Tax Payments
Overview of Corporate Tax Obligations in Portugal
The video below provides an overview of three primary taxes in Portugal:
- IRC (Corporate Income Tax): Explanation of the applicable tax rate and its calculation method.
- VAT (Value Added Tax): Overview of the different rates and when each rate applies.
- SSC (Social Security Contribution): Details on who is required to contribute, the contribution rates, and the minimum mandatory SSC payment.
Until when can I pay taxes - Social Security/IRS?
Payment must be made by the 20th of the following month — the same as other Social Security contributions. Note: If the last payment day falls on a Saturday/Sunday or a holiday, payment can be made on the next business day.
How can I pay taxes?
Pay the amount using your personal bank account first; then, make a transfer from your Rauva account to your personal bank account (amounts must be exactly the same).
Multibanco functionality is coming soon! We will keep you posted!
When do I know if I have VAT to pay or recover?
Following the end of each quarter, within 30 days, an estimate of the VAT to be paid/recovered will be sent to you by the accountant. I.e., end of April, July, October, January next year.
When do I have to pay VAT?
After submitting the VAT declaration for the quarter of operations, payment must be made two months later by the 20th (of May, August, November, and February of the following year). For example, for Q2 operations (April to June), taxes must be paid no later than 20th of August.
If I have VAT to recover, when and how can I claim it?
VAT refund requests can be made if one of two requirements are met:
a) when the amount to be refunded is more than €3000, or
b) when the company experiences 4 consecutive periods where they are owed a refund. If one of these requirements is met, the refund is requested when the periodic VAT return is submitted. As a rule, the refund is paid by the second month following the refund request.
Who can be considered a mixed vat-taxpayer?
Mixed taxable persons are those who, in the course of their activity, simultaneously carry out taxable operations that confer the right to deduction and exempt operations that do not confer this right.
I want to buy a car for my company. What is considered expenses? Do I need to pay extra taxes?
In addition to the value of the car, your company will have to pay IUC - Single Circulation Tax annually. In Portugal, cars purchased by companies are subject to autonomous taxation. These can range from 0 to 32.5% and depend on the purchase price of the vehicle, its nature (passengers/goods) and the fuel (Diesel/Petrol, Plug-In Hybrid and Electric). This autonomous taxation is levied on the purchase price of the car on the proportional of 25% per year for the first 4 years, plus all expenses related to it (fuel, insurance, maintenance and repair).
Will be the capital gains subject to taxes?
Yes. Capital income from interest on bonds, interest on bank deposits, dividends from shares, capital gains from the sale of shares or other financial assets of any nature or even income distributed by investment funds contribute to the calculation of the company's profit, that is, they will increase the company's profit, so they will be taxed by the company's income tax. It is customary for financial institutions to withhold tax at a rate of 25% on the amounts made available as capital income. This amount of withholding is then considered as tax already paid and will be deducted from the income tax payable at the end of the financial year.
What is the Transparency Regime and how it works?
The Tax Transparency Regime is characterised by the fact that the profit ascertained by the company that is covered by that regime is not taxed in the sphere of that company, but in the sphere of its partner. Carrying out a professional activity as a sole freelancer, or carrying out the same professional activity through a legal person, becomes innocuous from the point of view of taxation. It applies to those who carry out a professional activity specifically provided for in the list of activities referred to in article 151 of the Personal Income Tax (IRS) Code. That is, at the end of the tax year, when the taxable profit is calculated, this same profit will not be taxed by the corporate income tax, but will be added to the individual income statement of each shareholder in proportion to their participation in the company. Thus, the reference tax rates are the individual income tax rates and not the company rates.