Corporate tax in Portugal: 2025 Guide

What is corporate tax?

Corporate income tax is a direct tax levied on profits made by companies and other entities with legal personality. 

In Portugal, this tax is called Imposto sobre o Rendimento das Pessoas Coletivas (IRC) and applies to all entities resident in the country, as well as to the permanent establishments of foreign companies.

How much do you pay for corporate tax in Portugal?

The percentage to be paid for corporate tax in Portugal varies depending on the company’s profits and other factors, such as location or type of business. In 2025, the main tax rates are:

1. General rate: 20% of the taxable base.
2. Small and medium-sized enterprises (SMEs): Reduction to 16% for the first 50,000 euros of taxable profit.

Municipal surcharges: Up to 1.5%, depending on the municipality.

How is corporate tax paid?

The payment of corporation tax in Portugal is made through the annual settlement and instalment payments (payments on account) when they have made a profit in the previous year:

1. Payments on account: During the fiscal year, companies must make advance payments (quarterly) based on the previous year’s revenue.
2. Annual settlement: The annual return (Form 22) is filed, adjusting the amount owed with what has already been paid.

When is corporate tax paid?

The key dates for the payment of corporate income tax (IRC) are:

1. Tax return:
2. Filing of Form 22: Until May 31 of the year following the tax year. Payment by the same date.
3. Payments on account:
   1. First payment: Until July 31.
   2. Second payment: Until September 30.
   3. Third payment: Until December 15.

Which companies have to pay corporate tax?

All companies and entities with legal personality that have their headquarters or effective management in Portugal are subject to this tax. In addition, permanent establishments of foreign companies must also be taxed on profits generated in Portuguese territory.

How is the corporate tax base calculated?

The taxable base is determined from the company’s accounting result, adjusted by tax rules. Some key factors in this calculation include:

1. Taxable income: All profits generated by the company.
2. Deductible expenses: Operating costs, amortizations, debt interest, personnel expenses, among others.
3. Tax Benefits: Applicable tax exemptions and credits.
4. Accounting adjustments: Differences between accounting and tax criteria.

In conclusion, Corporate Income Tax in Portugal in 2025 remains a key factor to consider for companies and entrepreneurs operating in the country.

With a general rate of 20% and tax benefits for SMEs and specific sectors, proper tax planning can make a difference in the profitability of the business, so the best way to carry out this process is by having a consultancy for companies in Portugal.

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