The map shows statutory CIT rates in 27 European countries. are excluded from taxation; awards for sport training for non-professional sport agents (players, referees, judges) are excluded from taxation, up to € 2,375; the compensations paid as result of non-professional duties to referees and judges are excluded from taxation, up to € 2,375. staff from diplomatic and consular bodies and international organizations; contractors or auctioneers working on NATO shared infrastructures. (2) If there are simultaneously the expenses mentioned in i) and ii), the limit is € 1,000 instead of € 800 For the purpose of liability to Social Security Contributions, additional conditions are required. To calculate the value of the IMT tax simply complete steps 1, 2 and 3 Values updated by the Portuguese State Budget for 2019 Fill in the following fields to calculate the IMT tax in Portugal: Direct government funding of business R&D and tax incentives for R&D, Portugal, 2000-17 As a percentage of GDP, 2010 prices (right-hand scale) 0.00 0.10 0.20 0.30 0.40 0.50 0.60 % Direct government funding Tax incentive support Subnational tax incentive support Total 2006 (excl. The corporate tax rate is 21.4 percent as from January 1, 2019 (reduced to 20.6 percent from January 1, 2021). Deposit interest from any applications on financial institutions and public debt instruments benefit from a tax exemption in 1/5 and 3/5 of its value, if the capital is not withdrawn for at least 5 and 8 years, respectively, and the maturity occurs at the final of the contracted period. However, businesses pay corporate tax in Portugal at a flat rate of 21% of their taxable profits. by ... which in practice has resulted in lower tax rates. The content is current on 1 January 2020, with exceptions noted. The latest value from 2019 is 39.8 percent. (14) Final rates. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Severance payments paid by the employee when he or she terminates the labour contract without timely notice; Trade union fees of up to 1% of the gross income, increased by 50%, Simplified regime: depends on the activity exercised - please refer to above explanation, Organized standard accounting system: expenses related to the activities carried out, with some limitations, All the expenses effectively incurred and paid by the taxpayers in order to obtain or assure such income, excluding the financial costs, furniture, households appliances, decoration and comfort accessories, as well as the additional to the Municipal Property Tax (“AIMI"), Sale of real estate (except those arising from the sale of real state which benefited from non-refundable support from the State or other Public entities), Sale of intellectual or industrial property, or know-how when obtained by the non-original author, Assignment of position in contracts regarding immovable property, Trade union fees, up to 1% of the gross income, increased by 50%, Mandatory contributions to social protection systems and legal health coverage sub-systems, in the part that exceeds € 4,104, taxable income higher than € 7,091 and up to € 80,000. shares of Portuguese tax resident companies; other securities issued by Portuguese tax resident companies; autonomous warrants issued by Portuguese tax resident companies; derivatives negotiated on the regulated Stock Market; participation units in venture capital funds. Duration equal to or greater than 5 years and less than 10 years: reduction of five percentage points of the autonomous rate, i.e. The personal income tax withholding rate tables for 2019, applicable to employment income and pensions earned on the Autonomous Region of Azores, have been published by Order nr. The country with the highest CIT rate is France (34.4 percent), followed by Portugal (31.5 percent) and Germany (29.8 percent). the rate is reduced to 26%; for each renewal with an equal duration, an additional reduction of two percentage points, up to a limit of fourteen percentage points; An OECD study from 2008 found that corporate income taxes are the most harmful form of taxation for economic growth. Pereira Family  Interest is exempt on capital up to a balance of ≤ € 10,500, Author rights obtained by  the Portuguese tax resident original owner are taxed only at 50%, with the amount excluded from taxation being limited to € 10,000, Capital gains derived from the sale of participation units are taxed at a 10% rate, Real estate investment funds / entities in forest resources, Capital gains derived from the sale of participation units/shares are taxed at a 10% rate, Contributions to social security regimes made by employers. For that purpose, the taxpayer must identify in the tax authorities’ website the members of the household who attend these educational establishments and the total value of the respective expenses incurred. (12) Taxation of 100% of capital gain (without the possibility of applying the reinvestment regime) when taxpayers have benefited from support from the State or other Public entities (for the acquisition, construction, reconstruction or execution of conservation works), under certain conditions. (8) Deductible expenses incurred with services acquired in the following sectors of activity: (9) Health and insurance expenses, education and training expenditures, nursing home fees, invoice requirement, costs with immovable property, alimony and tax benefits are included. Portugal provides above-average capital cost write-offs for investments in machinery. The list focuses on the main indicative types of taxes: corporate tax, individual income tax, and sales tax, including VAT and GST, but does not list capital gains tax. 791-A/2019, of 16 January. 1056/2019, of 25 January. © 2017 - 2021 PwC. (1) Portuguese reference remuneration for 2019 (Indexante dos Apoios Sociais - IAS) – € 435,76. (13) The capital gains obtained by non-resident entities without permanent establishment in Portugal, who are domiciled in jurisdictions with more favourable tax regimes, is subject to a tax rate of 35%. the premiums and awards for disabled athletes and high performance athletes and their coaches. (8) Subject to taxation at an autonomous/final rate of 28%. Albania 15% 15% 15% 15% 15% Algeria 23% 26% 26% 26% 19%/26% Andorra 10% 10% 10% 10% 10% Tax brackets in Portugal in 2019 The number of taxable installments rose from five to seven from January 2018This measure appears in the Portuguese State Budget for the New Year. A recently released OECD database covering 88 jurisdictions worldwide shows that the global average statutory CIT rate was 21.4 percent in 2018. (4) Profits distributions attributed to employees are subject to Social Security contributions. However, this liability to Social Security will only enter into force when regulated. Portugal has a territorial tax system, exempting foreign dividend and capital gains income for most countries. Corporate Tax Rates 2015-2019* Jurisdiction 2015 2016 2017 2018 2019. Whilst Portugal is required to implement the VAT rules of the European Union, it still sets the level of its own VAT rate. (4) Income paid or made available to accounts opened in the name of one or more holders acting on behalf of one or more unidentified third parties is subject to a final tax rate of 35%, unless the beneficial owner of the income is identified. A reduced rate of 17% applies to the first EUR 15,000 of taxable profits of SMEs. It is established a new tax regime to encourage the return of emigrants to Portugal. The regime will apply to individuals who become Portuguese tax residents under Portuguese domestic law in a certain year and have not qualified as tax residents in Portugal in any of the previous five years. Help us continue our work by making a tax-deductible gift today. Taxable persons that have established their business, a fixed establishment or have their residence in Portugal and that carry out transactions subject to VAT, are obliged to communicate to the Portuguese Tax and Customs Authorities, by electronic means, the elements of documents issued under the VAT Code (invoices, simplified invoices, debit notes and credit notes) as well … (13) The capital gains obtained by non-resident entities without permanent establishment in Portugal, who are domiciled in jurisdictions with more favourable tax regimes, is subject to a tax rate of 35%. 4 TAX ON BUSINESS OPERATIONS: GENERAL. € 4,104 or, when higher, the total amount of mandatory social security contributions (in the part not exceeding 10% of the gross income received); personnel expenses, wages or salaries communicated to the Portuguese tax authorities; property rentals communicated through the issue of an electronic receipt or a specific statement, whose invoices and other documents are communicated to the Portuguese tax authorities (if only partially assigned to the professional activity, it is considered only 25% of the total amount); 1.5% of the tax registration value of the properties assigned to the business or professional activity or 4% of the tax registration value assigned to hotel activities or local accommodation (if only partially assigned to the professional activity, it is considered only 25% of the total amount); other expenses with the acquisition of goods and services related to the activity, dully communicated to Portuguese tax authorities, namely expenses with current consumption materials, electricity, water, transports and communications, rents, litigation, insurance, leasing rents, mandatory fees paid to professional associations and other organizations representing professional activities to which the taxpayer belongs, travels and stays of the taxpayer and his employees (if only partially assigned to the activity, it is considered only 25% of the total amount); Imports and intra-Community acquisitions of goods and services related to the activity. Consideration of 50% of the positive or negative balance arising from disposals made by tax residents: a) rents paid, net of subsidies or official contributions, concerning an urban property or fraction for permanent residence under the Urban Rental Regime or the New Urban Rental Regime, taxable income higher than € 7,091 and up to € 30,000. Portugal has a high corporate tax rate of 31.5 percent (the OECD average is 23.3 percent). h) Income arising from services rendered to an entity in which, for more than 183 days of the tax year: Validation of the application of the coefficient: Dependants <= 3 years old on December 31 of the year to which the tax relates, iv) Ascendants actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime, v) Only one ascendant actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime, iii) For each ascendant with disability actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime, iv) 30% of education and rehabilitation expenditures, v) 25% of life assurance premiums or contributions paid to credit unions, Disability expenses for each taxpayer and each dependant, which level of permanent disability is ≥ 90%. Companies that are subject to CIT with revenues of up to 1.2 million euros (EUR) in the given tax year and companies starting business activity from 2019 are able, under some conditions, to use the 9% CIT rate. disposal of shares in companies whose assets are comprised in more than 50% of real estate located in Portugal. (14) Final rates. As for the rental income, the tax rate will depend on the duration of the rental contracts for permanent residence, as follows: We work hard to make our analysis as useful as possible. A tax benefit was created to employees that move from their normal work place to perform their professional activity in a foreign country during at least 90 days, of which 60 days have to be consecutive. Therefore, to the taxable income determined by applying the coefficients will be added the positive difference between 15% of the gross income and the sum of the following amounts: In addition to the amount of the above deduction, the amount of mandatory social security contributions paid, exceeding 10% of gross income and related to such professional activities, may also be deducted to the gross amount of income, if not deducted for other purposes. (4) Should the expenses be made outside of Portuguese territory, the taxpayer may report them using the Portuguese Tax Authorities' website. Portugal: Corporate Tax Comparative Guide 25 November 2019 . Portugal: Tax rate, percent of commercial profits: For that indicator, we provide data for Portugal from 2005 to 2019. (3) Income paid or made available to recipients resident in Portuguese territory by non-resident entities without permanent establishment in Portugal, domiciled in jurisdictions with more favourable tax regimes is subject to a tax rate of 35%. (2) Taxed autonomously at a rate of 28% if paid by non-resident entities and not subject to withholding tax. Being an expat and a tax resident of one country while still a citizen of another country—especially the United States—brings a specific set of conditions and burdens. Enter Your Salary and the Portugal Salary Calculator will automatically produce a salary after tax illustration for you, simple. As from 1 January 2019, the Portuguese monthly minimum wage is increased to Eur 600. the rate is reduced to 23%; for each renewal with an equal duration, an additional reduction of five percentage points, up to a limit of fourteen percentage points; Portuguese companies pay 23.75% of gross wages to social security and employees pay a rate of 11% on their salary. Germany’s rate includes the 15 percent federal rate and municipal trade taxes, making the combined rate nearly twice the federal rate at 29.8 percent. The standard CIT rate is 19%. Would you consider contributing to our work? Additionally, the regime also establishes a tax exemption for foreign-sourced income, such as, employment income, self-employment income, rental income, interest, dividends as well as other investment income, under certain specific conditions. PIT is levied on income obtained by individuals, under six different categories, and its taxation will depend on the individual’s tax status. 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