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Portugal's standard Corporate Income Tax (IRC) rate will decrease from 19% to 18% in 2027, reducing the taxation of profits for businesses covered by the measure.
This change was approved under Law No. 64/2025 of 7 November, establishing a gradual reduction in Portugal's standard corporate income tax rates.
What Are the New Corporate Income Tax Rates?
Under the approved legislation, the standard IRC rates are:
- 2026: 19%
- 2027: 18%
These rates apply to tax periods beginning in the respective years.
What Tax Rates Apply to SMEs?
Eligible small and medium-sized enterprises (SMEs) and Small Mid Cap companies benefit from specific tax conditions.
For these businesses, a reduced rate of 15% applies to the first €50,000 of taxable profits, while the standard IRC rate applies to the remaining amount.
For example, an eligible SME with €100,000 in taxable profits in 2027 will generally pay 15% on the first €50,000 and 18% on the remaining €50,000.
How Will This Reduction Benefit Businesses?
Lower corporate income tax rates may help businesses reduce their tax burden and improve their capacity for investment and growth.
However, the final amount of tax payable depends on each company's circumstances, including applicable tax benefits, municipal surcharges and other relevant factors.
Why Is Tax Planning Important?
Understanding upcoming tax changes allows businesses to prepare budgets, assess investment opportunities and make more informed financial decisions.
Effective tax planning helps businesses benefit from legislative changes while ensuring compliance with their tax obligations.
