Enter Your Salary and the Portugal Salary Calculator will automatically produce a salary after tax illustration for you, simple. by ... which in practice has resulted in lower tax rates. Europe has the lowest regional average rate, at 20.27 percent (25.13 percent when weighted by GDP). A comparison of tax rates by countries is difficult and somewhat subjective, as tax laws in most countries are extremely complex and the tax burden falls differently on different groups in each country and sub-national unit. € 4,104 or, when higher, the total amount of the mandatory social security contributions. Get all the latest global tax news and analysis sent directly to your inbox. (1) Assuming that both taxpayers are people with disabilities. For the purpose of liability to Social Security Contributions, additional conditions are required. (2) If there are simultaneously the expenses mentioned in i) and ii), the limit is € 1,000 instead of € 800 Effective for the 2018 year and beyond, the federal corporate tax rate has been reduced from a stepped rate up to 35% to one flat rate of 21%. Non-resident shareholders of such entities may also benefit from a tax exemption on dividends and interest. However, this liability to Social Security will only enter into force when regulated. The Sales Tax Rate in Portugal stands at 23 percent. Please see www.pwc.com/structure for further details. (3) Reference rate has not yet been determined. In the absence of publication of the ordinance determining the reference interest rate, it is considered 70% of the minimum  rate applicable by the ECB to its main refinancing operations or another rate legally equivalent, on the first working day of the year to which the income relates. Companies that are subject to CIT with revenues of up to 1.2 million euros (EUR) in the given tax year and companies starting business activity from 2019 are able, under some conditions, to use the 9% CIT rate. (7) The taxpayer can opt to include this income in the annual income tax return. (6) The taxpayer can opt for 50% of the dividends earned to be taxed at the progressive rates in the annual income tax return, in which case only 50% of the income is liable to taxation. Corporate tax in Portugal Corporate tax rarely applies to self-employed workers and freelancers in Portugal. The taxable income of this category will be computed by applying the following coefficients to the gross income: The income “deduction” arising from the application of the coefficients referred above on b) and c) (i.e. (8) Subject to taxation at an autonomous/final rate of 28%. For this purpose, taxpayers must identify in the tax authorities’ website the invoices or other documents that are related with the rental expenses incurred as a result of transferring the permanent residence to an inland territory. For Social Security purposes, no liability to contributions arises in respect of the compensation for termination of employment contract in the event of collective redundancy; non compliance with legal notice; extinction of employment; individual redundancies or dismissals caused by inadaptability of the employee; obsolescence; for resolution by the employee; for termination before the term of the employment contract. Suite 950 The regime is applicable for a period of ten consecutive years. the generality of the service-rendering activities) is partially conditioned by the verification of expenses and charges effectively incurred and related to the activity. Corporate Tax Rates 2015-2019* Jurisdiction 2015 2016 2017 2018 2019. For the latest developments, access the EY Tax COVID-19 Response Tracker. The regime will apply to individuals who become Portuguese tax residents under Portuguese domestic law in 2019 or 2020, provided that they: The tax regime for non-habitual residents is part of the Investment Tax Code and is intended to attract individuals and investments to Portugal. The corporate tax rate hasn’t risen in the last few years and seems to have plateaued at 21%. (5) This limit is raised to € 1,000 for 3 years (the first year of the contract being concluded), if these expenses derive from the transfer of permanent residence to an inland territory (as defined in Administrative Rule no. In the example above, a taxpayer who earns a total gross income of € 40,000 and incurs expenses in the amount of at least € 1,896 can benefit from the application of the coefficient in full, i.e. Under certain conditions, such entities benefit from a reduced 5% corporate income tax (CIT) rate for certain activities and from a 50% deduction to their assessed tax. In Portugal, salary is multiplied by 14 months (the 12 months in the year, the holiday pay and the Christmas bonus, each equivalent to another salary). Countries with a lower corporate income tax are likely to grow faster and attract more investment and jobs than high-tax countries. For that purpose, the taxpayer must identify in the tax authorities’ website the members of the household who attend these educational establishments and the total value of the respective expenses incurred. (13) The capital gains obtained by non-resident entities without permanent establishment in Portugal, who are domiciled in jurisdictions with more favourable tax regimes, is subject to a tax rate of 35%. It is established a new tax regime to encourage the return of emigrants to Portugal. The additional surcharge is progressive and it is applicable on the income subject to the marginal tax rates, exceeding € 80,000.A rate of 2.5% is applicable to taxpayers with a taxable income exceeding € 80,000 up to € 250,000 and a rate of 5% is applicable to the taxable income exceeding € 250,000. All European countries tax corporate income. Under the regime’s rules, employment and self-employment income from a Portuguese source, derived from “high value-added activities of a scientific, artistic or technical nature” (included in a list of activities published by the Portuguese Government) earned by non-habitual residents in Portugal will be taxed at a flat rate of 20%. The income obtained by the following individuals will be excluded from taxation: Based on the following assumptions, we have prepared an estimate of the PIT due by the Pereira family. 4 TAX ON BUSINESS OPERATIONS: GENERAL. (4) Income paid or made available to accounts opened in the name of one or more holders acting on behalf of one or more unidentified third parties is subject to a final tax rate of 35%, unless the beneficial owner of the income is identified. Sales Tax Rate in Portugal averaged 21.19 percent from 2000 until 2020, reaching an all time high of 23 percent in 2011 and a record low of 17 percent in 2001. As of 1 January 2019, a lower 9% CIT rate for 'small taxpayers' has been introduced. The corporate tax base matters as well, though, since how countries design their corporate tax could hurt their growth prospects even if CIT rates are lowered. They are under the aged of 35. The Tax Foundation works hard to provide insightful tax policy analysis. The Tax Foundation is the nation’s leading independent tax policy nonprofit. Portugal has a high corporate tax rate of 31.5 percent (the OECD average is 23.3 percent). So, whoever earns 1500 € of gross salary every mont… Tax tables in Portugal are simply a list of the relevent tax rates, fixed amounts and / or threholds used in the computation of tax in Portugal, the Portugal tax tables also include specific notes and guidance on the validity of scenarios (for example, qualifying criterea for specific tax relief / allowances) and notes of the calculation of phaseout of specific tax … (13) The capital gains obtained by non-resident entities without permanent establishment in Portugal, who are domiciled in jurisdictions with more favourable tax regimes, is subject to a tax rate of 35%. Albania 15% 15% 15% 15% 15% Algeria 23% 26% 26% 26% 19%/26% Andorra 10% 10% 10% 10% 10% As for the rental income, the tax rate will depend on the duration of the rental contracts for permanent residence, as follows: did not qualify as tax residents during the prior three years; qualified as tax residents in Portugal prior to 31 December 2015; did not apply for the non-habitual residents regime. However, corporate income tax (CIT) rates differ substantially across countries, ranging from 9 percent in Hungary to 34.4 percent in France. While the regime applies, entities required to withhold tax on the income covered by this regime shall apply the withholding taxes only to half of the income paid or made available. This rate will be effective for corporations whose tax year begins after Jan. 1, 2018, and it is a permanent change. As from 1 January 2019, the Portuguese monthly minimum wage is increased to Eur 600. the rate is reduced to 26%; for each renewal with an equal duration, an additional reduction of two percentage points, up to a limit of fourteen percentage points; (4) Should the expenses be made outside of Portuguese territory, the taxpayer may report them using the Portuguese Tax Authorities' website. h) Income arising from services rendered to an entity in which, for more than 183 days of the tax year: Validation of the application of the coefficient: Dependants <= 3 years old on December 31 of the year to which the tax relates, iv) Ascendants actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime, v) Only one ascendant actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime, iii) For each ascendant with disability actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime, iv) 30% of education and rehabilitation expenditures, v) 25% of life assurance premiums or contributions paid to credit unions, Disability expenses for each taxpayer and each dependant, which level of permanent disability is ≥ 90%. (14) Final rates. Portugal has a territorial tax system, exempting foreign dividend and capital gains income for most countries. Duration equal to or greater than 5 years and less than 10 years: reduction of five percentage points of the autonomous rate, i.e. Not subject to withholding tax. Germany’s rate includes the 15 percent federal rate and municipal trade taxes, making the combined rate nearly twice the federal rate at 29.8 percent. (3) Income paid or made available to recipients resident in Portuguese territory by non-resident entities without permanent establishment in Portugal, domiciled in jurisdictions with more favourable tax regimes is subject to a tax rate of 35%. (1) The employment and self-employment income  paid to non-resident individuals as a result of services provided to a single entity is not liable to withholding taxes up to the amount corresponding to the monthly minimum wage. (14) Final rates. A flat CIT rate of 21% applies on the global amount of taxable income realised by companies resident for tax purposes in mainland Portugal (also applicable to Portuguese PEs of foreign entities). Would you consider telling us more about how we can do better? Going for Growth (Cut-off date : December 2018) By country. In addition, the overall cap of the tax deduction for education and training expenses shall be increased from € 800 to € 1,000, if the difference relates to the said expenses. Duration equal to or greater than 2 years and less than 5 years: reduction of two percentage points of the autonomous rate, i.e. Interest is exempt on capital up to a balance of ≤ € 10,500, Author rights obtained by  the Portuguese tax resident original owner are taxed only at 50%, with the amount excluded from taxation being limited to € 10,000, Capital gains derived from the sale of participation units are taxed at a 10% rate, Real estate investment funds / entities in forest resources, Capital gains derived from the sale of participation units/shares are taxed at a 10% rate, Contributions to social security regimes made by employers. Exemplification of the calculation of the amount of expenses to be presented by a taxpayer, in order to benefit from the full application of the legal coefficients to the gross income arising from the provision of services: Difference between 15% of gross income and the amount of deductible expenses. The country with the highest CIT rate is France (34.4 percent), followed by Portugal (31.5 percent) and Germany (29.8 percent). Federal and State Business Income Tax Rates . 75%. Follow these simple steps to calculate your salary after tax in Portugal using the Portugal Salary Calculator 2020 which is updated with the 2020/21 tax tables. Direct government funding of business R&D and tax incentives for R&D, Portugal, 2000-17 As a percentage of GDP, 2010 prices (right-hand scale) 0.00 0.10 0.20 0.30 0.40 0.50 0.60 % Direct government funding Tax incentive support Subnational tax incentive support Total 2006 (excl. To qualify for the visa, both of these rates must be met. At the Chilean company level, the Corporate Tax rate is 25% or 27% depending on the company's income tax regime (see question 4.6 below), calculated annually on its worldwide taxable income on a cash or accrual basis. An OECD study from 2008 found that corporate income taxes are the most harmful form of taxation for economic growth. Canada now has a relatively high corporate income tax rate at 26.2 per cent (incorporating Alberta’s 2021/22 legislated changes), only five points less than the top OECD rate in Portugal at 31.5 per The rate has gradually come down in the last decade, leaving it slightly below the EU average of 21.51%. The standard CIT rate is 19%. WTA: Withholding Tax on Account of the final tax payment Deposit interest from any applications on financial institutions and public debt instruments benefit from a tax exemption in 1/5 and 3/5 of its value, if the capital is not withdrawn for at least 5 and 8 years, respectively, and the maturity occurs at the final of the contracted period. income tax rate (in 2012, Canada’s corporate tax rate was seven points lower than the OECD weighted average). Optional: Change the number of days you work per we… Use our new tax calculator to compare how recent tax plans could impact your wallet. (10) May be excluded from taxation, provided that the sale value is reinvested in the acquisition of a primary private residence, in certain conditions. Portugal provides above-average capital cost write-offs for investments in machinery. (6) Amounts invested after the retirement date are not deductible. Consideration of 50% of the positive or negative balance arising from disposals made by tax residents: a) rents paid, net of subsidies or official contributions, concerning an urban property or fraction for permanent residence under the Urban Rental Regime or the New Urban Rental Regime, taxable income higher than € 7,091 and up to € 30,000. The tax rate over personal income in 2015 (tax return 2016) was the following: To explain how to calculate the Portuguese personal income tax, I’m going to give you the example of a single person, without children, that earns 1500 € monthly of gross salary as an employee. subnational tax support) Both spouses are employed; in addition, the wife works as a self-employed individual as a lawyer. Would you consider contributing to our work? Tax credit of 20% of the amount invested: Limits to aggregate computed tax deductions, Retirement Saving Plan (PPR) – € 2.000 x 2, Assuming a global amount withheld from the couple's income of € 4,769, Dividends (by option to be taxed at progressive rates), Amount of the income not subject to taxation: 50%, Rental - own real estate (by option to be taxed at progressive rates), Capital gains on the sale of the rented real estate, 20% payments to retirement saving plans (x2), Not subject to tax withholdings- Taxed at the marginal rates of PIT. 2. Countries with similar tax brackets include Austria with a maximum tax bracket of 50.00% , Belgium with a maximum tax bracket of 50.00% and United Kingdom with a maximum tax bracket of 50.00% . the premiums and awards for disabled athletes and high performance athletes and their coaches. More insights into the recent history and current state of corporate income taxes around the world are provided here. Suppliers of goods or services VAT registered in Portugal must charge the appropriate VAT rate, and collect the tax for onward payment to the Portuguese tax authorities through a VAT filling: see Portuguese VAT returns … Portugal’s 2019 budget law, which was published in the official gazette on 31 December 2018 and generally applies as from 1 January 2019, makes significant changes to the tax legislation. The maximum income tax rate in Portugal of 46.00% ranks Portugal as one of the ten highest taxed countries in the world. However, businesses pay corporate tax in Portugal at a flat rate of 21% of their taxable profits. The most important revenue sources include the income tax, social security contributions, corporate tax and the value added tax, which are all applied at the national level. 1. Taxes in Portugal are levied by both the national and regional governments of Portugal.Tax revenue in Portugal stood at 34.9% of GDP in 2018. Details of Tax Revenue - Portugal. are excluded from taxation; awards for sport training for non-professional sport agents (players, referees, judges) are excluded from taxation, up to € 2,375; the compensations paid as result of non-professional duties to referees and judges are excluded from taxation, up to € 2,375. staff from diplomatic and consular bodies and international organizations; contractors or auctioneers working on NATO shared infrastructures. Note: PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. The latest value from 2019 is 39.8 percent. Acquisition of social participation by employees. These CIT rates include the federal, state, and local taxes where there are multiple levels of government. Duration equal or more than 20 years: reduction of eighteen percentage points of the autonomous rate, i.e. For that purpose, the individual should communicate to the said entity, through a written statement, that no similar income was/is received from other resident entities or from permanent establishments of non-resident entities in Portugal. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and global levels. Most European countries impose CIT rates that are either close to or fall below the global average. The personal income tax withholding rate tables for 2019, applicable to employment income and pensions earned on the Autonomous Region of Madeira, have been published by Order nr. All rights reserved. (7) This benefits also apply to the contributions made by the employers, in favor of the employees, to Public Capitalisation regime. The CIT is the only tax levied on corporate income. Gains derived from stock options plans, subscription plans, attribution plans or equivalent share plans on securities issued by the employer are exempt, up to the limit of € 40,000, subject to certain conditions. Tax brackets in Portugal in 2019 The number of taxable installments rose from five to seven from January 2018This measure appears in the Portuguese State Budget for the New Year. According to the Minister of Finance Mário Centeno this new structure of the IRS scale will benefit 1.6 million households. Portuguese companies pay 23.75% of gross wages to social security and employees pay a rate of 11% on their salary. (5) Income paid or made available to recipients resident in Portuguese territory by a third party on behalf of non-resident entities domiciled in a more favourable tax regime is subject to a tax rate of 35%. In addition to the amendments reported below, the budget law includes changes to excise duties, stamp duty, vehicle and other taxes. disposal of shares in companies whose assets are comprised in more than 50% of real estate located in Portugal. This benefits consists in a PIT tax exemption applicable to the part of the remuneration paid to the employee, by the Portuguese employer, exclusively as compensation for moving and staying abroad (up to € 10,000). 1325 G St NW (4) Profits distributions attributed to employees are subject to Social Security contributions. Taxable persons that have established their business, a fixed establishment or have their residence in Portugal and that carry out transactions subject to VAT, are obliged to communicate to the Portuguese Tax and Customs Authorities, by electronic means, the elements of documents issued under the VAT Code (invoices, simplified invoices, debit notes and credit notes) as well … (12) Taxation of 100% of capital gain (without the possibility of applying the reinvestment regime) when taxpayers have benefited from support from the State or other Public entities (for the acquisition, construction, reconstruction or execution of conservation works), under certain conditions. Help us continue our work by making a tax-deductible gift today. 791-A/2019, of 16 January. Rate– The standard corporate tax rate is 21%. the rate is reduced to 23%; for each renewal with an equal duration, an additional reduction of five percentage points, up to a limit of fourteen percentage points; ... Corporate income tax rate [6 / 6] Year [21] Layout; Table options Export. Portugal: Corporate Tax Comparative Guide 25 November 2019 . The personal income tax withholding rate tables for 2019, applicable to employment income and pensions earned on the Autonomous Region of Azores, have been published by Order nr. Whilst Portugal is required to implement the VAT rules of the European Union, it still sets the level of its own VAT rate. To calculate the value of the IMT tax simply complete steps 1, 2 and 3 Values updated by the Portuguese State Budget for 2019 Fill in the following fields to calculate the IMT tax in Portugal: 208/2017 of 13 July). The corporate tax rate is 21.4 percent as from January 1, 2019 (reduced to 20.6 percent from January 1, 2021). Being an expat and a tax resident of one country while still a citizen of another country—especially the United States—brings a specific set of conditions and burdens. Details of Tax Revenue - Slovak Republic. The map shows statutory CIT rates in 27 European countries. (5) For managers, members of the board, public sector managers and representatives of permanent establishments of non-resident entities, the amounts received for the termination of the employment contract are totally taxable, on the part that respects to those functions only. A recently released OECD database covering 88 jurisdictions worldwide shows that the global average statutory CIT rate was 21.4 percent in 2018. This page provides - Portugal Sales Tax Rate | VAT - actual values, historical data, forecast, chart, statistics, economic calendar and news. The country with the highest CIT rate is France (34.4 percent), followed by Portugal (31.5 percent) and Germany (29.8 percent). Portugal: Tax rate, percent of commercial profits: For that indicator, we provide data for Portugal from 2005 to 2019. 4.1 What is the headline rate of tax on corporate profits? Not subject to withholding tax. Corporate income tax rate The standard corporate income tax rate is 25 percent. (2) The benefit from the private use of a company car is only liable to taxation when there is a written agreement. The regime will apply to individuals who become Portuguese tax residents under Portuguese domestic law in a certain year and have not qualified as tax residents in Portugal in any of the previous five years. The status of non-habitual tax resident becomes effective upon registration with the Portuguese tax authorities, which should be applied for until 31 March of the year following the one during which the taxpayer became tax resident in Portugal. For comparison, the world average in 2019 based on 185 countries is … The referred tax reductions enter into force on 1 October, 2019. Employers' contributions to pension funds (or other complementary social security regimes) are exempt from PIT in the moment the contributions are made, if certain conditions are met. (3) The amount of the education and training expenses incurred by students attending education institutions located in inland regions ( as identified in Ministerial Order 208/2017 of 13 July), shall be increased by 10 percentage points. The part of the compensation concerning the periods in which they exercised their duties as regular employees may continue to benefit from the tax exclusion. The limits set out paragraphs b) to d) are increased as follows: i) central, regional or local administration; Foundations (with conditions); Deduction of 15% of the VAT incurred by any household member regarding certain provisions of services (8) and deduction of 100% of the VAT incurred by any household member on monthly passes for the use of public transportation, in both cases if included on invoices communicated to the tax authorities, Deduction of 35% of the amount of expenses incurred by any member of the household with the acquisition of goods and services, communicated to the Portuguese tax authorities and provided that the taxpayer number is included in the invoice, Deduction of 45% of the amount incurred by any member of the household of a Single-parent taxpayers. Pereira Family  This amount can be increased to € 4,275, provided that the difference results from expenses incurred with mandatory fees paid to professional associations indispensable for the exercise of the respective activity. Going for Growth 2019. © 2017 - 2021 PwC. The only condition is that it is above 15%. The other rates remain at 0.4% for properties held by companies, 0.7% for individuals and 1% for those owning property valued over €1 million. 37/2019, of 31 January. Our work depends on support from members of the public like you. In general, this Tax Guide does not reflect any COVID-19 tax policy measures. Washington, DC 20005, Tax Expenditures, Credits, and Deductions, Taxes on Savers, Investors, and Entrepreneurs, Small Business, Pass-throughs, and Non-profits, Analysis of 2020 Presidential Tax Proposals, Research & Analysis of Digital Tax Policies, Consumption Tax Policies in OECD Countries, Sources of Government Revenue in the OECD, Opportunities for Pro-Growth Tax Reform in Austria, Tax Proposals, Comparisons, and the Economy. However, taxes are still administered at a central level. Other taxes involved in this setup include corporate and personal income tax. This is only applicable to dividends of Portuguese source or paid by an entity resident in European Union or in the European Economic Area. Optional: Select Advanced and enter your age to alter age related tax allowances and deductions for your earning in Portugal 3. Liable to PIT on worldwide income (Portugal and abroad), Not liable to PIT 50% of the employment income and business and professional income, Liable to PIT on the net employment and self-employment income from "high value-added activities" at a flat rate of 20%, Liable to PIT only on the Portuguese source of income, Salaries, holidays and Christmas bonus, commissions, Travel expenses not related to the company’s activity, Loans granted by the company – acquisition of permanent private house, (≤ €180,426.40 ) and (rate≥ 70% x ECB rate), Loans granted by other entity - the employer supports the interest (totally or partly), Extraordinary profit distribution/profit distribution, Indemnity for the termination of the labour contract, Up to (average of the regular salary of the last 12 months)*years of work, Retirement pension, company’s complement/Social Security, Royalties earned by the author/ Original owner, Royalties earned by the non author/ Technical assistance, capital gains arising the disposal of real estate, a) Sales of goods and products, as well as provisions of services in the hospitality, restaurant and beverage sector, with the exception of those relating to local accommodation establishments in the form of apartments/houses, b) Listed service-rendering activities (article 151.º of PIT Code), d) Royalties, Know how and other income (investment income, capital gains, rental income), f) Business related subsidies and remaining income of category B, g) Income arising from services rendered by a partner to a company subject to the “tax transparency regime”. 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