Portugal’s 2027 State Budget introduces several tax measures that businesses, entrepreneurs and international investors should be aware of. While it does not substantially change the Portuguese tax system, it includes developments affecting corporate taxation, employee compensation, investment incentives and accounting obligations.
Some changes, including the reduction in Corporate Income Tax (IRC), have already been approved under separate legislation. Others remain subject to parliamentary approval. Here are the main measures and what they could mean for businesses operating in Portugal.
Portugal’s 2027 State Budget at a Glance
The main figures and deadlines to consider are:
- 18% Corporate Income Tax (IRC) — the standard rate scheduled for 2027.
- 15% IRC for qualifying SMEs — applicable to the first €50,000 of taxable profits.
- 4.5% salary increase — proposed requirement for qualifying employer tax incentives.
- 6% of annual base salary — proposed tax exemption limit for eligible employee bonuses.
- 2027 — proposed extension of PDF invoice acceptance and the SIFIDE II research and development tax incentive.
- 2029 — proposed first submission year for accounting SAF-T files relating to 2028 periods.
These measures do not apply equally to every business. Their financial impact depends on the company’s size, tax position, employment arrangements and eligibility for specific incentives.
What Does the 2027 Budget Mean for Businesses in Portugal?
For businesses operating in Portugal, the most practical developments concern corporate taxation, employee compensation and accounting requirements.
Corporate Income Tax Will Fall to 18%
Portugal’s standard Corporate Income Tax (IRC) rate will decrease from 19% in 2026 to 18% in 2027, under legislation already approved. Qualifying small and medium-sized enterprises (SMEs) will continue to benefit from a reduced 15% rate on their first €50,000 of taxable profits.
For businesses operating in Portugal, this reduction may lower corporate tax costs. However, additional taxes and surcharges may still apply. The Budget proposal also maintains relief from increased autonomous taxation for certain companies reporting tax losses, subject to specific conditions.
Tax Benefits for Salary Increases and Employee Bonuses
The proposed Budget continues to encourage employers to increase salaries and reward employees. Companies meeting the conditions for a minimum 4.5% salary increase may benefit from a tax incentive.
Additionally, qualifying non-recurring bonuses of up to 6% of an employee’s annual base salary may be exempt from Personal Income Tax (IRS) and Social Security contributions. These incentives are subject to specific requirements and could help businesses manage payroll costs while rewarding employees.
Investment and Employee Housing Incentives
The proposal extends SIFIDE II, Portugal’s research and development tax incentive, through 2027. Eligible companies investing in innovation may benefit from Corporate Income Tax deductions.
Tax benefits related to housing provided by employers to employees are also proposed to continue. These may be particularly relevant for international companies relocating staff to Portugal. Both incentives depend on specific eligibility conditions.
More Time for Accounting and Invoicing Changes
The proposed Budget extends certain deadlines to help businesses prepare for future accounting requirements.
- PDF invoices: expected to remain accepted for tax purposes until 31 December 2027.
- Accounting SAF-T: reporting would begin in 2029 for tax periods starting in 2028.
- Inventory reporting: certain exemptions and simplified requirements would continue to apply.
These extensions provide businesses with additional time to prepare their accounting systems, without removing existing tax and reporting obligations.
Personal Income Tax and Foreign Residents
The proposed Budget also includes changes affecting individuals. Personal Income Tax (IRS) brackets are expected to increase by 3.88%, alongside other adjustments aimed at reducing the impact of taxation on income.
The tax regime for qualifying former Portuguese residents returning to Portugal is also proposed to continue in 2027. Eligible individuals may benefit from a 50% IRS exclusion on certain employment or professional income for five years, subject to legal requirements.
This may be relevant for businesses hiring returning Portuguese professionals and individuals planning to relocate.
What Remains Unchanged in 2027?
The proposed Budget does not introduce a broad restructuring of Portugal’s tax system. For most businesses, the existing framework for Corporate Income Tax, VAT and other recurring tax obligations remains largely intact. However, the Budget proposal’s lack of major changes does not mean a company’s overall tax position will remain unchanged.
Measures introduced by separate legislation, such as the scheduled reduction in the standard IRC rate, will continue to influence taxation in 2027. Existing surcharges, sector-specific rules and tax incentives may also remain relevant.
Businesses should therefore assess the combined impact of approved legislation, proposed changes and their existing obligations, rather than considering the State Budget in isolation.
Is Portugal’s 2027 State Budget Final?
Not yet. As of 22 October 2026, Parliament is still considering the State Budget. Some proposed measures may be amended before the final law is approved. Businesses and individuals should therefore distinguish between changes already established in law and measures that are still awaiting approval.
What Do These Changes Mean for You?
Tax changes don’t affect every business or individual in the same way. Your company’s structure, payroll arrangements or personal tax situation will determine which measures are relevant to you. Understanding these differences early can help you prepare for 2027 with greater clarity. Contact Oporto Accounting and find out how we can help.
Source: Portuguese State Budget 2027 proposal, submitted to Parliament on 8 October 2026.
