Portugal levies taxes on income, documents, transactions and real estate. Such system of taxation is currently divided into a number of Codes and Statutes, each one covering a different field of taxation.

In the months to come, it is our intention to cover in greater detail the aspects of each such Code and Statute. In this Introduction, we aim at providing an overview of the Portuguese tax system and clarify the logic behind our proposed information schedule.


Portuguese residents are subject to tax on their worldwide income whereas non-residents are subject to tax on income derived from their activities in the Portuguese territory. The provisions applicable to income taxation can be found in the Individual Income Tax Code ("CIRS"), in the Corporate Income Tax Code ("CIRC") and in the Double Tax Treaties signed by Portugal.

Thus far, Portugal has signed Double Tax Treaties with the following Countries: Austria, Belgium, Bulgaria, Brazil, Denmark (notice of termination having been served), Finland, France, Germany, Ireland, Italy, Mozambique, Norway, Spain, Switzerland, United Kingdom and United States.

Several tax exemptions and incentives can be found in a separate Statute (The Tax Benefits Code - "EBF"), including but not limited to income taxation. Article 41 of the EBF deals with the Tax Free Zones of Madeira and Azores. Income generated in these Zones is exempted from taxation provided such income has no relation with the remaining Portuguese territory.

The Portuguese legislator has included a tax which is a tax on income on a separate Code (the Transfers Code - "CIMSISSD" - see below). Such tax applies on all dividends distributed by joint stock companies to their respective shareholders and corresponds to 5% of such distributions (there are certain shareholders which - by their nature - are exempted from this tax).

As we proceed with the tax treatment of income, we shall cover the CIRS, the CIRC, the Tax Treaties and the EBF (with a separate chapter being dedicated to the Tax Free Zones of Madeira and Santa Maria in the Azores). On such treatment, we shall try to keep a clear separation between resident and non-resident taxation.


Documents and similar acts are generally subject to stamp duties in Portugal. Such duties cover a wide area, from contracts to financial operations, from guarantees to notarial instruments, from proxies to law suits. Being one of the oldest Portuguese Codes the Stamp Duties Code ("RIS") and its attached schedule ("TGIS") are on their way to being revised. However, one cannot estimate when such revision will occur.


Transactions are generally subject to taxes. In Portugal, such taxes vary in accordance with the nature of the transactions (onerous or gratuitous) and the type of asset being transferred (immovable or movable assets). Immovable assets are subject to a transfer tax called "Sisa". Discussions are currently being held at Government level to mitigate or eliminate this "Sisa" tax. Most probably, such mitigation or elimination will occur in simultaneous with the approval of a Real Estate Evaluation Code (see below). Gratuitous transfers ("inter vivos" or "mortis causa") are subject to donation or inheritance tax. Both these types of transfers are dealt with by the Transfers Code ("CIMSISSD"). The Value Added Tax Code ("CIVA") covers the transfer of goods and services in general.


Real Estate located in Portugal is subject to an annual tax covered by a separate Code (The Real Estate Code - "CA"). This tax is charged on the value of real estate as declared at the Finance Departments (currently well below its market value, thus making the impact of this tax almost irrelevant). Discussions are currently being held at Government level to enact a Real Estate Evaluation Code which may increase the value of the real estate for the purposes of determining the taxable base of the CA tax.


Our information on Portuguese taxation would not be completed if we were not to treat the procedural aspects of taxation as well as those relating to the treatment of tax offences. The procedure that is to be followed on a tax claim or litigation is covered by the Tax Procedure Code ("CPT") whereas the treatment of tax offences is treated by a separate statute (the "RJIFNA").

There are other taxes in Portugal which are subject to the interest of particular groups. Such is, for example, the case of specific Taxes on the sale of vehicles ("IA"), on tobacco ("ICT"), on alcohol ("ICBA") on oil products ("IPP") and on gambling ("IJ"). We shall cover such specific taxes at the end of our information schedule.

As time goes by, we shall update our information specially taking into consideration potential changes on the Portuguese tax system, which are currently being studied by the Government.

The contents of this Article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Miguel Teixeira de Abreu, Abreu, Cardigos & Partners, Lisbon, Portugal.