Corporate Income Tax (Imposto sobreo rendimento das pessoas coletivas – IRC) is payable on corporate profits based on business/trading income, passive income and capital gains.
The basis to determine the tax residency of a company in Portugal takes into consideration whether the legal seat or place of effective management and control is based in Portugal.
IRC rates | |
Tax Rate % | |
Resident companies / Non-resident companies with a permanent establishment (see notes a, b, and c below) | 21 |
Non- resident companies without a permanent establishment | 25 |
Resident companies that do not have commercial, industrial or agricultural activities as their main activity | 21 |
- A surtax of 1.5%, levied by the local council (Câmara Municipal), may apply.
- A national surtax of 3% to 9% applies to taxable income over €1.5 million.
- Qualifying small or medium enterprises (SMEs) may benefit from a reduced tax rate of 17% on the first €50,000 of taxable income and are subject to 21% on the remainder.
Withholding Taxes
Dividends – Dividends paid by a Portuguese entity to a non-resident company suffer a withholding tax of 25%, but if paid to a company with registered office in a ‘blacklisted’ jurisdiction (see list attached) the tax charge will rise to 35%. The withholding rate may be reduced under a double tax agreement (DTA), or it may be exempted under the EU Parent/Subsidiary Directive.
Royalties – Non-resident companies pay a 25% withholding tax on royalty payments unless the withholding rate is reduced under a DTA.
Interest – A non-resident company receiving bank interest will pay a 25% withholding tax (rising to 35% if registered in a ‘blacklisted’ jurisdiction) unless the withholding rate is reduced under a DTA.
Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.
