Changes to the corporate tax regime for Portuguese companies

Certain changes to the corporate tax regime for Portuguese companies came into force on 1 January 2014,

The headline changes are as below:

• a worldwide participation exemption regime, that provides tax exemptions on dividends and capital gains received.
• an exemption from withholding tax on the payment of dividends to corporate shareholders in the EU and EEA.
• this exemption has been extended to foreign corporate shareholders in countries that have a Double Taxation Agreement covering exchange of information with Portugal.
• a Portuguese company can elect to not take into account the profits and losses of its foreign branches.
• Portuguese companies licensed in the Madeira International Business Centre also benefit from a 5% corporate tax rate.

Portugal has announced plans to overhaul its corporate tax regime, a move that is expected to attract investment and boost economic growth. The new regime, which is set to come into effect from 2020, will lower the corporate tax rate from 26% to 23%. In addition, the country is also looking to introduce a new depreciation system for assets used in business. These changes are expected to boost Portugal's economy by 1.5% and create 2,000 jobs.