Portugal 1

Portugal
Structure and development of tax revenues

Table PT.1: Revenue (% of GDP)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
I. Indirect taxes 13.9 14.6 14.9 14.5 14.1 12.7 13.3 14.0 14.0 14.0
VAT 7.6 8.2 8.3 8.2 8.1 6.8 7.5 8.1 8.3 8.1
II. Direct taxes 8.3 8.1 8.5 9.4 9.5 8.8 8.6 9.6 9.4 11.6
Personal income 5.0 5.0 5.1 5.3 5.4 5.5 5.4 6.0 5.9 7.8
Corporate income 2.9 2.7 3.0 3.6 3.6 2.8 2.9 3.3 2.9 3.4
III. Social Contributions ( compulsory actual contributions) : : : : : : : : : :
Employers’ : : : : : : : : : :
Households’ : : : : : : : : : :
IV. Less: amounts assessed but unlikely to be collected : : : : : : : : : :
V. Total (I + II + III – IV) 30.3 30.9 31.5 32.0 31.9 30.0 30.6 32.5 32.0 34.3
VI. Social contributions (imputed + voluntary
: : : : : : : : : :
contributions)
VII. Total (incl. Imputed + voluntary contributions (V+VI) 33.5 34.3 34.9 35.2 35.1 33.6 33.9 35.6 34.9 37.6
Source: Eurostat (online data code: gov_10a_taxag)

Figure PT.1: Total receipts from taxes and compulsory social contributions, 2013 (% of GDP)
50
45
40
35
30
25
20
15
10
5
0
Denmark

France

Belgium

Finland

Italy

Sweden

Austria

EA-19

Luxembourg

EU-28

Hungary

Germany

Netherlands

Slovenia

Croatia

Czech Republic

Greece

Portugal

United Kingdom

Malta

Spain

Estonia

Poland

Cyprus

Slovakia

Ireland

Bulgaria

Latvia

Romania

Lithuania

Iceland

Norway

Source: Eurostat (online data code: gov_10a_taxag)

Figure PT.2: Tax revenues by main taxes, compared to EU-28, 2013 (% of GDP)
Social contributions Value added type
taxes (VAT)
12

Compulsory 9
Other (mainly
Indirect taxes households actual 6
indirect) taxes
social contributions 3
Direct taxes 0

Compulsory Taxes on individual or

employers actual household income
social contributions incl. holding gains

Taxes on the income

or profits of
corporations
EU-28 PT
Source: Eurostat (online data code: gov_10a_taxag)

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Latest tax reforms

Table PT.2: Latest tax reforms

Description of measure Change Date

Personal income tax
Employment income up to a maximum of EUR 10 000 is exempt for short-term
Base decrease In force from: 1.1.2015
assignments abroad (90 days, of which 60 are consecutive).
Separate taxation becomes the standard rule. However, families may opt for joint
N/A In force from: 1.1.2015
taxation.
PIT tax deductions have been reformulated: health expenses (15 % with limit of
EUR 1 000); family general expenses (35 % of expenses capped at EUR 250/taxpayer);
Base decrease In force from: 1.1.2015
education and training expenses tax credit of 30 % of expenses up to a limit of EUR 800.
Tax credits have a global limit, depending on income.
The application of the extraordinary surtax of 3.5 % is extended to 2015 under the same
Rate increase In force from: 1.1.2015
conditions as established by the 2013 State Budget Law (it was extended in 2014 too)
The family coefficient has been modified. Each taxpayer has an equal weight of 1, and
every dependent has a weight of 0.3 (0.15 if the household files separate tax returns,
Base decrease In force from: 1.1.2015
as the dependent will be included in both parents' annual tax returns). A limit to the
benefit arising from the introduction of the family coefficient has also been introduced.
Broadening of the concept of deductible expenses against rental income. It is now
possible to deduct expenses incurred in the 24 months prior to the beginning of the
Base decrease In force from: 1.1.2015
lease/rent, provided that during such period the property has not been used for another
purpose than leasing.
Exempt education vouchers. Extension of the age of dependants (from 7 to 25 years old)
for which it is allowed to attribute ‘education tickets‘, granted to parents for payment of
Base decrease In force from: 1.1.2015
school fees. Education vouchers are exempt up to the limit of EUR 1 100 per dependant.
Vouchers cannot accumulate with education tax credits.
Revamp of items (express typification) falling under investment income and capital
Base N/A In force from: 1.1.2015
gains.
Harmonisation of the tax rate applicable to investment income and capital gains to a flat
Rate N/A In force from: 1.1.2015
rate of 28 %.
Corporate income tax
Transposition of Directive No 2014/86/UE. Base decrease In force from: 1.1.2015
CIT rate reduced from 23 % to 21 %. Rate decrease In force from: 1.1.2015
Group taxation is allowed for horizontal structures of Portuguese companies with at
least 75 % holding by EU-based parent companies, following the EU Court of Justice N/A In force from: 1.1.2015
decision on SCA Holding (C-40/13).
Value-added tax
Introduction of tax compensation under flat-rate VAT scheme for SMEs involved in
agricultural production. Enables farmers to opt out of standard VAT arrangements and Base decrease In force from: 1.1.2015
recover part of input VAT (flat-rate compensation).
Option for the VAT simplified cash accounting scheme (the scheme was introduced in
N/A In force from: 1.1.2015
2013) set for month of October each year.
Possibility of deducting VAT incurred on the acquisition of electric or hybrid passenger
vehicles, and of deducting 50 % for vehicles using liquified petroleum gas and natural Base decrease In force from: 1.1.2015
gas. (Green tax reform).
Repair services for bikes are now subject to the reduced VAT rate. (Green tax reform). Base decrease In force from: 1.1.2015
Energy excises
Oil and energy products that are not exempt from excise duties are subject to a
surcharge (fator de adicionamiento) which is indexed to the price of carbon determined Rate increase In force from: 1.1.2015
in the EU Emissions Trading System (previous year). (Green tax reform).
Non-energy environmental taxes
Introduction of a new contribution for plastic bags used in the retail business (EUR 0.08/
Base increase In force from: 1.1.2015
bag). The final consumer bears the cost. (Green tax reform).

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 Portugal 1
Table PT.2: Latest tax reforms (continued)

Description of measure Change Date

Property taxes
Reduction up to 15 % of the rate of Municipal Property Tax (Imposto Municipal sobre
Rate decrease In force from: 1.1.2015
Imoveis) applicable to those properties classified as energy efficient. (Green tax reform).
Other types of tax
Bank Levy (contribuicao sobre o sector bancario) increased to a rate that can range
between 0.01 % and 0.085 % of the institutions’ liabilities. The Executive Order No 176- Rate increase In force from: 1.1.2015
A/2015, of 12 June established a tax rate of 0.085 %.
Pharmaceutical contribution enacted (contribuicao sobre a industria farmaceutica).
Rates range from 2.5 % to 14.3 % per medicine, but can vary depending on the type of Rate increase In force from: 1.1.2015
medicine and use.
The Energy Extraordinary Contribution (contribuicao extraordinaria sobre o sector
Base increase In force from: 1.1.2015
energetico), initially designed to be in force for 2014, is extended to 2015.
Increase of the rates of Vehicles Registration Tax (Imposto sobre Veiculos) applicable to
the purchase of passenger vehicles, either for personal or professional use. (Green tax Rate increase In force from: 1.1.2015
reform).
Source: DG Taxation and Customs Union. Further information on national tax reforms, including announcements of forthcoming measures, can be found in the tax
reforms database.

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Main features of the tax system

Table PT.3: Individual taxation (PIT)

General
worldwide income (resident)
Base and jurisdiction
domestic income (non-resident)
joint taxation, with family quotient (1 for taxpayers and 0.3 for
Taxation of couples and families dependants)
possibility to fill in a separate tax form
System and Applicable rates
Global / Labour income scheme
EUR 4 104 ; personal tax credit linked to min wage and family (¹)
Basic allowance EUR 325 per child; EUR 300 per old-age dependent (both tax
credits)
progressive; 14.5 %, 28.5 %, 37 %, 45 %, 48 % (non-residents: 25 %)
Rate schedule
top marginal rate: 48 % (> EUR 80 000) (²)
extraordinary surtax: 3.5 % (net income > min wage)
Surtaxes additional solidarity surcharge: 2.5 % (> EUR 80 000), 5 %
(> EUR 250 000)
Regional and local surcharges
Top statutory PIT rate (including surcharges) 56.5 %
Owner-occupied dwelling not included
Capital income
Income from renting movable property not included
Income from renting immovable property included, or taxed separately at 28 %
Capital gains (immovable property) included (base = 50 %)
Capital gains (movable property) 28 %
Dividends 28 % (base reduced if resident) (³)
Interests on deposits and special savings accounts 28 % (base reduced if resident) (³)
Interests on corporate and government bonds 28 % (base reduced if resident) (³)
Other specific features and alternative regimes
Self-employed (< EUR 200 000) professional expenses: % income (rate varies with activity)
Employment or pension income tax amount capped so that after-tax income ≥ EUR 8 500
Other tax provisions
Main tax credits & deductions:
(self-employed) % OR real expenses;
Professional expenses
(immovable property) real expenses including tax
Pension savings yes
Mortgage yes (interest and capital)
union fees, taxes (5 % VAT) deductible; child care, education,
Others (not exhaustive)
medical expenses, alimonies, donations are tax credits
Treatment of losses (business/self-employed income) 12-year carry forward (limited to 75 % of profits)
(¹) Complex system based on a proportion of household’s expenses, usually capped.
(²) A special rate of 60 % is applied to ’unjustified wealth increase of more than EUR 100 000‘.
(³) Azores reduced by 20 % (which base).
Source: DG Taxation and Customs Union, on the basis of information provided by the national Ministries of Finance. For more detail, the TEDB database contains an
extensive inventory of the main taxes in force in the EU Member States, including their legal basis, assessment base, main exemptions, applicable rate(s), economic and
statistical classification.

100 Taxation trends in the European Union

 Portugal 1
Table PT.4: VAT

Tax rates
Standard 23 %
Reduced rate(s) 6 % and 13 %

Table PT.5: Corporate taxation (CIT)

Tax rates
Nominal corporate income tax rate 21 %
Central government surcharge 7 % (for profit before deduction of losses of over EUR 35 million)
Regional government surcharge
Local government surcharge 1.5 %
Top CIT statutory rate (incl. surcharges) 29.5 %
Special tax rate for SMEs (all-in rate) 17 % (for taxable profit up to EUR 15 000)
Tax base worldwide income
Anti-avoidance
Limits to interest deductions yes (maximum of 30 % of EBIT or EUR 1 million; no thin cap rules)
Transfer pricing rules yes, arm's length principle
Controlled foreign company (CFC) yes
Controlled foreign company (CFC) for passive income only no
Allowance for Corporate Equity yes (notional rate 5 %)

Table PT.6: Social contributions

employment income, income from business or self-employed
Base activities, Income from sport and entertainment, benefits in kind,
pension income
Employers’ contributions
Total rate 23.75 %
of which:
Capped contributions no
Employees’ contributions
Total rate 11 %
of which:
Capped contributions no

Table PT.7: Wealth and transaction taxes

Inheritance and gift tax yes
Real estate taxation
Recurrent real estate tax yes
Regional differentiation yes
Tax discount for primary dwelling yes
Real estate transfer tax yes
Net wealth tax no
Source: DG Taxation and Customs Union, on the basis of information provided by the national Ministries of Finance. For more detail, the TEDB database contains an
extensive inventory of the main taxes in force in the EU Member States, including their legal basis, assessment base, main exemptions, applicable rate(s), economic
and statistical classification.

Taxation trends in the European Union 101