Running a company in Portugal offers considerable advantages, including access to the EU market and one of Europe’s most competitive corporate tax regimes. Yet compliance can be complex, particularly for foreign investors unfamiliar with local procedures, deadlines, and digital reporting requirements. To help business owners stay ahead of their obligations, our accounting specialists have compiled six essential Filing Tips for Businesses in Portugal that ensure both efficiency and full legal compliance.
1. Understand Your Company’s Tax Residency and Obligations
The first step in any successful filing strategy is to determine the company’s tax residency status. Portuguese entities, including those incorporated in Madeira, are deemed tax residents in Portugal and subject to Corporate Income Tax (IRC) on worldwide income. Non-resident companies with a permanent establishment (PE) in Portugal are taxed only on profits attributable to that PE.
Tax-resident companies must file an annual corporate income tax return (Modelo 22) and submit the IES/DA (Simplified Corporate Information/Annual Declaration) electronically through the Portal das Finanças. Accurate classification of residency is critical, as errors can lead to double taxation or missed treaty benefits under Portugal’s network of 80+ Double Taxation Agreements.
2. Keep Accurate and Timely Accounting Records
Portuguese law requires that all companies maintain organised accounting in accordance with the Sistema de Normalização Contabilística (SNC), Portugal’s local accounting standards aligned with IFRS. Books and records must be kept in Portuguese, stored for at least ten years, and submitted in digital SAF-T format when requested by the Tax Authority (Autoridade Tributária e Aduaneira).
For international businesses operating remotely, engaging a certified accountant (Contabilista Certificado) is not optional; it is a legal obligation. The accountant is responsible for ensuring that monthly bookkeeping, VAT returns, payroll submissions, and annual filings comply with both national and regional requirements. In Madeira, this includes the correct application of the reduced IRC rate available to qualifying entities within the International Business Centre.
3. Monitor Corporate Tax Deadlines and Advance Payments
Portugal’s corporate tax calendar follows a predictable but strict cycle:
- Annual return (Modelo 22): filed electronically by May 31 of the year following the tax period.IES/DA (Annual Declaration): due by July 15.Advance Payments: three instalments (July, September, and December) based on prior-year taxable income.
- Special Advance Payment (PEC): generally due in March; creditable against future tax liabilities.
- Foreign-owned entities often overlook autonomous taxation, an additional levy applied to certain expenses such as representation, per diems, or vehicles.
These are reviewed when filing the annual return and can significantly affect the effective tax rate if not correctly managed throughout the year.
4. Maintain VAT Compliance and Electronic Invoicing
Businesses engaged in taxable activities must register for Value Added Tax (IVA) and submit periodic VAT returns, monthly if annual turnover exceeds €650,000, or quarterly otherwise. From invoicing to reporting, all processes are now fully digital. Companies must use certified invoicing software and include QR codes and ATCUD identifiers on all invoices.
Foreign companies providing cross-border services should also consider VAT registration or reverse-charge rules, depending on the nature of their transactions. Non-compliance with VAT filing or late submissions may trigger penalties that quickly escalate. Partnering with a local accountant ensures that declarations, recapitulative statements, and intracommunity transaction listings are submitted correctly and on time.
5. Verify Withholding and Reporting Obligations
Portugal imposes withholding tax on certain payments made to non-residents, including dividends, royalties, and interest. Rates may be reduced or eliminated under the EU Directives or Double Tax Treaties. Companies distributing profits must ensure that shareholder documentation, tax residence certificates, and beneficial-ownership declarations are correctly in place before applying any exemption.
For companies based in Madeira, additional exemptions apply to qualifying distributions made to non-resident shareholders under the International Business Centre regime — but these require strict adherence to substance and reporting criteria. Failing to file supporting documentation with the annual return may result in the withdrawal of benefits and retroactive taxation.
6. Align with Social Security, Payroll, and Audit Requirements
While not part of the corporate income tax process, payroll and social-security filings are integral to overall compliance. Employers must register employees with Social Security, submit monthly remuneration statements, and pay contributions by the 20th of each month.
Entities exceeding two of the following thresholds, €3 million in turnover, €1.5 million in total assets, or 50 employees, are required to appoint a statutory auditor (Revisor Oficial de Contas). The auditor’s report forms part of the annual disclosure package and is crucial for maintaining credibility with banks, investors, and regulators.
Final Thoughts
Accurate tax filing in Portugal demands more than technical knowledge; it requires proactive coordination between accounting, legal, and operational teams to ensure that every filing reflects the company’s actual economic activity. Whether operating on the mainland or from Madeira, businesses benefit from working with professionals who understand both local and international compliance frameworks.
At Madeira Corporate Services, our certified accountants and tax advisers assist international clients with accounting, VAT, and corporate income tax filings, ensuring timely compliance and complete alignment with Portuguese law.
For tailored assistance on filing tips for businesses in Portugal and your company’s tax obligations in Portugal, contact our team to schedule an initial consultation.
The founding of Madeira Corporate Services dates back to 1996. MCS started as a corporate service provider in the Madeira International Business Center and rapidly became a leading management company… Read more
