Portugal Corporate Tax 2026: IRC Rates, the SME Rate and a Worked Example

Portugal is lowering its corporate income tax step by step. Here is what a company pays in 2026, what changes next, and how the numbers work out in practice.

The rates, year by year

The general IRC (Imposto sobre o Rendimento das Pessoas Coletivas) rate is falling over three years:

• 2026: 19%
• 2027: 18%
• From 2028: 17%

The schedule was set by a law passed in November 2025 (Lei n.º 64/2025), so the 2027 and 2028 rates do not depend on a future state budget. It applies to tax years that begin on or after the date shown, which for a company using the calendar year means the year itself.

A lower rate for smaller companies

Small and medium-sized companies, and certain small mid-cap companies, pay a reduced rate of 15% on the first €50,000 of taxable profit. Anything above that is taxed at the general rate. The reduced rate is meant to help companies at the start, so check with your accountant that your company really qualifies before you count on it.

A worked example

Imagine a company with a taxable profit of €80,000 in 2026:

• €50,000 at 15% = €7,500
• €30,000 at 19% = €5,700
• Total IRC: €13,200

That is an effective rate of about 16.5%, lower than the headline 19%. The smaller the profit, the closer the effective rate gets to 15%.

Taxable profit is not the profit in your accounts

This is where many first-time owners get surprised. IRC is calculated on the taxable profit, not on the profit shown in the accounting books. The accountant starts from the accounting result and then adjusts it. Some expenses are only partly deductible or not deductible at all, certain provisions and depreciation have limits, and some income is treated differently. The taxable base can therefore be higher or lower than the number you see in your financial statements.

Other taxes that can sit on top

• Municipal surcharge (derrama municipal): up to 1.5% of taxable profit, set by each municipality.
• State surcharge (derrama estadual): only for large profits, from 3% on the part above €1.5 million, with higher bands above that.
• Autonomous taxation: some expenses, such as company cars or certain entertainment costs, are taxed separately at their own rates.

Deadlines to keep in mind

For a company on the calendar year, the annual IRC return (Modelo 22) is normally due by the end of May of the following year. Advance payments are made during the year, usually in July, September and December, so cash planning matters from the very first year of activity.

What this means if you are setting up a company

A low rate is only one part of the picture. The structure you choose, how you pay yourself, and how profits reach you personally all change the real tax cost. If you are thinking about opening a company, we can help you pick the structure and handle the incorporation from start to finish.

This article is general information, not tax advice for your situation. Rates and rules can change, so confirm the current figures with your accountant or with us before you decide.