Opening a company in Portugal involves more than registering the business and starting to operate. As a foreign entrepreneur, you have to understand the obligations that your business has to comply with, from the beginning, to avoid unnecessary issued.
To help you stay on top of your tax responsibilities, we have a list of the main tax obligations companies in Portugal should be aware of.
1. Corporate Income Tax (IRC)
Companies operating in Portugal are generally subject to Corporate Income Tax (IRC) on their taxable profits.
The amount of IRC a company pays depends on its taxable income and the applicable tax rules. The standard IRC rate is currently 17%, while qualifying small and medium-sized companies may benefit from a reduced rate of 15% on the first €50,000 of taxable income, with the standard rate applying to the amount above that threshold.
Companies subject to IRC must submit the relevant tax declarations, including the annual corporate income tax return (Modelo 22) and the annual accounting and tax information declaration (IES/DA), where applicable.
2. VAT (IVA)
If your company carries out activities subject to VAT, you generally need to charge VAT on the relevant goods or services and account for it to the Portuguese Tax Authority.
The VAT reporting frequency depends, among other factors, on the company’s turnover.
Under the current rules, companies with an annual turnover of €650,000 or more are subject to monthly VAT declarations. Companies below this mark, usually, fall under the quarterly regime, although eligible businesses can opt for monthly reporting.
VAT declarations must be submitted electronically through the Portal das Finanças. Importantly, the obligation to submit a declaration can continue even during a period in which the company has not carried out taxable transactions.
The VAT amount payable is generally calculated based on the VAT charged to customers, less eligible deductible VAT on business expenses.
3. Withholding Tax
Companies may also have withholding tax obligations when making certain payments.
For example, when paying for certain professional services, a company may be required to withhold part of the amount and subsequently deliver that amount to the Tax Authority on behalf of the recipient.
The applicable withholding rate depends on the type of income and the circumstances of the recipient.
This is particularly relevant for companies that work with freelancers, professionals or service providers.
4. Payroll and Social Security Contributions
Employing staff also entails tax and social security responsibilities.
Employers must withhold the appropriate amount of income tax from employees’ salaries where applicable and submit the required payroll information. Companies must also pay the relevant Social Security contributions and employee contributions to Social Security.
These obligations are generally handled on a monthly basis and require accurate payroll records.
For companies hiring their first employees in Portugal, setting up the payroll process correctly from the beginning is particularly important.
5. Accounting Obligations
Companies operating in Portugal are required to maintain organized accounting.
Accounting records must be supported by appropriate documentation and recorded according to the applicable rules. Portuguese tax legislation also requires companies to maintain their accounting in a way that allows their taxable profit to be determined and controlled.
This means that keeping invoices, receipts, contracts, bank records and other relevant documentation organized is an important part of running a business in Portugal.
For most companies, these responsibilities are managed with the support of a Certified Accountant.
6. Annual Accounts and IES/DA
Companies subject to the annual accounts registration requirements must submit their IES/DA (Informação Empresarial Simplificada / Annual Accounting and Tax Information Declaration).
This declaration brings together accounting, tax and statistical information about the company and also serves as the basis for registering the company’s annual accounts.
For companies whose financial year follows the calendar year, the annual accounts registration is usually due by the 15th day of the seventh month following the end of the financial year, meaning 15 July for a January to December financial year.
The submission is made by the company’s Certified Accountant through the Portal das Finanças.
7. Other Taxes May Apply
IRC and VAT are some of the most common taxes companies are subject to, but they are not the only ones.
Depending on the company’s activities, assets, employees and transactions, other taxes and obligations may apply. These can include:
- Stamp Duty (Imposto do Selo)
- Property-related taxes such as IMI
- Vehicle-related taxes such as IUC
- Withholding taxes
- Taxes and contributions associated with employees
- Specific taxes applicable to particular sectors or activities
For this reason, the tax obligations of a company should always be assessed according to its specific activity and structure.
How Often Do Companies Have to Pay Taxes?
There is no single tax payment date that applies to every company.
Some obligations are monthly, such as certain payroll, withholding and VAT obligations. Others are quarterly, while annual declarations and payments are submitted according to specific deadlines.
The Portuguese Tax Authority publishes an annual tax calendar with the relevant declaration and payment deadlines. For example, the 2026 tax calendar includes monthly VAT and withholding tax deadlines, as well as quarterly VAT deadlines for companies under the relevant regime.
Keeping track of these dates is essential, because missing a declaration deadline can result in penalties, interest or other consequences.
Do Foreign-Owned Companies Have Different Tax Obligations?
Not necessarily. A company established in Portugal generally has to comply with the Portuguese tax and accounting rules applicable to its legal structure and activities, regardless of whether its shareholders or directors are Portuguese or foreign.
However, international businesses can have additional considerations, particularly when they:
- Have shareholders or directors living abroad
- Provide services to clients in other countries
- Purchase goods or services internationally
- Receive income from outside Portugal
- Have employees or contractors in different countries
- Have a parent company or related companies abroad
In these situations, international tax rules and double taxation agreements can become relevant.
Thinking about opening a business in Portugal? EasyRelocation offers specialized consultant and accountant services and can support you throughout the process.
This article is intended for general informational purposes and does not constitute tax, accounting or legal advice. Tax rules and deadlines may change, and the obligations applicable to your company depend on its specific circumstances. We recommend consulting a qualified accountant or tax professional for advice regarding your individual situation.
