Guide · Corporate tax
Portugal's corporate tax rate in 2026, and what a company pays
Portugal taxes company profits at 19% in 2026. Parliament has approved the next two cuts: 18% for tax years that start in 2027 and 17% from 2028. The tax is called IRC. A company resident in mainland Portugal pays the same rate whoever owns it.
Small and medium-sized companies pay 15% on the first EUR 50,000 of taxable profit, and 12.5% when they are run from the interior of the country. Two surtaxes sit on top of the headline rate: a municipal one of up to 1.5% and a state one for large profits. Investment and R&D tax credits then reduce the bill, if you claim them.
Figures checked against the official sources between 18 and 19 September 2026. We never promise approvals.
- Headline rate (IRC)
- 19% in 2026, 18% in 2027, 17% from 2028
- SMEs and small mid caps
- 15% on the first EUR 50,000 of taxable profit, when the main activity is agricultural, commercial or industrial
- Certified startups
- 12.5% on the same first slice
- SMEs run from the interior
- 12.5% on the same first slice
- Municipal surtax
- Up to 1.5% of taxable profit, set by each municipality
- State surtax
- 3% on taxable profit between EUR 1.5 million and EUR 7.5 million; 5% between EUR 7.5 million and EUR 35 million; 9% above EUR 35 million
- Foreign company with no permanent establishment
- 25% on Portuguese-source income, unless a tax treaty or an exemption applies
The headline rate, year by year
| Tax year starting in | General rate |
|---|---|
| 2026 | 19% |
| 2027 | 18% |
| 2028 and later | 17% |
Law 64/2025 wrote 17% into article 87 of the Corporate Income Tax Code and set the two steps that lead to it. The rate depends on the year in which your tax year starts, so a company with a tax year from July to June uses the 2026 rate for the year that starts in July 2026.
The rate applies to taxable profit: accounting profit after the adjustments the tax code requires. Losses from earlier years reduce it, within the limits of the code.
Reduced rates on the first slice of profit
- SMEs and small mid caps: 15% on the first EUR 50,000 of taxable profit. The general rate applies to the rest. The company has to carry on, directly and as its main activity, an agricultural, commercial or industrial business, and it has to meet the EU definition of an SME. A foreign parent company can take that status away.
- Certified startups: 12.5% on the same slice. The status comes from Startup Portugal, under Law 21/2023. See startup grants and incentives.
- SMEs run from the interior: 12.5% on the same slice. The company has to carry on its activity in a territory on the official list and be managed from there. It also needs to have no wages in arrears, not to come from a demerger in the last two years, and to have its profit assessed by direct methods or under the simplified regime. See incentives in interior Portugal.
Keep the size of these savings in proportion. On EUR 50,000 of profit, the SME rate saves EUR 2,000 a year against the 2026 headline rate, and the interior rate saves EUR 3,250. The law treats both reductions as de minimis aid, so they count towards the ceiling that also covers some grants.
The two surtaxes on top
Municipal surtax (derrama municipal). Each municipality sets its own rate every year, up to 1.5% of taxable profit. You pay it with the corporate tax return.
State surtax (derrama estadual). It applies in brackets, and only to large profits:
| Bracket | Rate |
|---|---|
| First bracket | 3% on taxable profit between EUR 1.5 million and EUR 7.5 million |
| Second bracket | 5% between EUR 7.5 million and EUR 35 million |
| Third bracket | 9% above EUR 35 million |
In 2026 the top marginal rate is 29.5%: the headline rate, plus the full municipal surtax, plus the top state bracket. Few companies reach it. A worked example closer to a new investor: an SME with EUR 200,000 of taxable profit, in a municipality that charges the full surtax, pays EUR 7,500 on the first slice, EUR 28,500 on the rest and EUR 3,000 of municipal surtax. That is EUR 39,000, or 19.5% of the profit, before any tax credit.
The tax on expenses that surprises newcomers
Portugal charges a separate tax on certain company expenses, called autonomous taxation (tributação autónoma). You pay it on the expense itself, so it is due even in a year with no profit.
- Company cars. 8% of the running costs when the car cost less than EUR 37,500, 25% up to EUR 45,000 and 32% above that. Plug-in hybrids and natural gas cars pay 2.5%, 7.5% and 15%. Fully electric cars pay nothing until their price passes a limit set by ministerial order, and 10% above it.
- Representation expenses, such as client meals and hospitality: 10%.
- Expenses with no supporting document: 50%.
Every one of these rates rises by 10 percentage points in a year when the company reports a tax loss. The law spares new companies: the increase does not apply in the tax year in which the company starts or in the following one, and a transitional rule widens that relief for 2026.
Madeira, the Azores and the 5% you have read about
The 5% rate belongs to companies licensed in the Madeira Free Trade Zone, also known as the International Business Centre of Madeira. Companies licensed until 31 December 2026 pay 5% until 31 December 2033. The licence comes with conditions: you create jobs, you invest a minimum amount when the company has few employees, and the profit that gets the low rate has a ceiling tied to the number of jobs.
A company that opens in Funchal without that licence pays the general rate of the region. The Azores and Madeira set their own general rates in regional law, below the mainland rate. Confirm the rate for the year with a certified accountant before you budget.
How tax credits cut the bill
Two credits do most of the work for a company that invests. You deduct them from the tax due, after the rate has been applied.
- RFAI gives back 30% of eligible investment in most regions, up to 50% of the tax due each year. Unused credit carries forward for 10 years.
- SIFIDE II gives back 32.5% of R&D spending, with a higher rate on the increase. Unused credit carries forward for 12 years.
Take the SME from the example above. Its corporate tax is EUR 36,000: the EUR 39,000 total less the EUR 3,000 of municipal surtax, which is outside the tax the credit comes off. If it invests EUR 100,000 in eligible equipment, RFAI is worth EUR 30,000. It can use half of the EUR 36,000 this year, so EUR 18,000, and carries the other EUR 12,000 forward. The full list is in Portugal tax incentives for companies.
What foreign founders get wrong
- Comparing headline rates between countries. The surtaxes and autonomous taxation add to the Portuguese bill, and the tax credits subtract from it. Compare what you would pay.
- Counting on the SME rate. The size test looks at the whole group. A subsidiary of a large foreign company pays the general rate from the first euro.
- Reading 12.5% as the rate for the interior. It covers the first EUR 50,000 of profit of an SME. The larger gains inland come from grant rates and hiring support.
- Treating the Madeira 5% as a general rate. It is a licensed regime with job and investment conditions.
- Mixing company tax with IFICI. IFICI is a personal income tax regime for qualified staff. The company's part is to qualify as an employer: see IFICI and the incentives a company needs.
This guide explains the rates in the law. It does not replace the certified accountant (contabilista certificado) that a Portuguese company with organised accounts has to appoint.
Frequently asked questions
What is the corporate tax rate in Portugal in 2026?
19% on taxable profit, for tax years that start in 2026. Add the municipal surtax of up to 1.5% and, for large profits, the state surtax. SMEs pay 15% on the first EUR 50,000.
Will the rate fall again?
Yes. Law 64/2025 set 18% for tax years that start in 2027 and 17% from 2028. A later state budget can change the schedule, so check the rate each January.
Does a foreign-owned company pay a different rate?
No. A company resident in Portugal pays the same rates whoever owns it. Ownership matters for SME status, because the size of the group counts, and SME status decides the reduced rate and many grant rates.
Do I pay corporate tax if the company makes a loss?
You pay no IRC on profit, because there is none. You still pay autonomous taxation on company cars, representation expenses and similar costs, and those rates rise by 10 percentage points in a loss-making year. The increase does not apply in a company's first two tax years.
Is the interior rate worth moving a company for?
By itself, no: at 2026 rates it saves at most EUR 3,250 a year. Look at the whole package instead. Interior territories get better conditions in Portugal 2030 calls, a higher hiring incentive and the same RFAI credit. See incentives in interior Portugal.
Official sources
The official texts are in Portuguese. The figures on this page were checked against them.
- Corporate Income Tax Code (CIRC), article 87, as amended by Law 64/2025 (checked 18 September 2026)
- Tax Benefits Statute (EBF), article 41-B (interior territories) (checked 18 September 2026)
- Tax and Customs Authority: instructions for Annex A of the Modelo 22 return, citing article 18 of Law 73/2013 (municipal surtax) (checked 19 September 2026)
- Corporate Income Tax Code (CIRC), article 87-A (state surtax) (checked 19 September 2026)
- Corporate Income Tax Code (CIRC), article 88 (autonomous taxation) (checked 19 September 2026)
- Tax Benefits Statute (EBF), article 36-A (Madeira Free Trade Zone), as amended by Law 73-A/2025 (checked 19 September 2026)
- Investment Tax Code (CFI), article 23 (RFAI: tax benefits) (checked 18 September 2026)
- Investment Tax Code (CFI), article 38 (SIFIDE II), as amended by Decree-Law 170/2026 (checked 18 September 2026)
Planning an investment in Portugal?
Tell us what you plan to invest in and where. We check which grants and tax credits fit it, and we answer in English.
Free eligibility check →