Portuguese 2025 State Budget – main tax measures

The Portuguese State Budget for 2025, enacted through Law no. 45-A/2024 of December 31, introduces a series of tax measures aimed at at strengthening  the competitiveness of companies and improving employees compensation. The following changes took effect on January 1, 2025.

1. Adjustments to the Corporate Income Tax (IRC)

(a) Reduction in Corporate Tax Rates:

• • The general corporate tax rate is reduced from 21% to 20%.

• • For Small and Medium Enterprises (SMEs) and small mid-caps, the rate applicable to the first €50,000 of taxable income decreases from 17% to 16%.

• • The transitional provision that establishes the non-application, in the 2025 tax period, of the rule that increases autonomous tax rates by 10%, when the taxpayer incurs in tax losses, is reintroduced, provided that:

• • • • The taxpayer has obtained taxable profit in one of the three previous tax periods and has submitted the Modelo 22 and IES declarations for the previous two tax periods.

     

    • • The 2025 tax periods corresponds to the commencement of activity or one of the two subsequent periods.

     

     

• • Expenses incurred with health or sickness insurance for the benefit of employees, retirees or their families, when considered social utility benfits, will now be considered at 120% of their value.

• • The tax incentive for salary increases is adjusted in order to increase the surcharge from 50% to 100% of the expenses corresponding to salary increases, and the maximum deduction limit from four to five times the value of the guaranteed minimum monthly salary (RMMG), i.e. from EUR 3,280 to EUR 4,350. In turn, the increase in the average annual basic salary per employee, compared to the end of the previous year, will be at least 4.7% (previously 5%), and there must now be an average increase in the annual basic salary of employees earning equal to or less than the company’s average annual basic salary at the end of the previous year of at least 4.7%.

• • The incentive to capitalize companies (ICE) will now be calculated by applying the average 12-month Euribor rate, with a spread of 2 p.p., up from the current 1.5 p.p., regardless of the size of the company. It is also determined that this deduction will be surcharged by 50% in 2025 with a limit of 4,000,000.00 euros or 30% of EBITDA (adjusted under the terms of the Corporate Income Tax Code), whichever is greater.

2. Portuguese Property Transfer Tax (IMT): An update of the brackets used to determine the applicable IMT rate for the transfer of urban properties or autonomous units of urban properties exclusively intended for housing is planned, with an increase of 2,3%. The threshold above which IMT is payable is raised from EUR 101.917 to EUR 104.261.

3. Reporting obligations: The obligation to submit the SAF-T (PT) file related to accounting has been deferred once again, now applying to the 2026 tax periods and beyond, to be submitted in 2027 and in subsequent periods.

4. Value Added Tax (VAT): The extension of the possibility to use PDF invoices (without a digital signature or certification seal) as electronic invoices for all purposes under tax legislation is once again anticipated, now until December 31, 2025.