On 10 October 2023, the government of Portugal presented the draft Budget Bill for 2024 to the parliament. The budget includes changes in corporate income tax, personal income tax, and indirect taxation. The key tax measures of the budget are as follows:

  • The corporate income tax rate for eligible start-ups has been reduced to 12.5% on the initial 50,000 EUR of taxable income;
  • Expenses associated with lightweight passenger vehicles, specific lightweight commercial vehicles, or motorcycles will now be subjected to autonomous taxation at the revised rates of 8.5%, 25.5%, and 32.5%, down from the previous rates of 10%, 27.5%, and 35%, respectively;
  • Interest payments on public debt made to social security and welfare institutions are eligible for a corporate income tax exemption;
  • The accelerated depreciation rate for certain buildings eligible for employee housing incentives is increasing from 2% to 4%;
  • The personal income tax table’s brackets for general rates will be adjusted by 3%, including an update to the rates within the first five brackets;
  • Extending the extraordinary support regime for electricity and gas expenses into the 2023 and 2024 tax years, allowing for a 20% enhanced deduction (total of 120%) for these expenses;
  • Extending the extraordinary support regime for expenses related to agricultural production into the 2024 tax year, allowing for a 40% enhanced deduction (total of 140%) for specific costs;
  • The exemption from taxing capital gains for non-residents when transferring shares, securities, warrants, and derivatives on stock exchanges will no longer have a time limit of five years, as it was subject to a general rule;
  • The elimination of the zero-rated VAT for essential food items;
  • Extending the VAT exemption for the sale of fertilizers, soil amendments, and related products used in feeding livestock, poultry, and other animals for agricultural purposes until 31 December 2024;
  • There is a 10% increase in special taxes on the consumption of various beverages, including beer, sugary non-alcoholic drinks, and spirits, and an anticipated increase in tobacco and petrol taxes based on the specific components of these products.