(11) Extension of the exclusion (total or partial) from taxation of real estate capital gains, if there is reinvestment of the sale value in the acquisition of an insurance contract, individual subscription of an open pension fund or contribution to the public capitalisation regime, under certain conditions. (9)  The capital gains obtained by tax residents on the sale of real estate are only considered in 50%. (4) Should the expenses be made outside of Portuguese territory, the taxpayer may report them using the Portuguese Tax Authorities' website. Taxation of company car in Category A Help us continue our work by making a tax-deductible gift today. Suppliers of goods or services VAT registered in Portugal must charge the appropriate VAT rate, and collect the tax for onward payment to the Portuguese tax authorities through a VAT filling: see Portuguese VAT returns … A reduced rate of 17% applies to the first EUR 15,000 of taxable profits of SMEs. Optional: Select Advanced and enter your age to alter age related tax allowances and deductions for your earning in Portugal 3. (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. (7) The taxpayer can opt to include this income in the annual income tax return. (14) Final rates. Other taxes involved in this setup include corporate and personal income tax. (5) Income paid or made available to recipients resident in Portuguese territory by a third party on behalf of non-resident entities domiciled in a more favourable tax regime is subject to a tax rate of 35%. 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. (6) The taxpayer can opt for 50% of the dividends earned to be taxed at the progressive rates in the annual income tax return, in which case only 50% of the income is liable to taxation. income tax rate (in 2012, Canada’s corporate tax rate was seven points lower than the OECD weighted average). For this purpose, taxpayers must identify in the tax authorities’ website the invoices or other documents that are related with the rental expenses incurred as a result of transferring the permanent residence to an inland territory. For the latest developments, access the EY Tax COVID-19 Response Tracker. A future map will show how European countries rank on measures of their corporate tax base. This amount can be increased to € 4,275, provided that the difference results from expenses incurred with mandatory fees paid to professional associations indispensable for the exercise of the respective activity. The majority of European countries tax corporate income at rates that range between 19 and 25 percent. 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. There has been one change to this tax in 2019 in the form of an additional rate of 1.5% for properties valued in excess of €2 million. Details of Tax Revenue - Portugal. They are under the aged of 35. Most European countries impose CIT rates that are either close to or fall below the global average. Washington, DC 20005, Tax Expenditures, Credits, and Deductions, Taxes on Savers, Investors, and Entrepreneurs, Small Business, Pass-throughs, and Non-profits, Analysis of 2020 Presidential Tax Proposals, Research & Analysis of Digital Tax Policies, Consumption Tax Policies in OECD Countries, Sources of Government Revenue in the OECD, Opportunities for Pro-Growth Tax Reform in Austria, Tax Proposals, Comparisons, and the Economy. Countries with similar tax brackets include Austria with a maximum tax bracket of 50.00% , Belgium with a maximum tax bracket of 50.00% and United Kingdom with a maximum tax bracket of 50.00% . For the purpose of liability to Social Security Contributions, additional conditions are required. As of 1 January 2019, a lower 9% CIT rate for 'small taxpayers' has been introduced. Taxes in Portugal are levied by both the national and regional governments of Portugal.Tax revenue in Portugal stood at 34.9% of GDP in 2018. Use our new tax calculator to compare how recent tax plans could impact your wallet. While the regime applies, entities required to withhold tax on the income covered by this regime shall apply the withholding taxes only to half of the income paid or made available. Pereira Family  (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. Duration equal to or greater than 5 years and less than 10 years: reduction of five percentage points of the autonomous rate, i.e. Keep up-to-date on significant tax developments around the globe with EY’s Global Tax Alert library. (5) For managers, members of the board, public sector managers and representatives of permanent establishments of non-resident entities, the amounts received for the termination of the employment contract are totally taxable, on the part that respects to those functions only. Corporate income tax rate The standard corporate income tax rate is 25 percent. The tax rate over personal income in 2015 (tax return 2016) was the following: To explain how to calculate the Portuguese personal income tax, I’m going to give you the example of a single person, without children, that earns 1500 € monthly of gross salary as an employee. A summary of the main regular tax obligations arising for companies and individuals. Weaknesses. The average value for Portugal during that period was 41.8 percent with a minimum of 39.8 percent in 2016 and a maximum of 43.8 percent in 2005. It is established a new tax regime to encourage the return of emigrants to Portugal. 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; 1056/2019, of 25 January. Details of Tax Revenue - Slovak Republic. To qualify for the visa, both of these rates must be met. More insights into the recent history and current state of corporate income taxes around the world are provided here. (2) The benefit from the private use of a company car is only liable to taxation when there is a written agreement. (3) The amount of the education and training expenses incurred by students attending education institutions located in inland regions ( as identified in Ministerial Order 208/2017 of 13 July), shall be increased by 10 percentage points. For that purpose, the individual should communicate to the said entity, through a written statement, that no similar income was/is received from other resident entities or from permanent establishments of non-resident entities in Portugal. The regime is applicable for a period of ten consecutive years. Non-resident shareholders of such entities may also benefit from a tax exemption on dividends and interest. 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. 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: PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. (7) This benefits also apply to the contributions made by the employers, in favor of the employees, to Public Capitalisation regime. (1) The employment and self-employment income  paid to non-resident individuals as a result of services provided to a single entity is not liable to withholding taxes up to the amount corresponding to the monthly minimum wage. 37/2019, of 31 January. All rights reserved. Portuguese companies pay 23.75% of gross wages to social security and employees pay a rate of 11% on their salary. In addition, the overall cap of the tax deduction for education and training expenses shall be increased from € 800 to € 1,000, if the difference relates to the said expenses. In addition to the amendments reported below, the budget law includes changes to excise duties, stamp duty, vehicle and other taxes. Sales Tax Rate in Portugal averaged 21.19 percent from 2000 until 2020, reaching an all time high of 23 percent in 2011 and a record low of 17 percent in 2001. The countries with the lowest CIT rates are Hungary (9.0 percent), Ireland (12.5 percent), and Lithuania (15.0 percent). (6) Amounts invested after the retirement date are not deductible. Duration equal to or greater than 2 years and less than 5 years: reduction of two percentage points of the autonomous rate, i.e. Going for Growth 2019. the rate is reduced to 14%; The corporate tax base matters as well, though, since how countries design their corporate tax could hurt their growth prospects even if CIT rates are lowered. (1) Portuguese reference remuneration for 2019 (Indexante dos Apoios Sociais - IAS) – € 435,76. Note: the rate is reduced to 10%. Canada now has a relatively high corporate income tax rate at 26.2 per cent (incorporating Alberta’s 2021/22 legislated changes), only five points less than the top OECD rate in Portugal at 31.5 per We work hard to make our analysis as useful as possible. (3) Reference rate has not yet been determined. (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%. For comparison, the world average in 2019 based on 185 countries is … 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; All European countries tax corporate income. The Tax Foundation works hard to provide insightful tax policy analysis. FWT: Final Withholding tax € 4,104 or, when higher, the total amount of the mandatory social security contributions. Deduction of 15% of the following expenses: a) acquisition of goods and services which are exempt from VAT or liable to the reduced VAT rate of 6%; 15% of the expenses, with a limit of 1,000, b) acquisition of other goods and services duly justified by a medical prescription, ii) 30% of the amount spent with rented property, per member of the household aged 25 or under and who attends a recognised educational establishment located at more than 50 km from the permanent residence of the household, up to a limit of, 25% of charges for nursing homes fees and institutions to support the taxpayer, as well as charges with disabled persons, dependants, ascendants and relatives until the third degree who do not have income equal to or higher than the minimum monthly wage, b) debt interest, for contracts concluded until 31 December 2011, incurred on the acquisition, construction or improvement of property used as the taxpayer’s permanent private residence, or rent (paid) in respect of a tenant's duly substantiated permanent residence, c) instalments payable as a result of contracts concluded until 31 December 2011 with housing cooperatives or under the group purchasing regime, for the purchase of residential property for use as the (taxpayer’s) permanent residence or rental paid in respect of a tenant's duly substantiated permanent residence, to the extent in which they refer to interest of related debt, d) amounts paid by way of rent under a leasing contract concluded until 31 December 2011 in respect of a permanent residence, to the extent that it does not constitute a repayment of capital. In general, this Tax Guide does not reflect any COVID-19 tax policy measures. Employers' contributions to pension funds (or other complementary social security regimes) are exempt from PIT in the moment the contributions are made, if certain conditions are met. the generality of the service-rendering activities) is partially conditioned by the verification of expenses and charges effectively incurred and related to the activity. 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. The taxable income of this category will be computed by applying the following coefficients to the gross income: The income “deduction” arising from the application of the coefficients referred above on b) and c) (i.e. The status of non-habitual tax resident becomes effective upon registration with the Portuguese tax authorities, which should be applied for until 31 March of the year following the one during which the taxpayer became tax resident in Portugal. (8) Subject to taxation at an autonomous/final rate of 28%. This benefits consists in a PIT tax exemption applicable to the part of the remuneration paid to the employee, by the Portuguese employer, exclusively as compensation for moving and staying abroad (up to € 10,000). The corporate tax rate hasn’t risen in the last few years and seems to have plateaued at 21%. 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. The only condition is that it is above 15%. The maximum income tax rate in Portugal of 46.00% ranks Portugal as one of the ten highest taxed countries in the world. Corporate Tax Rates 2015-2019* Jurisdiction 2015 2016 2017 2018 2019. (6) Provided that benefits from the Share Plans are not paid on a cash – settlement basis. Optional: Change the number of days you work per we… 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. (5) This limit is raised to € 1,000 for 3 years (the first year of the contract being concluded), if these expenses derive from the transfer of permanent residence to an inland territory (as defined in Administrative Rule no. The rate has gradually come down in the last decade, leaving it slightly below the EU average of 21.51%. Depending on the tax rate into which the taxpayer falls, capital gains taxes will be 28% or possibly lower, if added to general income and the tax bracket is still under 28% for the total amount. This is only applicable to dividends of Portuguese source or paid by an entity resident in European Union or in the European Economic Area. (14) Final rates. Portugal: Tax rate, percent of commercial profits: For that indicator, we provide data for Portugal from 2005 to 2019. PIT is levied on income obtained by individuals, under six different categories, and its taxation will depend on the individual’s tax status. Please see www.pwc.com/structure for further details. As from 1 January 2019, the Portuguese monthly minimum wage is increased to Eur 600. the premiums and awards for disabled athletes and high performance athletes and their coaches. The regime establishes a 50% relief from taxation on employment or self-employment income received after their return to Portugal. Would you consider contributing to our work? The other rates remain at 0.4% for properties held by companies, 0.7% for individuals and 1% for those owning property valued over €1 million. The additional surcharge is progressive and it is applicable on the income subject to the marginal tax rates, exceeding € 80,000.A rate of 2.5% is applicable to taxpayers with a taxable income exceeding € 80,000 up to € 250,000 and a rate of 5% is applicable to the taxable income exceeding € 250,000. This page provides - Portugal Sales Tax Rate | VAT - actual values, historical data, forecast, chart, statistics, economic calendar and news. Not subject to withholding tax. The part of the compensation concerning the periods in which they exercised their duties as regular employees may continue to benefit from the tax exclusion. Low CIT rates in Hungary, Ireland, and Lithuania can have a positive impact on these countries’ economic growth. by ... which in practice has resulted in lower tax rates. In Portugal, salary is multiplied by 14 months (the 12 months in the year, the holiday pay and the Christmas bonus, each equivalent to another salary). did not qualify as tax residents during the prior three years; qualified as tax residents in Portugal prior to 31 December 2015; did not apply for the non-habitual residents regime. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and global levels. 4 TAX ON BUSINESS OPERATIONS: GENERAL. Countries with a lower corporate income tax are likely to grow faster and attract more investment and jobs than high-tax countries. Taxpayers who have not exceeded an annual gross amount of € 200,000 in this category in the previous year and who have not opted for the organized accounts regime are covered by the simplified regime. So, whoever earns 1500 € of gross salary every mont… disposal of shares in companies whose assets are comprised in more than 50% of real estate located in Portugal. The referred tax reductions enter into force on 1 October, 2019. The CIT is the only tax levied on corporate income. According to the Minister of Finance Mário Centeno this new structure of the IRS scale will benefit 1.6 million households. Portugal has a territorial tax system, exempting foreign dividend and capital gains income for most countries. subnational tax support) Get all the latest global tax news and analysis sent directly to your inbox. In the example above, a taxpayer who earns a total gross income of € 40,000 and incurs expenses in the amount of at least € 1,896 can benefit from the application of the coefficient in full, i.e. As a 501(c)(3) nonprofit, we depend on the generosity of individuals like you. (1) Assuming that both taxpayers are people with disabilities. Whilst Portugal is required to implement the VAT rules of the European Union, it still sets the level of its own VAT rate. 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. The income obtained by the following individuals will be excluded from taxation: Based on the following assumptions, we have prepared an estimate of the PIT due by the Pereira family. 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. However, businesses pay corporate tax in Portugal at a flat rate of 21% of their taxable profits. 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. For Social Security purposes, no liability to contributions arises in respect of the compensation for termination of employment contract in the event of collective redundancy; non compliance with legal notice; extinction of employment; individual redundancies or dismissals caused by inadaptability of the employee; obsolescence; for resolution by the employee; for termination before the term of the employment contract. 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. 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. A flat CIT rate of 21% applies on the global amount of taxable income realised by companies resident for tax purposes in mainland Portugal (also applicable to Portuguese PEs of foreign entities). Exemplification of the calculation of the amount of expenses to be presented by a taxpayer, in order to benefit from the full application of the legal coefficients to the gross income arising from the provision of services: Difference between 15% of gross income and the amount of deductible expenses. The Tax Foundation is the nation’s leading independent tax policy nonprofit. 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%. This tax relief is applicable to income earned in the first year of residency after the return to Portugal and in the following four years, expiring after this period. 2. The personal income tax withholding rate tables for 2019, applicable to employment income and pensions earned on the Mainland, have been published by Order nr. Acquisition of social participation by employees. For over 80 years, our goal has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity. However, this liability to Social Security will only enter into force when regulated. Not subject to withholding tax. 208/2017 of 13 July). Albania 15% 15% 15% 15% 15% Algeria 23% 26% 26% 26% 19%/26% Andorra 10% 10% 10% 10% 10% However, taxes are still administered at a central level. Rate– The standard corporate tax rate is 21%. Our work depends on support from members of the public like you. Would you consider telling us more about how we can do better? Europe’s average CIT rate (22.5 percent) is slightly higher than the global average (21.4 percent). The most important revenue sources include the income tax, social security contributions, corporate tax and the value added tax, which are all applied at the national level. (4) Profits distributions attributed to employees are subject to Social Security contributions. A comparison of tax rates by countries is difficult and somewhat subjective, as tax laws in most countries are extremely complex and the tax burden falls differently on different groups in each country and sub-national unit. ... Corporate income tax rate [6 / 6] Year [21] Layout; Table options Export. 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. Follow these simple steps to calculate your salary after tax in Portugal using the Portugal Salary Calculator 2020 which is updated with the 2020/21 tax tables. (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%. These CIT rates include the federal, state, and local taxes where there are multiple levels of government. 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. 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 … 75%. The standard CIT rate is 20% in the Autonomous Region of Madeira and 16.8% in the Autonomous Region of the Azores, including PEs of foreign entities registered therein. The content is current on 1 January 2020, with exceptions noted. 1325 G St NW In the absence of publication of the ordinance determining the reference interest rate, it is considered 70% of the minimum  rate applicable by the ECB to its main refinancing operations or another rate legally equivalent, on the first working day of the year to which the income relates. Both taxpayers are people with disabilities ( Cut-off date: December 2018 ) by country after Jan. 1 2018. Regime to encourage the return of emigrants to Portugal Portuguese reference remuneration for 2019 ( dos... From 1 January 2020, with exceptions noted or paid by an resident. For that indicator, we provide data for Portugal from 2005 to 2019 rate hasn ’ t risen the... Guide does not reflect any COVID-19 tax policy analysis Portugal: tax in. 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