Corporate tax and tax incentives
Portugal corporate tax incentives in 2026
The general corporate income tax rate (IRC) in Portugal is 19% for 2026, and the law already sets 18% for 2027 and 17% from 2028. Small and medium-sized companies pay 15% on the first EUR 50,000 of taxable profit, and 12.5% if they carry on their activity in the interior and are managed from there. The surtaxes and a worked example are in the corporate tax rate guide.
On top of the rate, two tax credits reduce the bill of a company that invests or does research: RFAI, worth up to 30% of qualifying investment, and SIFIDE II, worth 32.5% of R&D costs and more when they grow. Both are open to foreign-owned companies on the same terms as any other company taxed in Portugal.
Figures checked against the official sources between 18 and 19 September 2026. We never promise approvals.
The corporate tax rate in 2026, 2027 and 2028
Law 64/2025 of 7 November 2025 cut the general rate in three steps. The rate that applies is the one for the year in which the company's tax period starts.
| What | Rate | Applies to |
|---|---|---|
| General rate, 2026 | 19% | Tax periods starting in 2026 |
| General rate, 2027 | 18% | Tax periods starting in 2027 |
| General rate, from 2028 | 17% | Tax periods starting on or after 1 January 2028 |
| SME and small mid cap rate | 15% | The first EUR 50,000 of taxable profit. The general rate applies above that |
| Interior rate | 12.5% | The first EUR 50,000 of taxable profit of SMEs and small mid caps that carry on their activity in, and are managed from, a designated interior territory |
| Municipal surtax (derrama municipal) | Up to 1.5% | Taxable profit. Each municipality sets its own rate, from zero up to the maximum |
| State surtax (derrama estadual) | 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 | Large profits only |
For a small company, then, the headline rate overstates the bill. An SME in an interior municipality with a taxable profit of EUR 50,000 pays 12.5% on it, plus whatever municipal surtax its town applies.
The SME rates depend on the company being an SME under the EU definition, and that definition looks at the whole group. See the SME trap for foreign-owned companies.
RFAI: a credit for investing in productive assets
A company that makes an initial investment, such as a new establishment or new capacity, deducts 30% of the qualifying investment from its corporate tax in Norte, Centro, Alentejo, the Azores and Madeira, and 10% in the eligible parts of the Lisbon area and the Algarve. There is no application: it is claimed on the tax return. The credit is capped at 50% of the tax due each year, or 100% in a new company's first three tax periods, and the rest carries forward for 10 tax periods.
Full rules, conditions and a worked example: RFAI, Portugal's investment tax credit.
SIFIDE II: a credit for research and development
A company that does R&D deducts 32.5% of the year's eligible costs, plus 50% of the increase over the two-year average, up to EUR 1.5 million. It needs an application to ANI, the national innovation agency, by the end of May of the following year. Unused credit carries forward for 12 tax periods. The scheme currently covers tax periods starting on or before 31 December 2026.
Full rules, eligible costs and a worked example: SIFIDE II, Portugal's R&D tax credit.
Which one fits your company
| RFAI | SIFIDE II | |
|---|---|---|
| Rewards | Investment in new productive assets | Research and development costs |
| Typical user | A factory or a hotel adding capacity | A software, engineering, industrial or agri-food company developing something new |
| Main rate | 30% (10% in the eligible parts of the Lisbon area and the Algarve) | 32.5%, plus 50% of the increase |
| Prior application | No. Claimed on the tax return | Yes, to ANI, every year |
| Carry forward | 10 tax periods | 12 tax periods |
| Main condition | Keep the assets and the jobs created for three years (SMEs) or five years | The work must be real R&D: new, technically uncertain, systematic |
The two can be used by the same company, because they reward different costs. Both only help a company that has, or will have, corporate tax to pay. A business that expects losses for years gets more from a grant.
Combining tax credits with grants
A Portugal 2030 grant and RFAI can apply to the same investment, as long as the total public support stays within the maximum aid intensity for the region and the size of the company. SIFIDE II only counts the R&D costs that a non-repayable grant did not already cover.
The order of decisions matters. A grant has to be applied for before the investment starts. RFAI is claimed afterwards, but the project has to be designed from the start so that it qualifies. Deciding after the machines are delivered is too late for one and risky for the other.
This page covers taxes on companies. Personal tax regimes for people who move to Portugal are a separate subject, for a tax adviser.
Frequently asked questions
What is the corporate tax rate in Portugal in 2026?
The general rate is 19% for tax periods starting in 2026. SMEs and small mid caps pay 15% on the first EUR 50,000 of taxable profit, or 12.5% if they operate in, and are managed from, a designated interior territory. A municipal surtax of up to 1.5% of taxable profit may apply, and large profits pay a state surtax.
Is the rate going down?
Yes, and it is already law. Law 64/2025 sets 19% for 2026, 18% for 2027 and 17% from 2028.
Are there tax breaks for foreign-owned companies?
There are no tax breaks reserved for foreign-owned companies, and none that exclude them. RFAI, SIFIDE II and the reduced SME and interior rates apply to any company taxed in Portugal that meets the conditions. Investment projects of EUR 3 million or more can negotiate contractual tax benefits, through IAPMEI or, for the largest projects, AICEP, the investment agency.
Can a newly created company use these credits?
Yes. A new company claiming RFAI can use the credit against 100% of its corporate tax in its first three tax periods, and SMEs that have not completed two financial years get a 15% uplift on the SIFIDE base rate. In both cases, unused credit carries forward.
Do I need to apply in advance?
For RFAI, no: it is claimed on the corporate tax return, and the company keeps the file that proves the investment qualified. For SIFIDE II, yes: an application goes to ANI by the end of May of the following year, for the costs of the previous year.
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)
- 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)
- 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)
- gov.pt: submitting a SIFIDE application (checked 18 September 2026)
- Investment Tax Code (CFI), article 22 (RFAI: scope and conditions) (checked 18 September 2026)
- Investment Tax Code (CFI), article 2 (contractual tax benefits), as amended by Law 12/2022 (checked 19 September 2026)
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