Corporate Income Tax (Imposto sobre a rendimento das pessoas colectivas – 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)


Non- resident companies without a permanent establishment


Resident companies that do not have commercial, industrial or agricultural activities as their main activity


a) A surtax of 1.5%, levied by the local council (Câmara Municipal), may apply
b) A state surtax of 3% to 9% is applicable to taxable income over €1.5 million
c) Qualifying small or medium enterprises (SMEs) may benefit from a reduced tax rate of 17% on the first €25,000 of taxable income and 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 even be exempt 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.

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