Portuguese tax regime - Taxes in Portugal
Tax and Accounting Information in Portugal
We present below a very brief version of the main aspects of the Portuguese tax system and the various taxes in Portugal. For more information please contact us.
Corporate Income Tax (IRC)
The IRC is regulated by Decree-Law 442-B/88 dated 30/11, which entered into effect on 01/01/89. The Corporate Income Tax is levied on the following entities, per the table below:
|Legal persons with head office or permanent management on Portuguese territory who perform a commercial, industrial or agricultural activity (commercial companies, cooperatives)||Total Income / Profit|
|Legal persons with head office or permanent management on Portuguese territory who perform a commercial, industrial or agricultural activity (associations, foundations, civil societies without legal personality)||Overall Income (sum of the income of the categories in accordance with the IRS rules)|
|Legal persons who are non-residents of Portuguese territory who perform their activity via a permanent establishment (branches)||Profit attributable to the permanent establishment located on Portuguese territory|
|Legal persons who are non-residents of Portuguese territory without a permanent establishment||Those will pay withholding tax on income earned in Portugal|
For more detailed information on the Corporate Income Tax (IRC) in Portugal, click here.
Value Added Tax - VAT (IVA)
The Value Added Tax (VAT), as regulated in Community Directive 77/388/EEC and respective subsequent changes, was approved by pursuant to DL 394-b/84 of 26/12 and came into force on 1/01/1986.
It is an indirect tax that applies to goods and services provided in exchange for a price. The VAT mechanism allows for deduction of VAT paid on goods and services. Each economic operator pays the state the difference between VAT collected and VAT paid. VAT therefore runs through the entire economic system up until the end consumer who pays the full amount of the tax.
Since 1993, intra-Community transactions are subject to a special regime. Directive 91/680/EEC of 16/12 that was applied in Portugal pursuant to DL 290/92 of 28/12, replacing the previous concept of “import” by a new concept - “intra-Community transaction.” As such, import in the legal sense of the word began to be used to refer only to the entry of goods or services from third party countries or territories that are not part of the European Union’s tax system.
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Personal Income Tax (IRS)
The Personal Income Tax (IRS) is levied on the income of single persons, divided into 6 categories. Residents in Portugal are taxed on the totality of their income (in Portugal and abroad) and non-residents are taxed for income obtained in Portugal (according to the different Personal Income Tax categories). A special regime was created in 2009, for non-habitual residents.
The main characteristics of the Personal Income Tax (IRS) are based on a constitutional principal which consecrates the concept of progressive taxing, so as to mitigate social inequality, as stated in article 104 of the Constitution of the Republic.
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Property Tax (IMI)
The Municipal Property Tax (IMI) is a tax that applies to the property value of real estate (rural, urban or mixed) located in Portugal. IMI is payable by owners, beneficiary owners or superficiary owners of real estate property at 31 December of the respective year. The taxable value of real estate property is determined by an appraisal made in accordance with the IMI Code.
More detailed information on Portuguese Property Tax (IMI) available here.
Real Estate Transfer Tax (IMT)
The Real Estate Transfer Tax (IMT) was approved pursuant to DL 287/2003 of 12 November and came into force on 1 January 2004. This tax applies to the transfer of property rights or partial rights, applicable to real estate property, located on Portuguese territory, and in other cases that the law considers equivalent to real estate transfer.
Click the following link to learn all about the Real Estate Transfer Tax (IMT) in Portugal.
Stamp duty applies to a series of legal acts, contracts, documents, titles, documents and other acts or situations that are listed in the General Stamp Duty Table. Given the heterogenic nature of the tax, it is necessary to consult the table in order to check whether a particular legal act is subject to this tax. It may cover multiple situations, such as rental agreements, successions and endowments, cheques, credit securities, gambling, loans, the granting of credit, guarantees and interest, among others. The tax only applies to acts that have occurred on Portuguese territory.
You can find all about Stamp Duty here.