The Corporate Tax Rate in Portugal in 2025 has dropped from 21% to 20%, as of January 1, 2025, reflecting a targeted effort to enhance competitiveness and attract investment. This foundational change necessitates a fresh approach to corporate tax planning, as total burdens can vary significantly once local and regional surtaxes are added.
Core Corporate Tax Rate Portugal in 2025 (Mainland Portugal)
- Base CIT rate: 20% flat on taxable profits
- Municipal surtax (Derrama Municipal): up to 1.5%, depending on location
- State surtax (Derrama Estadual) on annual profits:
- 3% on profits between €1.5M and €7.5M
- 5% on profits between €7.5M and €35M
- 9% on profits above €35M
In practice, combined rates may exceed 30% for highly profitable firms
SMEs & Small/Mid‑Caps
Portuguese tax law offers special relief for smaller businesses:
- First €50,000 of taxable profit for SMEs and small/mid‑caps is taxed at 16% (down from 17%)
Autonomous Regions: Madeira & Azores
General Taxation
- Madeira: regional standard rate of 14% — plus a regional surtax tiered like the mainland
- Azores: applies a base rate of 14%, also with analogous regional
- Companies licensed within the Madeira International Business Centre (MIBC) pay 5% on profits sourced from non‑resident entities or other MIBC‑licensed firms
SMEs & Small/Mid-Caps in the Autonomous Regions
- Madeira’s first €50,000 taxable profit for SMEs and small/mid‑caps is taxed 11,2%.
Forward‑Looking Tax Cuts (2025–2028)
Under Prime Minister Montenegro, Portugal’s government confirmed plans to gradually reduce the standard CIT rate from 20% to 17% by 2028, part of the 2025 tax agenda to foster competitiveness.
Strategic Tax Planning Tips
- Assess Total Effective Rate: Always calculate beyond the 20% base rate; account for municipal and state surtaxes, which can elevate the total to over 30%.
- Leverage SME Relief: Companies with annual profits ≤€50,000 should take full advantage of the 16% SME rate to maximise savings.
- Consider Regional Structuring: Establishment in regions like Madeira or Azores can meaningfully reduce tax burdens, particularly via MIBC licensing in Madeira for international services.
- Plan for Future Reductions: With the CIT rate set to decline to 17% by 2028, modelling forecasts can show long‑term benefits, especially when tied to investments or refinancing plans.
- Monitor Legislative Developments: As tax reductions roll out, check for updates on surcharges or new deductions that could impact planning.
Summary on Corporate Tax Rate in Portugal in 2025
- The base corporate tax in mainland Portugal is 20% from 2025.
- Additional municipal and state surtaxes mean effective rates often exceed 30%.
- SMEs benefit from a 16% profit rate on their first €50,000.
- Regional incentives in Madeira and the Azores offer lower tax structures.
- Future cuts to 17% by 2028 make Portugal increasingly attractive for corporate investment.
Ready to optimise corporate tax position in Portugal?
At Madeira Corporate Services (MCS), we provide strategic tax planning, company incorporation, and ongoing compliance support tailored to your business needs, whether investing in the mainland, the Azores, or leveraging the 5% rate under Madeira’s International Business Centre. Contact our team today to schedule a confidential consultation and discover how we can help you reduce your effective tax rate while ensuring full legal compliance under the 2025 tax framework.
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
