Following the vote and approval of the Portuguese State Budget for 2025, the Parliament opted for a one percentage point reduction of the general Corporate Income Tax (IRC) rate in 2025 to 20%.
The reduction in question applies to the results obtained by companies next year (i.e. in 2025). However, the final settlement of the tax will not take place until 2026, as the IRC is calculated and settled when the Form 22 return is filed (according to the general rule, before May 2026). Therefore, any tax reduction on this return will only take place in that year.
Likewise, it has also been approved to lower to 16% the IRC rate applicable to the first 50,000 euros of profits of micro, small and medium-sized enterprises (SMEs) or small or mid-cap companies.
The advance payments of the IRC due in 2025 to be paid by companies will be calculated and settled based on the tax figures of the previous year 2024 – still settled at the IRC rate of 21%. However, companies can waive or adjust the payment of the last payment on account – the third payment – which according to the general rule must be paid by 15th December, depending on the tax to be assessed for the year in question. The general rate will then be lower, and it is possible that some companies will pay less than they would if the IRC remained at 21%, or even not pay it at all.
The combined relief of the two measures is expected to have a budgetary cost of 420.5 million euros in 2026: 366 million euros are associated with the lowering of the general rate to 20% and only 54.5 million euros with the lowering of the rate for smaller companies.
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All information contained in this publication is up to date on 2024. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.