T04E - IRC

Note: These guidelines are intended only as a summary. Tax laws and regulations change frequently and sometimes unexpectedly. It is strongly recommended that you seek professional advice. 

Companies are obliged to have a certified accountant responsible for their accounts. 

To calculate the Corporate Income Tax (IRC) you have to pay attention to the income subject to tax, the so-called corporate tax base, for a given fiscal year. Resident entities are liable to IRC on a total liability base, that is to say, on the world-wide income from Portuguese and foreign sources.  Non-resident entities are liable to tax in terms of real liability, that is to say, only on income from Portuguese sources. Then, the IRC tax, the municipal surcharge and, in some cases, an additional tax on the taxable profit are applied.

Digital Invoicing Alignment
New entities must estimate annual turnover based only on taxable operations.

Operations exempt under Article 9 of the VAT Code continue to be excluded from that estimate.

IRC declarations remain integrated with the digital invoicing system - and 2026 even reinforces digital invoicing by delaying mandatory structured e‑invoices but keeping all other digital reporting obligations intact.

The mandatory structured e‑invoicing was postponed. PDF invoices remain valid and legally considered electronic invoices until 31 December 2026. From 1 January 2027, PDF invoices will require a Qualified Electronic Signature (QES) unless further changes occur.

Landlords’ tax cut on moderate rents
From 2026, Portugal will reduce both IRS and IRC on income from residential rents (moderate rents). The IRS rate on qualifying rents up to €2,300/month drops to 10%, and this applies to both new and existing contracts. For companies, only 50% of rental income from eligible residential rents will be subject to IRC. The regime is expected to run until the end of 2029.

CORPORATE INCOME TAX (IRC) is levied on:

• Corporate entities with their head-office or effective management in Portuguese territory, which are deemed to be resident

• Unincorporated entities with their head-office or effective management in Portuguese territory deemed to be resident

• Incorporated or unincorporated entities without their head-office or effective management in Portuguese territory (deemed to be non-resident) deriving income in Portugal.

TAXABLE BASE

a) Resident entities:

I) if they exercise as their main activity a commercial, industrial or agricultural activity, the tax base is the profit. However small businesses may opt a simplified taxation system, explained below 

ii) If they do not exercise as their main activity a commercial, industrial or agricultural activity, the tax base is formed by the overall income.

b) Non-Resident entities:

I) if they have a permanent establishment in Portuguese territory, the taxable base is made up of the profit attributable to that permanent establishment

ii) If they have no permanent establishment in Portuguese territory, the taxable base is made up of incomes of different categories separately considered for IRS purposes. 

c) Offshore Property Companies:

Since 2002, various fiscal measures have been introduced regarding Offshore Property Companies.  In addition to tax haven domiciled companies no longer being eligible for specific tax breaks, these corporate entities will also be assigned a “presumed” minimum income, based in this case on 1/15^th of the “Valor Matriz” (assessed rateable value). Corporate Income Tax (IRC), as well as all necessary filing obligations, will be due.  To further clarify these measures, the Government has updated its “black-listed” of offshore havens, and has defined a registration process for self-identification of these non-resident companies.

RATES

The Government reduced the Corporate Income Tax (IRC) rate to 19% for 2026, 18% for 2027 and 17% for 2028 on Mainland Portugal when applied to resident entities liable to tax based on profits and to permanent establishments of non-resident entities. For Madeira 13,3% and the Azores 14%.

In the case of small or medium-sized companies and small-mid-cap companies there will be an additional reduction to 15% in 2026 on the first €50,000 of taxable income. The remaining income is taxed at the general rate (19% in 2026, etc.). For Madeira this is 10,5% and the Azores 8.75% in 2026 on the first €50.000.

Newly established companies in Portugal enjoy favourable tax rates. Entities qualified as Startups will be subject to IRC, at a rate of 12.5% ​​on the first €50.000 of taxable income (8.75% for Startups operating in territorial areas of Madeira and the Azores) with excess amounts taxed at 19% in mainland Portugal or 13.3% in Madeira and 14% in the Azores.

Check with your accountant to know if your SME classifies as Startup and if you are eligible. 

Non-resident entities without a permanent establishment within Portuguese territory or deriving income therein not attributable to a permanent establishment are subject to IRC at a rate of 25% as a rule.  For Companies domiciled in a black-listed offshore territory, the tax rate increased to 35%.  Other situations you will find on the link at the end of the bulletin.

Portugal transposed the EU’s Pillar Two Directive (Council Directive (EU) 2022/2523) into national law in late 2024. This created the Regime do Imposto Mínimo Global (RIMG), which requires: A minimum effective tax rate of 15% for multinational groups and large domestic groups with annual consolidated revenue ≥ €750 million.

Madeira Free Trade Zone/Zona Franca de Madeira
The current regime with reduced rate of 5% was extended for another 5 years, meaning that entities licensed to operate in the Madeira Free Trade Zone from January 2015 and until December 2026 are taxed in IRC until December 2033 at the rate of 5%.

Companies that set up offshore in the Madeira Free Trade Zone need to get information about the IRC rate of the Autonomous Region with the company accountant for more information and entitlements. 

Company vehicles
All autonomous taxation (TA) rates on vehicle expenses remain unchanged in 2026.

That means the reductions listed in 2025 continue to apply in 2026.

Autonomous taxation in terms of IRC that are levied on vehicles of companies or individual entrepreneurs you can find below. Plug-in hybrid vehicles that are homologated under Euro 6e‑bis with <80 g CO₂/km now also qualify for the 2.5%, 7.5%, and 15% rates.

• 8% for vehicles up to €37,500 (2.5% plug-in hybrids or natural gas)

• 25% for vehicles between €37,500 - €45,000 (7.5% plug-in hybrids or natural gas)

• 32% for vehicles over €45,000 (15% plug-in hybrids or natural gas)

Electric vehicles
Charges for vehicles powered exclusively by electric energy are subject to autonomous taxation at a rate of 10% if the acquisition cost of these vehicles exceeds €62,500.

Green Transition Benefits
Companies investing in environmentally sustainable projects may benefit from targeted IRC reductions. This includes renewable energy installations, circular economy initiatives and carbon footprint reduction.

MUNICIPAL SURCHARGE 

In addition to corporate income tax, municipalities may levy a Municipal Surcharge (“Derrama Municipal”).  up to 1.5% levied on taxable profits (depending on the municipality of the activities) reduced rates may apply to companies with a turnover of less than € 150.000,00 with reference to the previous tax year.  An exemption may also apply to companies that carry out a specific activity or that have been recently incorporated and create new jobs.

Under the Special Regime of Group Taxation, the Municipal Surcharge is levied on the taxable income assessed by each company part of the group.

The Municipal Surcharge is levied on the taxable profit of the year, before the deduction of tax losses.

You can find a list per year HERE (you need your log in details to the Finanças website) after it has been published by the authorities.

STATE SURCHARGE

Both resident and non-resident companies in Portugal, which carry out activities of a commercial, industrial or agricultural nature primarily, are subject to state surcharge - additional tax on taxable profit. 

State Surcharge (“Derrama Estadual”) of 

•  3% (2,1% Madeira and 2,4% Azores) on taxable profits exceeding € 1.5 million up to € 7.5 million, 

•  5% (3,5% Madeira and 4% Azores) on taxable profits exceeding € 7.5 million up to € 35 million and 

•  9% (6,3% Madeira and 7.2% Azores) on taxable profits exceeding € 35 million.

Companies with head office or place of effective management in the Autonomous Region of Azores have different rates; please contact an accountant in your region.

For collection in 2026 with reference to the fiscal year of 2025, please check in Finanças website https://info.portaldasfinancas.gov.pt

You can find the fiscal calendar here: Calendário/Agenda Fiscal (portaldasfinancas.gov.pt). 

Submission of the periodic Income Statement Model 22, by electronic data transmission, by the entities subject to IRC, whose tax period coincides with the calendar year, should be done online here: https://irc.portaldasfinancas.gov.pt/mod22 where you choose Entregar declaração in the left menu.

Deadlines: 
Periodic income statement
To pay Corporate Income Tax (IRC), companies must submit a periodic income tax return. Filing until 31^st of May applies to companies with tax year ending 31^st of December.

Annual declaration of accounting and tax information
Companies subject to Corporate Income Tax (IRC) must submit an annual declaration of accounting and tax information. The declaration must be sent, through the Finanças portal, by the 15^th of  July.

Keep in mind that deadlines may vary for businesses with non-calendar fiscal years or newly incorporated entities. Check with your accountant.

CORPORATE SIMPLIFIED REGIME 

Resident taxpayers that are not exempt or subject to a special taxation system, engaged primarily in a commercial, industrial or agricultural activity, may opt by assessing their taxable income according to a simplified regime. For conditions that need to be met, contact your accountant. 

The option for the simplified regime must be formalised in the beginning of activity return or in the modifications return due by the end of the 2^ndmonth of the tax period in which the company wishes to start the application of the regime (February for companies with fiscal year equal to civil year).

Some autonomous taxation does not apply in the simplified scheme. 

OFFSHORE PROPERTY COMPANIES

Offshore companies holding property in Portugal are subject to special taxation. If rent is received, then the company is assessed on its net income.  If there is no business activity, the assessment is based on notional income, determined at the rate of 1/15^th of the rateable value (“Valor Patrimonial”).   

In the case of income from real estate, and capital gains derived by a non-resident entity without a permanent establishment within Portugal, the tax assessment shall be made by the taxpayer (or the fiscal representative) on the basis of the periodical income tax return. Such entities are required to appoint a fiscal representative having domicile, head-office or effective management in Portugal to represent them before the Tax Authority. 

Exemption
Interest arising from the remuneration of public debt paid to social security and pension institutions is exempt from IRC.

AL‑to‑rental tax exemption
Property income from rental contracts for permanent housing that was used as an AL establishment until 31^st of December 2022, provided that the rental contract is signed until 31^st of December 2024, will be exempt from IRC until 31^st of December 2029.

Corporate entities will have to pay tax instalments and any other credits charged by AT (Finanças) exclusively through electronic payment methods.

For more information, please contact your accountant.

Sources: 

Most recent diplomas with changes to the law: Decreto Lei n.º 45-A/2024, 49/2025 and Lei n.º 64/2025.

OE2026 Lei n.º 73-A/2025 and OE2026 Madeira

OCC

https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/legislacao/diplomas_legislativos/Pages/diplomas-circ.aspx