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Tax Law in Portugal

Income tax for person personal companies (Legal Entity Income Tax - IRC)

The tax subjects are all companies (personal and business companies) as well as company-like structures (e.g. representations abroad), which have their registered office or management on the Portugal territory. Foreigners can also be liable to taxation in case, that they have incomes according to this law and do not underlie to an individual income tax rate (IRS). The general tax rate is 25 per cent at present. The companies without registered office in Portugal, as the above mentioned, which also can be tax-liable, are subjected to general tax rate of 25 per cent. The incomes from know-how and sale of technologies, leasing and lease of machines and equipment, are taxed with 15 per cent rate. The incomes from capital investments, excepting the securities, come under 20 per cent rate. The incomes from lease are taxed with 15 per cent rate. Besides this, the unified procedure of taxation exists, where the turnover lump-sum is to be paid, which should reflect the deductible costs and shall be free of relevant confirmations.

Income Tax of a Person (IRS)

The tax base is created by annual income of a person, whereby the persons residential in Portugal are any incomes calculated, i.e. also those from abroad, and the persons residential abroad are calculated only incomes reached in Portugal. The eventual bilateral Double Taxation Treatments serve as a prevention from multiple tax charges. The tax rate moves between 12 and 40 per cent at the non-taxable amount approximately EUR 4,500, whereby similarly as it is in Austria, there are various deductible items here.

VAT (IVA)

The Portugal value added tax completely responds to the respective regulations contained in the EU Directives. The actual general rate amounts 19 per cent in inland, 13 per cent in autonomous territories of Madeira and Azores. The basic foodstuffs, medical services, medicaments, etc. underlie to the decreased rate of 12 per cent, or 8 per cent on Madeira and Azores.

Besides VAT, there are also the consumption taxes for tobacco products, gas and oil products, also for motor vehicles (in levels increased according to volume capacity).

Double Taxation Treaty

Austria and Portugal concluded the Double Taxation Treaty in 1972 (Civil Code, No. 85/72, 469/75), which assumes that both the incomes of natural persons and legal entities are taxed in principle in the country, on territory of which they arose.

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