List of published territories Albania$$$Algeria$$$Angola$$$Argentina$$$Armenia$$$Australia$$$Austria$$$Azerbaijan$$$Bahrain$$$Barbados$$$Belarus$$$Belgium$$$Bermuda$$$Bolivia$$$Bosnia and Herzegovina$$$Botswana$$$Brazil$$$Bulgaria$$$Cabo Verde$$$Cambodia$$$Cameroon, Republic of$$$Canada$$$Cayman Islands$$$Chad$$$Chile$$$China, People's Republic of$$$Colombia$$$Congo, Democratic Republic of the$$$Congo, Republic of$$$Costa Rica$$$Croatia$$$Cyprus$$$Czech Republic$$$Denmark$$$Dominican Republic$$$Ecuador$$$Egypt$$$El Salvador$$$Equatorial Guinea$$$Estonia$$$Fiji$$$Finland$$$France$$$Gabon$$$Georgia$$$Germany$$$Ghana$$$Gibraltar$$$Greece$$$Greenland$$$Guatemala$$$Guernsey, Channel Islands$$$Guyana$$$Honduras$$$Hong Kong$$$Hungary$$$Iceland$$$India$$$Indonesia$$$Iraq$$$Ireland$$$Isle of Man$$$Israel$$$Italy$$$Ivory Coast (Côte d'Ivoire)$$$Jamaica$$$Japan$$$Jersey, Channel Islands$$$Jordan$$$Kazakhstan$$$Kenya$$$Korea, Republic of$$$Kosovo$$$Kuwait$$$Kyrgyzstan$$$Lao PDR$$$Latvia$$$Lebanon$$$Libya$$$Liechtenstein$$$Lithuania$$$Luxembourg$$$Macau$$$Macedonia$$$Madagascar$$$Malawi$$$Malaysia$$$Malta$$$Mauritius$$$Mexico$$$Moldova$$$Mongolia$$$Montenegro$$$Morocco$$$Mozambique$$$Myanmar$$$Namibia, Republic of$$$Netherlands$$$New Zealand$$$Nicaragua$$$Nigeria$$$Norway$$$Oman$$$Pakistan$$$Palestinian territories$$$Panama$$$Papua New Guinea$$$Paraguay$$$Peru$$$Philippines$$$Poland$$$Portugal$$$Puerto Rico$$$Qatar$$$Romania$$$Russian Federation$$$Rwanda$$$Saint Lucia$$$Saudi Arabia$$$Senegal$$$Serbia$$$Singapore$$$Slovak Republic$$$Slovenia$$$South Africa$$$Spain$$$Sri Lanka$$$Swaziland$$$Sweden$$$Switzerland$$$Taiwan$$$Tajikistan$$$Tanzania$$$Thailand$$$Timor-Leste$$$Trinidad and Tobago$$$Tunisia$$$Turkey$$$Turkmenistan$$$Turks and Caicos Islands$$$Uganda$$$Ukraine$$$United Arab Emirates$$$United Kingdom$$$United States$$$Uruguay$$$Uzbekistan, Republic of$$$Venezuela$$$Vietnam$$$Zambia$$$Zimbabwe JDCN-89JRLJ$$$JDCN-9L9ER3$$$JDCN-89HREB$$$JDCN-89HRGN$$$JDCN-89HRHB$$$JDCN-89HRJM$$$JDCN-89HRKA$$$JDCN-89HRKX$$$JDCN-89HRLL$$$JDCN-89HRM9$$$JDCN-89HRMW$$$JDCN-89HRNK$$$JDCN-89HRP8$$$JDCN-89HRPV$$$JDCN-89HRQJ$$$JDCN-89HRR7$$$JDCN-89HRRU$$$JDCN-89HRSH$$$JDCN-89HRV5$$$JDCN-89HRT6$$$JDCN-89HRTT$$$JDCN-89HRUG$$$JDCN-89HRVS$$$JDCN-89HRWF$$$JDCN-89HRYE$$$JDCN-89HRZ3$$$JDCN-89HRZQ$$$JDCN-89HS2D$$$JDCN-89HS32$$$JDCN-89HS3P$$$JDCN-89PKJ7$$$JDCN-89HS5N$$$JDCN-89HS6B$$$JDCN-89HS6Y$$$JDCN-89HS7M$$$JDCN-89HS8A$$$JDCN-89HS8X$$$JDCN-89HS9L$$$JDCN-89HSA9$$$JDCN-89HSAW$$$JDCN-89HSBK$$$JDCN-89HSC8$$$JDCN-89HSCV$$$JDCN-89HSDJ$$$JDCN-89HSE7$$$JDCN-89HSEU$$$JDCN-89HSFH$$$JDCN-89HSG6$$$JDCN-89HSGT$$$JDCN-9LFTHK$$$JDCN-89HSHG$$$JDCN-89HRX4$$$JDCN-8UENHH$$$JDCN-89HSJ5$$$JDCN-89HSJS$$$JDCN-89HSKF$$$JDCN-8HLNAZ$$$JDCN-89HSL4$$$JDCN-89HSLR$$$JDCN-89HSME$$$JDCN-89HSN3$$$JDCN-89HSNQ$$$JDCN-89HSPD$$$JDCN-89HSQ2$$$JDCN-89HSQP$$$JDCN-89HSRC$$$JDCN-89HSRZ$$$JDCN-89HRXR$$$JDCN-89HSSN$$$JDCN-89HSTB$$$JDCN-89HSTY$$$JDCN-89HSUM$$$JDCN-AN9ENE$$$JDCN-89HSVA$$$JDCN-89HSVX$$$JDCN-8EGQEM$$$JDCN-89HSWL$$$JDCN-89HSX9$$$JDCN-89HSXW$$$JDCN-89HSYK$$$JDCN-89HSZ8$$$JDCN-89HSZV$$$JDCN-89HT2J$$$JDCN-89HT38$$$JDCN-89HT3V$$$JDCN-89HT4J$$$UKWE-8CEb2F$$$JDCN-89HT5U$$$JDCN-89HT6H$$$JDCN-89HT77$$$JDCN-89HT7U$$$JDCN-89HT8H$$$JDCN-89HT96$$$JDCN-8HLRL5$$$JDCN-89HT9T$$$JDCN-97XLRC$$$JDCN-89HTAG$$$JDCN-89HTB5$$$JDCN-89HTCF$$$JDCN-89HTD4$$$JDCN-89HTDR$$$JDCN-89HTEE$$$JDCN-89HTF3$$$JDCN-89HTFR$$$JDCN-BECD9B$$$JDCN-89HTGE$$$JDCN-89HTH3$$$JDCN-89HTHQ$$$JDCN-89HTJD$$$JDCN-89HTK2$$$JDCN-89HTKP$$$JDCN-89HTLC$$$JDCN-89HTLZ$$$JDCN-89HTMN$$$JDCN-89HTNB$$$JDCN-89HTNY$$$JDCN-8UPFL5$$$JDCN-89HTW7$$$JDCN-89HTPM$$$JDCN-89HTQA$$$JDCN-89HTQX$$$JDCN-89HTRL$$$JDCN-89HTS9$$$JDCN-89HTSW$$$JDCN-89HTTK$$$UKWE-8CDMS7$$$JDCN-89HTUV$$$JDCN-89HTWU$$$JDCN-89HTXH$$$JDCN-89HTY6$$$JDCN-89HTZG$$$JDCN-89HU25$$$JDCN-89HU2S$$$JDCN-89HU3F$$$JDCN-8VDJC3$$$JDCN-89HU44$$$JDCN-8V8FQH$$$JDCN-89HU4R$$$JDCN-89HU5E$$$JDCN-B82GFQ$$$JDCN-89HU63$$$JDCN-89HU6Q$$$JDCN-89HU7D$$$JDCN-89HU82$$$JDCN-89HU8P$$$JDCN-89HU9C$$$JDCN-89HU9Z$$$JDCN-89HUAN$$$JDCN-89HUBB$$$JDCN-9LFTHP$$$JDCN-89HUBY Herzegovina$$$Cape Verde$$$Republic of Cameroon$$$People's Republic of China$$$Peoples Republic of China$$$Democratic Republic of the Congo$$$DRC$$$Republic of Congo$$$Channel Islands$$$Channel Islands$$$South Korea$$$Republic of Korea$$$Laos$$$Republic of Lebanon$$$The Netherlands$$$PNG$$$Russia$$$St. Lucia$$$St Lucia$$$Slovakia$$$SA$$$Tobago$$$Republic of Turkey$$$Turks$$$Caicos$$$UAE$$$Great Britain$$$UK$$$Britain$$$Whales$$$Northern Ireland$$$England$$$US$$$U.S.$$$U.S.A.$$$USA$$$Republic of Uruguay$$$Republic of Uzbekistan$$$Republic of Zambia

Portugal Corporate - Income determination

Choose a topic
Portugal Map
Country
See full territory list
Close topic

Taxable profit is based on accounting income adjusted according to specific provisions of the tax legislation, when applicable.

Inventory valuation

Inventories are valued at the lower of the following values: cost or net realisable value. The first in first out (FIFO) and average-cost methods of valuation are accepted. The last in first out (LIFO) method is not allowed.

Inventory adjustments are deductible for tax purposes on the amount accounted for in the tax year, capped at the difference between the acquisition or production value and, if lower, the net realisable value (duly documented) with reference to the balance sheet.

Capital gains

Under the participation exemption regime, capital gains and capital losses realised on the transfer of shares can be exempt from taxation. This rule applies to all types of Portuguese companies (holdings and operational companies) and includes capital gains on the transfer of shares derived from a non-tax-neutral merger, division, transfer of assets, or exchange of shares, and also in case of a transfer of supplementary capital entries. The regime applies provided that, at the date of the transaction, the following requirements are met:

  • The shares are held for a consecutive period of at least one year.
  • The taxpayer directly, or directly and indirectly, holds at least 10% of the share capital or voting rights in the entity from which the shares are transferred.
  • The taxpayer is not covered by the tax transparency regime (i.e. imputation of profits to individual or corporate shareholders, regardless of effective distribution).
  • The entity from which shares are transferred is not resident in a black-listed jurisdiction.
  • The assets of the entity from which shares are transferred are not directly or indirectly comprised of more than 50% of real estate located in Portugal and acquired on or after 1 January 2014 (except real estate allocated to an agricultural, industrial, or commercial activity that does not consist of buying and selling real estate).

This regime also applies to capital gains and capital losses realised by a Portuguese PE of:

  • An EU resident entity, which complies with the requirements foreseen in Article 2 of the EU Parent/Subsidiary Directive.
  • An EEA resident entity, subject to tax cooperation obligations similar to the ones established within the European Union, provided that the entity complies with requirements that are comparable to those foreseen in Article 2 of the EU Parent/Subsidiary Directive.
  • An entity resident in a state with which Portugal has concluded a double tax treaty (DTT) (except if resident in a black-listed jurisdiction) that foresees exchange of information and is subject to and not exempt in its state of residence from an income tax similar to the Portuguese CIT, which legal rate is not lower than 60% of the standard Portuguese CIT rate (meaning 12.6%).

Where the participation exemption regime on the transfer of shares does not apply, the positive net difference between capital gains and capital losses arising from the transfer of shares is taxed as part of normal income. The same applies on the disposal of tangible fixed assets, intangibles, biological assets, and investment properties. In certain circumstances, only 50% of the net gains on disposal of tangible fixed assets, intangibles, and biological assets (investment properties are not covered) is taxed as part of normal income, provided the sales proceeds are reinvested.

The regime also applies to capital gains and capital losses realised and related with shares held by a company with head office or place of effective management in Portugal that transfers its tax residence to another EU member state or to an EEA member state.

Capital gains and capital losses are determined by the difference between the sales proceeds, net of related costs, and the acquisition value, net of impairment losses and tax deductible depreciation or amortisation, adjusted by the inflation index (in the case of at least two years of ownership).

Dividend income

Under the participation exemption regime, profits distributed to a Portuguese parent company are exempt from taxation, provided that the following requirements are met:

  • The taxpayer directly, or directly and indirectly, holds at least 10% of the share capital or voting rights in the subsidiary.
  • The shares are held for a consecutive period of at least one year (or maintained for that period).
  • The taxpayer is not covered by the tax transparency regime.
  • The subsidiary is subject to and not exempt from CIT, an income tax mentioned in Article 2 of the EU Parent/Subsidiary Directive (Council Directive 2011/96/EU), or a tax similar to CIT with a legal rate that is not lower than 60% of the standard CIT rate.
  • The subsidiary is not resident in a black-listed jurisdiction.

This regime also applies to profits distributed to a Portuguese PE of:

  • An EU resident entity, which complies with the requirements foreseen in Article 2 of the EU Parent/Subsidiary Directive.
  • An EEA resident entity, subject to tax cooperation obligations similar to the ones established within the European Union, provided that the entity complies with requirements that are comparable to those foreseen in Article 2 of the EU Parent/Subsidiary Directive.
  • An entity resident in a state with which Portugal has concluded a DTT (except if resident in a black-listed jurisdiction) that foresees exchange of information and is subject to and not exempt in its state of residence from an income tax similar to the Portuguese CIT.

The participation exemption regime on profits is denied in case of an arrangement or series of arrangements which main purpose or purposes is to obtain a tax advantage that defeats the object and purpose of eliminating double taxation on profits, in case such arrangement or series of arrangements is not regarded as genuine, all facts and circumstances considered. For completeness, an arrangement or series of arrangements is not regarded as genuine if it is not based on valid economic reasons and has no economic reality.

Bonds and other subordinated securities income

At the level of the issuer, the total or partial reduction of the principal debt in bonds or other subordinated securities obtained by Portuguese taxpayers are considered as income taxed at the standard CIT rate.

This rule applies provided that they do not attribute to the holder the right to receive dividends or voting rights at the General Meeting of Shareholders and are not convertible into shares.

Interest income

Interest income obtained by Portuguese taxpayers is taxed as part of normal income and taxed at the standard CIT rate. Any WHT incurred in interest income received is treated as a payment on account of the final CIT liability, refundable even if no CIT is due, in case of domestic interest income.

Royalty income

Royalty income obtained by Portuguese taxpayers is taxed as part of normal income and taxed at the standard CIT rate. Any WHT incurred in royalty income received is treated as a payment on account of the final CIT liability, refundable even if no CIT is due, in case of domestic royalty income.

Certain royalty income may benefit from the patent box regime (see the Tax credits and incentives section).

Foreign income

A Portuguese company is taxed on all its foreign income; however, there is an optional regime to exclude from taxation the profits and losses allocated to a foreign PE (see the Taxes on corporate income section for more information).

Taxes paid abroad can be offset against corresponding Portuguese tax (see Foreign tax credit in the Tax credits and incentives section for more information).

There are no provisions concerning tax deferral of income earned abroad.


Last Reviewed - 01 July 2019

Contacts, News and Downloads
Portugal contacts
Jaime Esteves Title = Jaime Esteves width=55px
Jaime EstevesTax Lead Partner+351 213 599 601
Jorge Figueiredo Title = Jorge Figueiredo width=55px
Jorge FigueiredoPartner, Financial Services / International Tax Structuring+351 213 599 618
Leendert Verschoor Title = Leendert Verschoor width=55px
Leendert VerschoorPartner, Transfer Pricing / Human Resources / International Tax Structuring+351 213 599 631
Maria Torres Title = Maria Torres width=55px
Maria TorresPartner, Mergers & Acquisitions Tax+351 225 433 135
Rosa Areias Title = Rosa Areias width=55px
Rosa AreiasPartner, International Tax Structuring+351 225 433 197
Susana Claro Title = Susana Claro width=55px
Susana ClaroPartner, Indirect Taxes+351 213 599 618
Paulo Ribeiro Title = Paulo Ribeiro width=55px
Paulo RibeiroPartner, Tax Management & Accounting Services+351 213 599 513
Catarina Gonçalves Title = Catarina Gonçalves width=55px
Catarina GonçalvesPartner, International Tax Structuring+351 213 599 659
Rodrigo Domingues Title = Rodrigo Domingues width=55px
Rodrigo DominguesPartner, Financial Services+351 213 599 625
Adriao Silva Title = Adriao Silva width=55px
Adriao SilvaDirector, Financial Services+351 213 599 625
Susana Caetano Title = Susana Caetano width=55px
Susana CaetanoDirector, Indirect Taxes+351 213 599 610
Ana Reis Title = Ana Reis width=55px
Ana ReisDirector, International Tax Structuring+351 225 433 135
Ricardo Lourenço Title = Ricardo Lourenço width=55px
Ricardo LourençoDirector, Tax Technology+351 213 599 611
Diogo Tavares Castro Title = Diogo Tavares Castro width=55px
Diogo Tavares CastroDirector, Transfer Pricing+351 213 599 646
Barbara Abrantes Garcia Title = Barbara Abrantes Garcia width=55px
Barbara Abrantes GarciaDirector, Transfer Pricing & Value Chain Transformation+351 213 599 625
Contacts, News and Downloads
Select territory
Select territory
      Advanced print
      Advance print
      Please login to see favourites territories in Advance print
      Login
      Signup
      Contact us

      Successful

      Thank you for contacting PwC.
      Contacts
      See full territory list
      Favourites
      Login
      Signup