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.

Key Changes to IRC Introduced in Decree n.º 45-A/2024:

Digital Invoicing Alignment

The law reinforces the integration of IRC declarations with the new digital invoicing system, especially for new entities registering with the tax authorities. Businesses must now estimate annual turnover considering only taxable operations, excluding exemptions under Article 9 of the VAT Code.

Startup and SME Tax Incentives 

Enhanced deductions and incentives are introduced for startups and small and medium enterprises (SMEs) involved in innovation and digitalisation. These include accelerated depreciation and expanded eligibility for R&D tax credits.

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.

Streamlined Reporting Obligations 

Adjustments are made to clarify deadlines and simplify reporting for companies just beginning operations. These aim to reduce administrative burden in early stages of a company’s tax lifecycle.

2025 Updates Build on 45-A/2024

• The modular tax filing model and automatic validation tools from Decree n.º 49/2025* streamline and improve the usability of earlier reforms.

• Cross-border IRC adjustments now clarify obligations for businesses operating in multiple EU countries — helpful for international compliance.

*Key Changes to IRC Introduced in Decree nº 49/2025:

• Simplification of the procedure for recognising impairment losses on non-current assets

• Possibility of opting for the regime of article 54.º-A of the IRC in relation to a permanent establishment established after the end of the 3rd month of the tax period within the subsequent 30 days

• Elimination of the individual taxpayer process

• Possibility of obtaining a certificate proving the normal and habitual exercise of the activity of purchasing real estate for resale through the Finanças Portal (Request Certificate: Log in to the Finanças Portal.Go to: Início, alteração e cessação de atividade This section manages all business activity declarations — including start, change, or cessation of business operations. Look for options related to: Comprovativo de início de atividade or a Declaração de exercício habitual linked to NACE codes for real estate transactions. Use or confirm that your business activity is registered under NACE code 6810 (“Compra e venda de bens imobiliários”) 

  After submission or validation, you can download the certificate from your e-fatura profile or activity declarations.

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 1/15th 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 from 21% to 20% for 2025, 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 and the Azores 14%.

In the case of small or medium-sized companies and small-mid-cap companies there will be an additional reduction from 17% to 16% in 2025 on the first €50,000 of taxable income (this will be 15% in 2026) and is expected to reach 12.5% in three years. For Madeira and the Azores this is 11,2% (previously 11.9%) in 2025.

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 20% in mainland Portugal or 14% in Madeira and 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 (see point c above), the tax rate increased to 35%.  Other situations you will find on the link at the end of the bulletin.

The mandatory minimum rate of 15% on multinationals with an annual turnover of more than 750 million euros, which arises from a European directive that came into force in January 2024, has now been transposed into national legislation.

Madeira International Business Centre (MIBC)/ Zona Franca de Madeira
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. The current regime with reduced rate of 5% is approved until 2028, but the preferential regime may not be granted for new entrants after 2026.   

Company vehicles
In 2025 all autonomous taxation rates will be reduced by half a percentage point in terms of IRC that are levied on vehicles of companies or individual entrepreneurs. In addition, the values on which the fees apply will be updated, with each instalment rising by 10 thousand euros.

• In 2025: 8% for vehicles up to €37,500 (2.5% plug-in hybrids or natural gas)

• In 2025: 25% for vehicles between €37,500 - €45,000  (7.5% plug-in hybrids or natural gas)

• In 2025: 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.

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 for 2024 HERE (you will need your log in details to the Finanças website) and for 2025 once it has been published by the authority.

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 2025 with reference to the fiscal year of 2024, please check in Finanças website. 

You can find the fiscal calendar here: Calendário/Agenda Fiscal. 

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 2nd month 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 1/15th 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.

IRC exemption for real estate investment funds revoked
The income obtained by investment funds set up between 2008 and 2013 with assets in real estate subject to urban rehabilitation will no longer be exempt from IRC.

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

From 01/01/2024, corporate entities will have to pay tax installments and any other credits charged by AT (Finanças) exclusively through electronic payment methods.

For more information, please contact your accountant.

You may find the following website useful. gov.pt
Most recent diplomas with changes to the law: n.º 45-A/2024 and 49/2025 and PortaldasFinanças and OE2025 Madeira