IRC tax down to 20% in State Budget 2026

Portugal’s State Budget for 2026 foresees a general reduction in IRC corporation tax to 20% and a reduction to 16% on the first €50,000 of profit for SMEs and SMCs.

This is in line with legislation that was approved in December, 2024. Moreover, a tax incentive for companies that increase their average salaries by 4.6% in 2026 – and number of staff is also included.

The government has also decided to update by 2% the IMT property transfer tax brackets which means that properties bought and sold will be exempt from the tax up to €106,346.

Property transfer tax on young people under 36 (IMT Jovem) will not be applicable for the purchase of properties up to €330,539.

Salaries up to €920 will be tax exempt in the coming year while the extraordinary solidarity tax on the banking sector will end after the Constitutional Court decided that the tax was illegal with the banks getting back €200 million including interest.

The government foresees a growth in revenues from the petroleum products tax ISP of 4.6% on last year worth €4.2Bn.

The extraordinary tax on the pharmaceutical sector and medical device suppliers will remain in place. In 2023 this brought in €26.1 million. Expenses from health and sickness insurance will now be tax deductible by 120%.

Overall, the lowering of IRC and other incentives will leave the government €200 million short of revenues.

Image: epa12442014 (L-R) Secretary of State for Tax Affairs Claudia Reis Duarte, Portuguese Finance Minister Joaquim Miranda Sarmento, Deputy Minister and Secretary of State for the Budget Jose Maria Brandao de Brito and Secretary of State for the Treasury and Finance Joao Silva Lopes attend a press conference on the proposal for the State Budget 2026 (OE2026) at the Hall of the Ministry of Finance in Lisbon, Portugal, 09 October 2025. EPA/JOSE SENA GOULAO
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