Corporate Tax in Portugal will continue to decrease until 2028

Portugal has approved a gradual reduction of its corporate income tax (IRC) rate, marking one of the most significant tax reforms in recent years. Following the 2025 State Budget — which lowered the general IRC rate from 21% to 20% — the government has now confirmed a further reduction to 17% by 2028.

What Changes

The reform introduces a three-year transition period for the general corporate tax rate:

• 2026: 19%

• 2027: 18%

• 2028: 17%

Small and medium-sized enterprises (SMEs) and small mid-caps will continue to benefit from a 15% rate on the first €50,000 of taxable income, ensuring a lower rate than the general corporate tax.

These changes aim to enhance Portugal’s competitiveness, stimulate investment, and align the national corporate tax rate with EU averages.

When It Takes Effect

The reform has been published and has been in force since 7 November 2025, with the new rates taking effect from the 2026 fiscal year onwards. The changes will affect all companies subject to corporate income tax in Portugal.

What It Means for Businesses

For companies operating in Portugal, this progressive tax reduction provides an opportunity to reassess tax planning, reinvestment, and growth strategies. The reform reflects Portugal’s broader commitment to simplifying its tax system and promoting sustainable business development.