The Portuguese Corporate Tax Structure

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Portuguese companies are subject to tax on their worldwide income. However, branches of non-resident companies are only taxed on Portuguese-source profits.

Corporate tax is charged at a rate of 21% on a company’s profit, although some exemptions may apply in relation to passive income, under the participation exemption method.

Worldwide Participation Exemption Regime: Applicable to Capital Gains and Dividend Payments Inbound and Outbound
Under Portugal’s participation exemption regime, dividends received and capital gains received and distributed by a Portuguese resident company from a domestic or foreign shareholding are exempt from tax, provided that panama mobile database the shareholder holds, directly or indirectly, at least 10% of the capital or voting rights of the other company for 12 months.

The subsidiary may not be resident in a listed tax haven and must be subject to, and not exempt from, income tax at a rate which is equivalent to at least 60% of the Portuguese corporate tax rate (currently 21%).

A tax credit may be applicable, when the conditions for the application of the participation exemption regime are not fully met, with an option for an underlying tax credit for dividends on foreign shareholdings held for 12 months, of at least 10%.

In terms of capital gains, the participation exemption method applies to gains on the disposal of shares.