes

Tax rate

Tax rate for foreign companies

Foreign companies are taxed on the profits they make in Portugal. For further information access the web portal of the Finance Ministry (in Portuguese).

Capital gains taxation

Long term capital gains are taxed in Portugal at the standard Corporate Tax rate, i.e. 26.5%. Some exemptions apply on some type of capital.

Main allowable deductions and tax credit

To determine fiscal results you can deduct: depreciation, interest, remuneration of directors (totally deductible), and royalties. The fiscal loss of a given year may be carried forward over one or several of the six following accounting years. On the other hand, the carry-back method is not authorized.
Expenses are deductible for depreciation or amortization, reserves, rents for premises and equipment, wages, etc.
Tax credit exists especially for apprenticeships. Additional information.

Other corporate taxes

Stamp duty is levied on many types of transactions. Real Estate transfer tax apply at rates from 5 to 8%, depending on type of assets and area concerned.

Individual taxes

Tax rate

Allowable deductions and tax credit

Children's education and prolonged studies for adults (courses approved by the Ministry), health expenses, investment in renewable energies, buying IT equipment, etc.

Special expatriate tax regime

If expatriates do not have a residence in Portugal, they can choose between total income tax in Portugal or in their country of origin. If they do have a residence in Portugal, they are subject to the IRS regime.

Double taxation treaties

Countries with whom a double taxation treaty have been signed

Portugal has signed agreements with 52 countries

Withholding taxes

Dividends: 21.5%, Interest: 21.5%, Royalties: 15% (rates may be lower in the case of a tax treaty)

Bilateral agreement

Sources of fiscal information

Tax Authorities

Directorate General of taxes in Portugal

Other domestic resources

The "lojas do cidadão" (citizen shops) to help you with tax issues, social security, water, gas and electricity contracts, etc..