DISCLAIMER: This post was last modified on 12 July 2024. Some information in this article may not be updated.

To improve Portugal’s economy, the Ministério da Economia recently proposed 60 measures under the Programa Acelerar a Economia or Accelerate the Economy Programme. The measures, which include changes to Portugal’s tax rules, aim to boost investments and capitalisation, develop new financing mechanisms and foster entrepreneurship in the country.  

Below are some of the tax-related measures under the Programme:  

Summary of changes to Portugal’s tax rules per the  

1. The corporate income tax rate, currently 21%, will be reduced to 15% by 2027 (a gradual reduction of two percentage points annually until 2027). 
2. The new mandatory minimum tax rate for multinationals operating in Portugal and large Portuguese companies is 15%. 
3. Gradual reduction of CIT rates over three years for medium-sized and small mid-cap companies from 17% to 12.5% by 2026 (applied to the company’s first €50,000 taxable income). 
4. The creation of a VAT group system to promote the improvement of companies’ cash flow, reduce VAT refund processes and streamline processes to reduce bureaucracy. 
5. Companies would be allowed to pay VAT within 12 months after receipt of payment from customers instead of when invoicing (for billing up to €2 million from the previous €500,000). 
6. Reduction of personal income tax rate on employment to 20% under the Fiscal Incentive for Scientific Research and Innovation (IFICI) Program. 
7. Tax exemption on foreign income sources, such as employment, independent work, capital investment income (interest or dividends), royalties, capital gains, real estate income or gains. Note that foreign pensions are subject to full taxation. 
8. Deduction in IRS of dividends and realised capital gains related to an individual’s investment to company capitalisation operations (20% of capital contributions, subject to applicable limits). 
9. Increase the deductibility of financing costs of goodwill in mergers, i.e., the positive difference between the acquisition cost and the acquired company’s asset value, by extending the scope to currently excluded assets and transactions, effective 2025. 
10. Increase the deductibility of financing costs incurred during mergers, as of 2025, where more than 50% of the share capital and voting rights are acquired (€2 million (up from the current €1 million) or 30% of profit before depreciation, net financing expenses, and tax, whichever is higher). 

If you would like to know more about these changes, please contact our Bolder Group representatives. You can also read the full text of the measures (in Portuguese) through this link: ficheiro.aspx (portugal.gov.pt) 

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