Companies engaged, primarily, in commercial, industrial or agricultural activities, as well as non-residents with permanent establishment on Portuguese territory, are subject to a special advance tax payment, paid during March or in two installments during March and October of the year to which it relates to or, in the case of companies that have adopted a fiscal year that does not coincide with the calendar year, during the 3rd and 10th month of the respective fiscal year.
The special advance tax payment corresponds to an amount equal to 1% of turnover for the previous tax year, with the minimum of Euro 850 and, when surpassed, the payment shall be equal to this minimum amount plus 20% of the excess, with a ceiling of Euro 70.000. To the amount discharged, advance payments made in the previous tax year can be deducted.
Companies licensed to operate within the International Business Centre of Madeira as of the 1st of January 2015 benefit from a reduction of the special advance tax payment, in proportion to the applicable corporate tax rate (in this case, a reduction of 76,2%).
The special advance tax payment is not applicable on the first two tax periods (start-up and the next), i.e. only on the third year after the start of the company’s activity there is an obligation to make such payment.
The following exemptions apply:
a) When there is total exemption from Corporate Income Tax, even if the exemption does not include income which is subject to definitive withholding tax;
b) Companies with procedures under the Insolvency Code;
c) Companies who have ceased to make sales or services and have presented the declaration of cessation of activity
d) Entities that are subject to the simplifies accounting regime;
e) Entities that have files, within the legal deadline, the compliance obligations (Mod. 22 and IES), pertaining to the two previous taxation periods.
When the special tax regime for groups of companies is applicable, the special advance tax payment is due by each of the group companies, including the dominant one.
The special advance tax payment can be deducted in the same tax period to which it relates or, if insufficient, until the next six tax periods.
In case of cessation of activity in the same tax period or until the following six tax periods to which the special advance tax payment refers to, what could not have been deducted as described above is refunded upon request, within 90 days following the cessation of activity.
Companies may also be reimbursed from what was not deducted upon request to the Tax Administration, within 90 days following the end of that period.