November 17, 2025
Background
Law No. 64/2025 of November 7, published in the Official Gazette, makes a significant amendment to the Corporate Income Tax Code (CIT Code), revising downwards the general rates applicable to taxable income.
The amendment concerns Article 87 of the CIRC, introducing a phased schedule for reducing rates, with an effective impact from 2026 onwards.
Main changes
New general corporate income tax rate
The general corporate income tax rate provided for in paragraphs 1 and 5 of Article 87 will be 17% in 2028. This rate applies:
- To most corporate income tax payers.
- To entities with headquarters or effective management in Portugal that do not primarily engage in commercial, industrial, or agricultural activities.
Regime applicable to SMEs and Small Mid Caps:
For taxpayers classified as small or medium-sized enterprises (SMEs) or small-to-medium-sized companies (Small Mid Caps), as defined in the annex to Decree-Law No. 372/2007:
- The rate applicable to the first €50,000 of taxable income is reduced to 15%.
- The excess taxable income is taxed at the general rate.
Transitional regime (2026–2028)
The reduction in the general rate is progressive:
- For tax periods beginning in 2026, a general rate of 19% applies.
- For periods beginning during 2027, the general rate is reduced to 18%.
- For periods beginning on or after January 1, 2028, the definitive general rate of 17% will apply.
In the case of SMEs and Small Mid Caps, the reduced rate of 15% already applies to tax periods beginning on or after January 1, 2026.
Impact on companies
These changes represent:
- A gradual and structural reduction in the corporate income tax burden.
- A stronger incentive for SMEs and Small Mid Caps, which benefit from the reduced rate in advance.
- The need to update financial models, and current and deferred tax estimates, considering the reduction of rates.
- Possible review of tax strategies and business models, considering this effect.
Next steps
We recommend:
- Assessing the immediate impact for periods beginning in 2026.
- Updating tax estimate and cash flow models.
- Reviewing special regimes, tax benefits, or limits indexed to the corporate income tax rate.
- Verification of qualification as an SME or Small Mid Cap, for the purposes of accessing the special 15% rate.
We are at your disposal to provide comprehensive support, including personalized advice and detailed clarification on the corporate income tax framework.
***
The above information is not intended to be an exhaustive analysis of all the changes to the current legal regime, but a selection of those that we believe to be the most relevant, and does not dispense with the consultation of our Company and/or diplomas to which they refer.
For more information contact: Catarina Breia (+351 91 7575 832 or cbreia@pt-nexia.com) from our Tax Department.
