4 TAX ON BUSINESS OPERATIONS: GENERAL. 791-A/2019, of 16 January. the rate is reduced to 10%. Follow these simple steps to calculate your salary after tax in Portugal using the Portugal Salary Calculator 2020 which is updated with the 2020/21 tax tables. This rate will be effective for corporations whose tax year begins after Jan. 1, 2018, and it is a permanent change. (3) Income paid or made available to recipients resident in Portuguese territory by non-resident entities without permanent establishment in Portugal, domiciled in jurisdictions with more favourable tax regimes is subject to a tax rate of 35%. While the regime applies, entities required to withhold tax on the income covered by this regime shall apply the withholding taxes only to half of the income paid or made available. Use our new tax calculator to compare how recent tax plans could impact your wallet. These CIT rates include the federal, state, and local taxes where there are multiple levels of government. Please see www.pwc.com/structure for further details. (6) Amounts invested after the retirement date are not deductible. Taxable persons that have established their business, a fixed establishment or have their residence in Portugal and that carry out transactions subject to VAT, are obliged to communicate to the Portuguese Tax and Customs Authorities, by electronic means, the elements of documents issued under the VAT Code (invoices, simplified invoices, debit notes and credit notes) as well … Would you consider contributing to our work? The standard CIT rate is 20% in the Autonomous Region of Madeira and 16.8% in the Autonomous Region of the Azores, including PEs of foreign entities registered therein. are excluded from taxation; awards for sport training for non-professional sport agents (players, referees, judges) are excluded from taxation, up to € 2,375; the compensations paid as result of non-professional duties to referees and judges are excluded from taxation, up to € 2,375. staff from diplomatic and consular bodies and international organizations; contractors or auctioneers working on NATO shared infrastructures. Gains derived from stock options plans, subscription plans, attribution plans or equivalent share plans on securities issued by the employer are exempt, up to the limit of € 40,000, subject to certain conditions. Countries with similar tax brackets include Austria with a maximum tax bracket of 50.00% , Belgium with a maximum tax bracket of 50.00% and United Kingdom with a maximum tax bracket of 50.00% . The corporate tax rate hasn’t risen in the last few years and seems to have plateaued at 21%. (10) May be excluded from taxation, provided that the sale value is reinvested in the acquisition of a primary private residence, in certain conditions. FWT: Final Withholding tax The additional surcharge is progressive and it is applicable on the income subject to the marginal tax rates, exceeding € 80,000.A rate of 2.5% is applicable to taxpayers with a taxable income exceeding € 80,000 up to € 250,000 and a rate of 5% is applicable to the taxable income exceeding € 250,000. Europe has the lowest regional average rate, at 20.27 percent (25.13 percent when weighted by GDP). Duration equal to or greater than 10 years and less than 20 years: reduction of fourteen percentage points of the autonomous rate, i.e. Portugal’s 2019 budget law, which was published in the official gazette on 31 December 2018 and generally applies as from 1 January 2019, makes significant changes to the tax legislation. Additionally, the regime also establishes a tax exemption for foreign-sourced income, such as, employment income, self-employment income, rental income, interest, dividends as well as other investment income, under certain specific conditions. Taxes in Portugal are levied by both the national and regional governments of Portugal.Tax revenue in Portugal stood at 34.9% of GDP in 2018. The Sales Tax Rate in Portugal stands at 23 percent. Under the regime’s rules, employment and self-employment income from a Portuguese source, derived from “high value-added activities of a scientific, artistic or technical nature” (included in a list of activities published by the Portuguese Government) earned by non-habitual residents in Portugal will be taxed at a flat rate of 20%. the rate is reduced to 23%; for each renewal with an equal duration, an additional reduction of five percentage points, up to a limit of fourteen percentage points; Companies that are subject to CIT with revenues of up to 1.2 million euros (EUR) in the given tax year and companies starting business activity from 2019 are able, under some conditions, to use the 9% CIT rate. Going for Growth (Cut-off date : December 2018) By country. For this purpose, taxpayers must identify in the tax authorities’ website the invoices or other documents that are related with the rental expenses incurred as a result of transferring the permanent residence to an inland territory. Under certain conditions, such entities benefit from a reduced 5% corporate income tax (CIT) rate for certain activities and from a 50% deduction to their assessed tax. (2) The benefit from the private use of a company car is only liable to taxation when there is a written agreement. Our work depends on support from members of the public like you. Optional: Select Advanced and enter your age to alter age related tax allowances and deductions for your earning in Portugal 3. The Tax Foundation works hard to provide insightful tax policy analysis. Employers' contributions to pension funds (or other complementary social security regimes) are exempt from PIT in the moment the contributions are made, if certain conditions are met. A reduced rate of 17% applies to the first EUR 15,000 of taxable profits of SMEs. A recently released OECD database covering 88 jurisdictions worldwide shows that the global average statutory CIT rate was 21.4 percent in 2018. This tax relief is applicable to income earned in the first year of residency after the return to Portugal and in the following four years, expiring after this period. Help us continue our work by making a tax-deductible gift today. Would you consider telling us more about how we can do better? Interest is exempt on capital up to a balance of ≤ € 10,500, Author rights obtained by  the Portuguese tax resident original owner are taxed only at 50%, with the amount excluded from taxation being limited to € 10,000, Capital gains derived from the sale of participation units are taxed at a 10% rate, Real estate investment funds / entities in forest resources, Capital gains derived from the sale of participation units/shares are taxed at a 10% rate, Contributions to social security regimes made by employers. In Portugal, salary is multiplied by 14 months (the 12 months in the year, the holiday pay and the Christmas bonus, each equivalent to another salary). Being an expat and a tax resident of one country while still a citizen of another country—especially the United States—brings a specific set of conditions and burdens. Taxation of company car in Category A This amount can be increased to € 4,275, provided that the difference results from expenses incurred with mandatory fees paid to professional associations indispensable for the exercise of the respective activity. All rights reserved. The tax rate over personal income in 2015 (tax return 2016) was the following: To explain how to calculate the Portuguese personal income tax, I’m going to give you the example of a single person, without children, that earns 1500 € monthly of gross salary as an employee. In addition, the overall cap of the tax deduction for education and training expenses shall be increased from € 800 to € 1,000, if the difference relates to the said expenses. The regime is applicable for a period of ten consecutive years. The regime will apply to individuals who become Portuguese tax residents under Portuguese domestic law in a certain year and have not qualified as tax residents in Portugal in any of the previous five years. (5) For managers, members of the board, public sector managers and representatives of permanent establishments of non-resident entities, the amounts received for the termination of the employment contract are totally taxable, on the part that respects to those functions only. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. The personal income tax withholding rate tables for 2019, applicable to employment income and pensions earned on the Mainland, have been published by Order nr. (6) The taxpayer can opt for 50% of the dividends earned to be taxed at the progressive rates in the annual income tax return, in which case only 50% of the income is liable to taxation. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and global levels. As of 1 January 2019, a lower 9% CIT rate for 'small taxpayers' has been introduced. Taxpayers who have not exceeded an annual gross amount of € 200,000 in this category in the previous year and who have not opted for the organized accounts regime are covered by the simplified regime. (6) Provided that benefits from the Share Plans are not paid on a cash – settlement basis. Going for Growth 2019. Severance payments paid by the employee when he or she terminates the labour contract without timely notice; Trade union fees of up to 1% of the gross income, increased by 50%, Simplified regime: depends on the activity exercised - please refer to above explanation, Organized standard accounting system: expenses related to the activities carried out, with some limitations, All the expenses effectively incurred and paid by the taxpayers in order to obtain or assure such income, excluding the financial costs, furniture, households appliances, decoration and comfort accessories, as well as the additional to the Municipal Property Tax (“AIMI"), Sale of real estate (except those arising from the sale of real state which benefited from non-refundable support from the State or other Public entities), Sale of intellectual or industrial property, or know-how when obtained by the non-original author, Assignment of position in contracts regarding immovable property, Trade union fees, up to 1% of the gross income, increased by 50%, Mandatory contributions to social protection systems and legal health coverage sub-systems, in the part that exceeds € 4,104, taxable income higher than € 7,091 and up to € 80,000. shares of Portuguese tax resident companies; other securities issued by Portuguese tax resident companies; autonomous warrants issued by Portuguese tax resident companies; derivatives negotiated on the regulated Stock Market; participation units in venture capital funds. , the total amount of the ten highest taxed countries in the decade. 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