As part of tax measures introduced by Portugal’s 24th constitutional government, the Portuguese Minister of Finance, Joaquim Miranda Sarmento, on 25 July 2024, established a Commission tasked with reviewing and proposing a comprehensive reform of the nation’s tax procedures and processes, as outlined in the Tax Procedures and Processes Code.
The Commission will be responsible for recommending proposals aimed to enhance the speed, simplicity, and effectiveness of tax processes and procedures. The tax reforms are expected to lower the costs associated with tax compliance to simplify the tax system, enhance tax stability, and redefine tax equity.
The main tax measures outlined in 24th government programme are as follows:
Corporate income tax (CIT)
- Reduce corporate income tax rate from 21% to 15% over three years;
- Simplify CIT to increase investment attractiveness and economies of scale;
- Discuss extending the VAT cash accounting scheme with the European Commission, currently limited to EUR 500,000;
- Launch the “Capitalisation + Programme” to support generational change and enhance tax incentives for equity financing;
- Review the tax regime for digital platforms and promote discussions at the European level to enhance demand for media content.
Personal income tax (PIT)
- Personal Income Tax (PIT) rates reduced by 0.5 to 3 percentage points for up to the 8th layer compared to 2023;
- A maximum 15% tax rate for individuals up to 35 years old, excluding the highest income bracket.
Real estate/property tax
- Abolition of property transfer tax (IMT) and stamp duty for young buyers (up to 35) on primary and permanent homes.
