Corporate Tax
Portuguese Corporate Taxation (IRC) — 2025: Rates & Rules
If you're planning to do business in Portugal, you'll need to understand IRC — the country's corporate income tax system.
IRC operates on a company's net profits, after deductible expenses and allowances. The headline rate is only the start: the regime you fall under, your region, and your turnover all change the final figure.
Who pays IRC?
- Resident companies (commercial, industrial or agricultural) are taxed on worldwide profits;
- Resident entities such as associations and foundations are taxed, like individuals, on all income;
- Non-resident companies with a permanent establishment in Portugal are taxed on Portuguese-sourced income;
- Non-resident companies without a permanent establishment are taxed via withholding on their Portuguese income.
How IRC is calculated
- Determine net accounting profits;
- Adjust for tax provisions (add-backs and exclusions);
- Apply deductions — carried-forward losses and incentives;
- Apply the appropriate rate;
- Subtract prepayments and withholdings to reach the final liability.
IRC rates in 2025
| Region / case | Rate |
|---|---|
| Mainland — general rate | 20% |
| Mainland SME — first €50,000 | 16% (12.5% interior) |
| Mainland SME — above €50,000 | 20% |
| Startups — first €50,000 | 12.5% |
| Madeira — general (CINM) | 14.7% / 5% |
| Madeira SME — first €50k / remaining | 11.9% / 14.5% |
| Azores — general | 14.7% |
| Azores SME — first €50k / remaining | 8.75% / 14.5% |
Advance payments (Pagamentos por Conta — PPC)
Companies make three advance IRC payments based on the previous year's tax, due on 15 July, 15 September and 15 December.
- Turnover up to €500,000 → 80% of the prior-year IRC;
- Turnover above €500,000 → 95% of the prior-year IRC;
- The third instalment may be skipped if sufficient tax has already been prepaid.
Surcharges
Municipal surcharge (Derrama Municipal)
Some municipalities apply an additional tax of up to 1.5%. Lisbon and Porto always apply 1.5%; small businesses with turnover under €150,000 are often exempt; Funchal applies 0% (2023–2025). CINM companies receive preferential rates.
State surcharge (profits above €1.5M)
| Taxable profit | Mainland | Madeira | CINM |
|---|---|---|---|
| €1.5M – €7.5M | 3% | 2.1% | 0.42% |
| €7.5M – €35M | 5% | 3.5% | 0.70% |
| Above €35M | 9% | 6.3% | 1.26% |
Tax benefits and incentives
Beyond the rates, several mechanisms can reduce the effective burden:
- Deductions for R&D expenses;
- Tax credits for job creation;
- Internationalisation incentives;
- Preferential regimes in Madeira (CINM).
Need guidance?
Choosing the right structure and regime from day one is where most corporate tax is won or lost. We'll model your options before you commit.