Paying taxes is part of the day-to-day running of any business. Once you set up a company, you take on a number of new tax obligations. (retirar o artigo neste link)
It is therefore essential to keep these obligations up to date, as the consequences of late or missed payments can have a significant impact on the future of the business.
Do you know which taxes your company needs to pay in order to operate legally and regularly?
In this article, we highlight some of the main taxes that apply to companies in Portugal. Find out more below!
Business Taxes: Discover the Main Ones
Companies are subject to various tax obligations from the moment they are established, including the payment of different taxes. Failure to comply can result in fines and penalties that may negatively affect the operation of the business.
The first step towards avoiding problems is understanding which taxes apply to your company. These can vary depending on several factors relating to the business and its activities.
Below, we highlight the main tax obligations that business owners should be aware of.
1 – Corporate Income Tax
One of the main taxes paid by companies is IRC (Corporate Income Tax), which applies to income and profits generated from commercial, industrial or agricultural activities.
In addition to Portuguese companies, this tax may also apply to non-resident companies that generate income in Portugal.
IRC is calculated based primarily on the company’s taxable profit. However, several factors can affect the final amount of tax payable.
2 – Value Added Tax
Another well-known tax in Portugal is VAT (Value Added Tax).
For businesses, VAT generally applies differently to purchases and sales. Companies pay VAT on their purchases and charge VAT on the goods and services they sell to their customers.
As a general rule, the amount payable to the State corresponds to the difference between deductible input VAT and VAT charged on sales.
VAT returns and payments may be made on a monthly or quarterly basis, depending on the company’s applicable tax regime.
The VAT rate applicable to a transaction depends on the type of goods or services provided.
In mainland Portugal, the main VAT rates are:
- Standard rate: 23%
- Intermediate rate: 13%
- Reduced rate: 6%
3 – Social Security Contributions
If you have recruited employees and your company has staff, you will also have to pay Social Security contributions.
These contributions are linked to each employee’s monthly salary and include both an employer contribution and an amount withheld from the employee’s salary.
As a general rule, the employer’s contribution corresponds to 23.75% of the employee’s gross remuneration.
The employee, in turn, generally has 11% withheld from their salary as their Social Security contribution.
4 – Stamp Duty
Stamp Duty (Imposto do Selo) may apply to certain business transactions and activities. It covers various documents, contracts, legal acts, titles and specific transactions, among other situations provided for by Portuguese tax legislation.
The applicable rate depends on the nature of the transaction and the provisions established in the general Stamp Duty table, which is available on the Portuguese Tax Authority’s Finance Portal.
The best way to determine exactly which taxes and tax obligations apply to your company is to consult a certified accountant (Contabilista Certificado).
Keep track of your tax obligations and comply with the relevant deadlines to avoid fines and penalties from the Portuguese Tax Authority.