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Generic Tax Name Corporate income tax
Tax name in the national language Imposto sobre o rendimento das pessoas colectivas - IRC
Tax name in English Corporate income tax
Member State PT-Portugal
Tax in force since 1989/01/01
If abolished, date on which the tax ceases to apply
Business version date 2012/01/01
Version date 2012/03/09
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

IRC Code, enacted by Decree Law 442-B/88 of 30 November, as amended; Tax Incentives Statute (EBF), enacted by Decree Law 215/89 of 1 July, as amended; Decree 2/90 of 12 January, as amended; Law 85/98 of 16 December; Regional Legislative Decree 2/99/A of 20 January; Decree Law 74/99 of 16 March; Regional Legislative Decree 18/99/M of 28 June; Law 151/99 of 14 September; Decree Law 401/99 of 14 October; Decree Law 409/99 of 15 October; Regional Legislative Decree 29/2000/M of 27 April; Regional Legislative Decree 2/2001/M of 20 February; Decree Law 198/2001 of 3 July; Decree Law 219/2001 of 4 August; Decree Law 310/2001 of 10 December; Law 26/2004 of 8 July; Law 40/2005 of 3 August; Decree Law 193/2005 of 7 November; Law 2/2007 of 15 January; Decree Law 8/2007 of 17 January; Decree Law 159/2009 of 13 July; Law 12-A/2010 of 30 June; Law 55-A/2010 of 31 December; Law 64-B/2011 of 30 December.

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

Local authorities (Municipalities) may levy a non deductible surcharge of up to 1.5 % of the taxable profit before the deduction of tax losses and tax benefits ('Derrama'); for liable profit between 1.5 and 10 million euros there's a surtax of 3% and for liable profit above 10 million euros there's a surtax of 5% (State ' Derrama').

 
Geographical Scope Whole country.
 
Taxpayers
Domestic-source income of non-resident entities is Taxed
Not Taxed
Comments
 
Tax object and basis of assessment
As general rule, taxable income under corporate income tax includes also








Comments

Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Comments

Type of shareholding can also be indirect.

Resident entities are subject to tax on worldwide income, including capital gains.

Non‑resident entities are subject to tax only on income derived in the Portuguese territory.

 

Basis of assessment:

- Taxable profit, in the case of resident entities which carry out a business activity;

- Income items falling in the different categories as defined and computed for Personal income tax purposes, in the case of other resident entities;

- Profits attributable to a permanent establishment of a non resident entity;

- Income items falling in the different categories as defined and computed for Personal income tax purposes, in the case of non resident entities not acting through a permanent establishment situated in Portugal.

 
Deductions, Allowances, Credits, Exemptions
Valuation of inventory
System First-in first-out (FIFO)
Last-in first-out (LIFO)
Average cost
Specific identification (unit method)

Comments

Depreciation rules
 
Buildings
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Movable (tangible) assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

Declining balance is also accepted.

Average depreciation period
Average depreciation rate
 
Movable fixed assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

Declining balance is also accepted.

Average depreciation period
Average depreciation rate
 
Intangible assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Land (if any)
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate


Comments

Are there limits to interest deductions? Yes No
If yes:
Definition of deduction limit

Comments

Is there an Allowance for Corporate Equity? Yes No
If yes:
Notional rate applied for allowance 3.00 %

Comments

Losses
Loss carry-forward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 

Comments


Comments

Deductions

Expenses actually incurred in the exercise of the activity engaged in, adjusted where appropriate in accordance with the relevant tax rules.

Capital gains are not taxed separately but are included in the ordinary income. Only 50 % of net capital gains derived from the sale of tangibles and shares are subject to tax, if the proceeds are reinvested under certain conditions laid down by the law. In general, only 50% of net capital loss derived from the sale of shares is tax deductible.

Ordinary losses can be carried forward for four years.

Dividends received are fully deductible for tax purposes (i.e. they are tax exempt) if derived from a participation of at least 10% of the paying company's capital which was held for an uninterrupted period of one year prior to the distribution or provided that it will be held until the one-year period expires. The profits from which the distribution was made must have been subject to effective taxation.

 

Main exemptions

- The central government, autonomous regions and local authorities, municipal associations and federations, social security institutions, except for investment income

- Charities (IPSS) and entities of public interest, under certain conditions.

- Income derived from cultural, entertainment or sport activities subject to the conditions laid down by the law.

- Agricultural, housing and building co-operatives, educational and handicraft production co-operatives subject to the conditions laid down by the law.

- Political parties.

 
Rate(s) Structure
Nominal corporate income tax rate Rate: 25.00 %

Central government surcharge Rate: 3.00 %
Regional government surcharge Rate:
Local government surcharge Rate: 1.50 %
Combined rate (all-in rate) Rate: 29.50 %


Comments

The central governement surcharge applies to profit before deduction of losses of over 1.5 million euros (1.5 to 10 million euros there's a surtax of 3% and above 10 million euros there's a surtax of 5%); the local government surcharge is a maximum rate and also aplies to profit before the deduction of losses.


Special tax rate for SMEs
Special tax rates apply to SMEs: Yes No
If yes:
Nominal corporate income tax rate Rate:
Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate:


Comments
 
International aspects
Treaty countries Non-treaty countries
 
Repatriated profits are taxed according to the following system Exemption system Exemption system
Tax credit Tax credit
Deduction Deduction
 
Interest received is taxed Yes No Yes No
Tax rate on interest received 25.00 %
Outgoing dividends withholding tax 25.00 %
Outgoing interest payments withholding tax 25.00 %
 
Foreign losses can be set-off Yes No Yes No
If yes:
Minimum direct or indirect shareholding to qualify loss-offset (if applicable)
 
Loss carry-forward exists? Yes No Yes No
If yes:
Time limit: Indefinite
5  Years  
Indefinite
5  Years  
Size limit:
 
Loss carry-backward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Controlled foreign company (CFC-)rules exist? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Threshold for capital or voting power held directly or indirectly by resident in non-resident company 25.00 % 25.00 %
CFC-rules apply if foreign tax rate is lower than 15.00 % 15.00 %
CFC-rules apply for passive income only? Yes No Yes No

Comments   Treaty countries

Tax rates

Dividends from 5% to 15%;

Interests from 5% to 15%;

Royalties from 5% to 15%


Comments   Non-treaty countries
 
Measures against profit shifting
 
Do Thin Capitalization (TC) rules exist? Yes No
If yes:
Date of first introduction
Introduced as Explicit TC law
Part of CIT law
Test for TC Ratio
Arm's length
If ratio
Value of numerical ratio: 2 : 1
Definition numerator
Definition denominator equity
 
Debt considered for test Internal
Internal and external
TC depends on shareholding? Yes No
Substantial shareholding threshold 10.00 %
 
Type of shareholding Direct
Indirect
Automatic remedy Yes No
Remedy Non-deductibility of interest
Reclassification as dividend
 
Rules apply to All companies
Foreign companies
Non-EU companies
Transfer pricing rules exists? Yes No
If yes:
Arm’s length principle applied? Yes No
 
Remedy Fee
Tax base increase
 
Tax due date

31st May for resident entities which carry out a business activity and permanent establishments of non resident entities; three advance payments may be due on the last day of July, September and December. Special advance payments may be due on March and October. Withholding tax is generally due by the withholding person on the 20th day of the month next following the day in which the taxable event took place (i.e. payment date in most cases).

 
Tax collector

The tax is collected annually by the Directorate General of Taxation generally on the basis of the tax return submitted by the taxpayers. Advance payments and withholding tax are credited against the final tax liability.

 
Special features

Non‑residents

Permanent establishments of non‑resident entities are taxed in the same way as resident companies.

 

Non resident entities not acting through a permanent establishment in Portugal are taxable only on income derived in the Portuguese territory. In the absence of a Double Taxation Agreement:

- Income from immovable property situated in Portugal is subject to a final witholding tax of 16.5% while income from Royalties, Fees for technical assistance, know-how and the leasing of equipment as well as Commissions is subject to a final witholding tax of 15 %

- Interest and dividends are subject to a final withholding tax of 25 %. However, income from debt-securities registered in a centralized system is exempt if the non resident entity does not act through a permanent establishment situated in Portugal and is not held directly or indirectly for more than 20% by residents in Portugal. This exemption is not applicable to residents of a listed tax haven (Decree-Law 193/05 as amended by Decree-Law 25/06).

- Capital gains derived by non-resident entities from the sale of shares or other securities issued by Portuguese‑resident companies as well as warrants issued by Portuguese‑resident companies and financial derivative instruments traded on a regulated stock market are in general exempt from tax. However, this exemption is not applicable to:

· non-resident entities owned, directly or indirectly, for more than 25 per cent by any resident company;

· non-resident entities which are residents of a listed tax haven;

· capital gains derived by non-resident entities from the sale of shares in a resident real estate company (a company in which more than 50 per cent of its assets consists of immovable property situated in the Portuguese territory) or of a resident holding company that controls such a real estate company.

If these conditions are not fulfilled, the net capital gains are taxed at a special rate of 25% (computed from a tax assessment). 

- Interest and royalties paid to entities resident in another EU Member State (or permanent establishments of entities resident in EU Member States situated in another EU Member State) are subject to 10% final withholding tax (until 01.07.2009; 5% as from 01.07.2009 until 01.07.2013 and exempt afterwards) if all the conditions established by the Interest and Royalties Directive (Directive 2003/49/EC, of 3 June) are fulfilled.

- Dividends paid to entities resident in another EU Member State (or permanent establishments of entities resident in EU Member States situated in another EU Member State) and fulfilling the conditions established by article 2 of the Parent-Subsidiary Directive (Directive 90/435/EEC, of 23 July) are exempt from withholding tax if derived from a participation of at least 10% of the paying entity's capital (or if the acquisition cost of the participation was at least 20 million euro) which was held for an uninterrupted period of one year prior to the distribution. If this condition is not met but provided that the participation is held until the one-year period expires, the taxpayer has a period of two years after the expiry date to ask for the withholding tax refund.

- Income from gaming is subject to a 35% final withholding tax.

 
Economic function







Comments

 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51o (d51ba + d51bb)

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2010 4,910.38 EUR 2.73
2009 4,809.92 EUR 2.74
2008 6,285.77 EUR 3.51
2007 6,073.40 EUR 3.46
2006 4,705.21 EUR 2.83
2005 4,131.78 EUR 2.60
2004 4,278.92 EUR 2.81
2003 3,988.59 EUR 2.73
2002 4,640.95 EUR 3.25
2001 4,379.31 EUR 3.22
2000 4,744.07 EUR 3.69

Comments