CORPORATE TAX: GOOD NEWS FROM PORTUGAL (I)

While Portugal has never been in the tax-friendly group of countries this might change drastically thanks to the reform of its corporate tax legislation which was recently passed. Portugal now seeks to become a hub for international companies, specially those with strong ties with Portuguese-speaking countries on the rise such as Brazil, Angola or Mozambique. In this next series of posts we’ll take a brief look on what all the good news is about.

1.- Corporate tax rate: the general rate now stands at 25% but it has been lowered to 23% in 2014, and is expected to be cut even further: an extra 2% in 2015 and another 2% to 4% in 2016. So at the end of the line the rate could be 17%. 

2.- Intermediate rate for smes: from this year small and medium enterprises will benefit from a special intermediate rate of 17% for the first taxable € 15,000. 

3.- Tax loss carryforwards: tax losses can be set-off for a 12-year period. However, compensation for each period can only go as far as 70% of taxable profits.