Last partial update, November 2021.
- Portugal's tax rates for individuals is progressive.
The 2021 tax rate is 14.5% - 48% with additional 2.5% surtax for income between EUR 80,000 EUR 250,000 and 5% for income exceeding EUR 250,000.
- Exemptions are granted to taxpayers with specific types of income.
- The 2021 rate of tax for a corporation in Portugal is 21% with the addition of 3% surtax for income exceeding EUR 1.5 million up to EUR 7.5 million, 5% for income exceeding EUR 7.5 million up to EUR 35 million and 9% for income exceeding this ceiling with a local tax of up to 1.5%, maximum of 31.5% in total.
- Small companies pay 17% tax on the first EUR 25,000 income.
Portugal Income Tax for an Individual
- An individual in Portugal is liable for tax on his income as an employee and on income as a self-employed person.
In the case of an individual who answers the test of a "permanent resident" of Portugal, tax will be calculated on his income earned in Portugal and overseas.
A foreign resident who is employed in Portugal pays tax only on his income in Portugal.
- To be considered a Portuguese resident, the requirements must be met of residency in Portugal of at least 183 days in any calendar year, and occasionally also if residency is less than 183 days.
If the individual has a home in Portugal that is his main residence, he will be considered a Portuguese resident.
- An employer is obligated to deduct, immediately, each month, the amount of tax and national insurance due from a salaried worker.
- Certain payments are deducted from taxable income as detailed below.
Portugal Individual Income Tax Rates 2021
|Tax %||Tax Base (Euro)|
|14.5%||up to 7,112|
|48%||80,883 and over|
There is also a surcharge of 2.5% for income exceeding EUR 80,000 to EUR 250,000 and 5% for income exceeding EUR 250,000.
Corporate Tax in Portugal
Portugal Corporate Tax
- In Portugal the standard corporate tax in 2021 is 21% with an additional surtax of 3%-9% for income exceeding EUR 1.5 million and of up to 1.5% municipal tax making a total of 31.5%.
- Companies in the free trade zone of Azores and Madeira are eligible for a reduced tax rate of 14.7%.
Portugal Capital Gains
- A company capital gain in Portugal is usually added to regular income.
- For companies, under certain conditions, When the proceeds of the sale of shares and fixed assets which were held for more than 1 year.
Only 50% of the gain is taxable if the proceeds are reinvested.
Under certain conditions.
- There is a participation exemption for dividend income, subject to terms.
- On the sale of individual's real estate that was used as the vendor's residence, If the proceeds are invested in the purchase of alternative real estate for a residence in Portugal or EU/EEA country within a short period as defined in law, the capital gain is exempt from tax.
- For individuals, a capital gain on the sale of shares is taxed at 28%.
The tax rate is 14% for sale of shares of micro and small non listed companies.
Portugal Reporting Dates and PaymentThe tax year in Portugal is the year ending on December 31.
Advance payments of tax are made as specified below.
- 3 advance payments based on the tax paid in the previous year.
The advances are paid in July, September and December.
- A fourth advance payment of 1% of turnover must be paid by the date of filing the report.
There are minimum and maximum amounts for the advance payment.
- Individuals and companies are obligated to file financial statements by May 31 for companies, and by April 30 for individuals.
Portugal Deduction of Tax at SourceTaxation of Employee
An employer is obligated to deduct tax at source from an employee and to make additional contributions to social security.
Portugal Social Security
- An employee: the employer's contribution is 23.75% of the salary.
The employee's contribution is 11% of the salary.
- The insurance covers pension, unemployment and care insurance.
Other deductions in PortugalTax must be deducted at source from the following payments to nonresident companies on the basis of the following::
- Dividend - standard deduction of 0%/25%/35%
- Interest - the standard rate of tax deducted at source - 25%/35%.
- Royalties - the standard rate of tax deducted at source - 25%/35%.
- Technical Services - the tax deducted at source is 25%.
Tax deducted at source in respect of foreign residents is subject to the Double Taxation Prevention Treaty.
Note: The information in this site is for general guidance only. Users of this site are advised to take professional advice before taking practical tax decisions.
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