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Corporate Income Tax (IRC)

IRC Corporete Income Tax Portugal

in Taxation and Succession

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CORPORATE INCOME TAX

All companies earning income in Portugal are subject to Corporate Income Tax (IRC).

This page provides information on the following:

REGISTRATION TO PAY CORPORATE INCOME TAX (IRC)

Communicating the start of activity

In order to pay Corporate Income Tax (IRC) in Portugal, companies must submit a declaration of commencement of activity within:

or

Companies with no established address but earning income in Portugal have to submit their declaration of commencement of activity by the deadline for submission of the annual accounting and tax declaration.

The declaration may be submitted:

For more information please see the Frequently Asked Questions page of the Tax and Customs Authority website or the activity start up manual.

Appointing a tax representative to submit the declaration

Companies without an established address in Portugal, but which have an established address in another Member State of the European Union, may submit the declaration of commencement of activity through a representative with a tax address in Portugal.

Companies without an established address in Portugal or in a Member State of the European Union are obliged to appoint a tax representative in Portugal.

For more information please see the Frequently Asked Questions page of the Tax and Customs Authority website.

Notifying changes in activity

Companies not registered in the commercial register or registered in the central register of legal persons

Where there are changes to the data indicated in the declaration of commencement of activity, a company is required to submit a declaration of changes in activity within:

  • 15 days from the date of change, if the undertaking carries out an activity subject to Value Added Tax (VAT)

or

Companies registered in the commercial register

Companies registered in the commercial register are exempt from submitting a declaration of changes in activity to the Tax and Customs Authority (AT), if the changes refer to:

  • entry in the commercial register
  • amendments to the Articles of Association as regards legal status, company name, registered office or main place of business, capital or object
  • appointment and termination of service, for any reason other than the passage of time, of management or supervisory bodies
  • merger and division
  • appointment and termination of office of liquidators, prior to completion of the liquidation
  • appointment and dismissal of the insolvency practitioner
  • winding up and closing the liquidation.

Companies registered in the central register of legal persons

Companies registered in the central register of legal persons which are not subject to commercial register are exempt from submitting a declaration of changes in activity to the Tax and Customs Authority (TA) in the following cases:

  • initial registration
  • change in company name
  • change in the location of the registered office, domicile or postal address
  • winding up and closing the liquidation.

How to submit a declaration

A declaration of changes in activity may be submitted:

For more information please see the Frequently Asked Questions page of the Tax and Customs Authority website or the activity amendment manual.

Notifying termination of activity

When a company terminates activity, it must submit a declaration of termination of activity.

A declaration of termination of activity must be submitted within 30 days after the end of activity.

Companies registered in a commercial register or registered in the central register of legal persons are exempt from submitting a declaration of termination of activity to the Tax and Customs Authority (AT).

A declaration of termination of activity may be submitted:

For more information please see the Frequently Asked Questions page of the Tax and Customs Authority website or the activity termination manual.

INCOME TO WHICH CORPORATE INCOME TAX (IRC) APPLIES

Corporate Income Tax (IRC) applies to:

  • the profit made by companies with registered office in Portugal whose main commercial, industrial or agricultural activity is subject to the deduction of any losses or benefits from tax advantages
  • the sum of the income of companies with registered office in Portugal whose main activity is not commercial, industrial or agricultural, which is subject to the deduction of non-tax-exempt common expenditure or benefits from tax advantages
  • the profit of an establishment located in Portugal of a company without registered office in Portugal, which is subject to the deduction of any losses or benefits from tax advantages
  • the sum of the income obtained in Portugal from companies with no registered office or establishment in Portugal.

For more information, please refer to Article 3, Article 15 and Article 17 of the Corporate Income Tax Code.

RATES OF CORPORATE INCOME TAX (IRC)

The normal rate of Corporate Income Tax (IRC) is:

  • 21% in mainland Portugal
  • 20% in the Autonomous Region of Madeira
  • 16.8% in the Autonomous Region of the Azores.

For small or medium-sized enterprises which have an agricultural, commercial or industrial economic activity as their main activity, a rate of 17% applies to the first EUR 25 000, and the standard rate to the remainder.

Companies with no registered office or permanent establishment in Portugal are subject to a rate of 25%, except for the following income where the rate is 35%:

For more information, please refer to Article 87 of the Corporate Income Tax (IRC) Code.

EXEMPTIONS FROM CORPORATE INCOME TAX (IRC)

The following entities are exempt from the payment of Corporate Income Tax (IRC):

  • public utility administrative entities
  • private charitable institutions and legally equivalent institutions
  • charitable, care, welfare, social solidarity, environmental protection and agri-food inter-association public utility entities which exclusively or predominantly pursue scientific or cultural activities
  • associations established for the pursuit of cultural, recreational and sporting activities
  • maritime and air navigation entities not established in Portugal, provided that the same exemption is granted to companies established in Portugal in their country of origin.

The exemptions do not cover corporate income derived from the exercise of commercial or industrial activities undertaken outside the scope of purposes set out in the Articles of Association of entities entitled to exemption.

The profits of entities resident in Portugal are exempt when made available to an entity:

  • resident in another Member State of the European Union
  • resident in a Member State of the European Economic Area which is bound by administrative cooperation in the field of taxation equivalent to that established within the European Union
  • resident in a State with which an agreement is in force to avoid double taxation and which applies to the entity a tax similar to Corporate Income Tax (IRC) with a minimum rate of 60% of that applied in Portugal
  • which holds, throughout the year preceding provision, at least 10% of the share capital or voting rights of the entity making available the profits.

For more information, please refer to Article 10, Article 11, Article 13 and Article 14 of the Corporate Income Tax Code.

PERIODIC AND ANNUAL DECLARATIONS

Periodic income statement

In order to pay Corporate Income Tax (IRC) in Portugal, companies must submit a periodic declaration of income.

The declaration must be sent via the Tax and Customs Authority website, before 31 May.

Companies having their registered office or permanent establishment in Portugal may opt for an annual tax period other than the calendar year. The period chosen must remain the same for at least five years and the periodic declaration of income must be sent by the last day of the fifth month following the end of the annual tax period. For example, if the annual tax period ends in March, the company must submit the periodic declaration of income by 31 August.

In the event of termination of activity a company must send the periodic declaration of income by the last day of the third month following the date of termination.

For more information, please refer to Article 120 of the Corporate Income Tax Code..

Annual declaration of accounting and tax information

Companies subject to Corporate Income Tax (IRC) are required to submit an annual declaration of accounting and tax information.

The declaration must be sent via the Tax and Customs Authority website, by 15 July.

Companies having their registered office or permanent establishment in Portugal may opt for an annual tax period other than the calendar year. The period chosen must remain the same for at least five years and the annual declaration of accounting and tax information must be sent by the 15th day of the seventh month following the end of the annual tax period. For example, if the annual tax period ends in April, the company must submit the annual declaration of accounting and tax information by 15 November.

In the event of termination of activity a company must send the periodic declaration of income by the last day of the third month following the date of termination.

For more information, please refer to Article 121 of the Corporate Income Tax Code.

PAYMENT OF CORPORATE INCOME TAX (IRC)

Companies which have an agricultural, commercial or industrial economic activity as their main activity and companies which are not resident but have a permanent establishment in Portugal are required to pay corporate income tax (IRC) in four instalments:

  • in July
  • in September
  • by 15 December
  • by 31 May, the deadline for submitting the periodic declaration of income, when companies pay the difference between the amounts paid in the three previous instalments and the total stated in the declaration.

Where undertakings have an annual tax period other than the calendar year, the above deadlines shall be:

  • in the 7th month
  • in the 9th month
  • by the 15th day of the 12th month
  • before the deadline for submitting the periodic declaration of income, owhen companies pay the difference between the amounts paid in the previous three instalments and the total stated in the return.

For example, if the annual tax period ends in February, companies have to pay Corporate Income Tax (IRC):

Companies which do not have an agricultural, commercial or industrial economic activity as their main activity pay Corporate Income Tax (IRC) in one instalment only, before the deadline for submitting the periodic declaration of income.

For more information, please refer to Article 104 and Article 108 of the Corporate Income Tax Code.

ARCHIVING OF RECORDS

Time limit for archiving transaction records

Companies must keep transaction records for 10 years.

If the tax settlement period is longer than 10 years, records of transactions have to be maintained until the end of the settlement period.

If accounting or billing is carried out in computerised form, it is mandatory to keep documentation relating to the analysis, programming and implementation of computer processing and back-up data for billing and accounting programmes during the period for which transaction records are mandatory.

More information can be found on the Tax and Customs Authority website.

Location of archived transaction records

Enterprises with an address in Portugal

If invoices, books, records and other documents are available on paper, they have to be stored in Portugal.

If business owners have more than one establishment, they can centralise the documents of all establishments in the same archive.

If invoices, books, records and other documents are available in electronic form, they have to be stored in any Member State of the European Union.

The archive location, whether in paper or electronic form, must be indicated in the declaration of commencement of activity or declaration of changes in activity.

More information can be found on the Tax and Customs Authority website.

Enterprises without an address in Portugal

Companies without an address in Portugal may store invoices, books, records and other documents, in paper or electronic form, in any Member State of the European Union.

The archive location, whether in paper or electronic form, must be indicated in the declaration of commencement of activity or declaration of changes in activity.

More information can be found on the Tax and Customs Authority website.

Storing archives outside the European Union

Any company wishing to store records of transactions, whether in paper or electronic form, outside the European Union must request prior authorisation from the Tax and Customs Authority (AT) via the Tax and Customs Authority website.

More information can be found on the Tax and Customs Authority website.

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