CIT and rental income in Portugal
In Portugal, income arising from property leases earned by commercial companies is generally subject to CIT. This income forms part of the companies’ taxable profit and is subject to the rates established under the CIT Code.
Over recent years, the legislator has introduced several measures aimed at mitigating the impact of rising rents and encouraging contractual stability in the real estate market. One such measure was introduced through Law No. 19/2022, which established extraordinary support for the taxation of property income.
For companies subject to CIT, paragraph 3 of article 3 of the aforementioned law established that taxable rental income could be determined by applying a coefficient of 0.87. In practice, this results in a reduction of the taxable base subject to tax.
What does the application of the 0.87 coefficient mean?
The application of the 0.87 coefficient allows only 87% of rental income to be considered for CIT purposes.
Practical example:
- Rental income: €100,000
- Application of the 0.87 coefficient:
- Taxable income: €87,000
- Effective tax exclusion: €13,000
This mechanism aimed to partially ease the tax burden associated with property income, provided certain legal requirements were met.
Conditions to benefit from the reduction in the taxable base
The application of this tax benefit depends on the cumulative fulfilment of several conditions, namely:
- The rents must have become due and been paid during the period covered by the measure;
- Lease agreements must have been in force before the legally defined date;
- Lease agreements must have been duly communicated to the Tax Authority;
- There must not have been any rent update exceeding the legally established limits.
Furthermore, this regime does not apply to taxpayers covered by the simplified regime for determining the taxable base under CIT.
The importance of the 2026 Binding Ruling
The Binding Ruling of 16-02-2026 clarified a highly relevant practical issue for companies with property income: whether the reduction resulting from the application of the 0.87 coefficient should be considered for the purposes of the quantitative limitations established under article 92 of the CIT Code.
Article 92 of the CIT Code establishes minimum taxation limits in certain situations, preventing some tax benefits from excessively reducing the taxable base.
The interpretation now clarified by the Tax Authority reinforces the need to distinguish between:
- The determination of taxable income;
- The subsequent application of tax benefits or deductions;
- The quantitative limitations established under the CIT Code.
In practice, this clarification has a direct impact on the calculation of tax payable by real estate companies and companies holding leased assets.
Impact on real estate companies and holding companies
This interpretation is particularly relevant for:
- Real estate management companies;
- Family businesses with leased property assets;
- Property holding companies;
- Real estate investors with assets allocated to business activities;
- Companies earning significant income from leases.
An incorrect interpretation of the tax framework may lead to:
- Additional CIT assessments;
- Tax inspection corrections;
- Compensatory interest charges;
- Future tax contingencies.
For this reason, it is essential to carefully analyse:
- The nature of the income;
- The accounting framework;
- The correct application of tax coefficients;
- The limits established under article 92 of the CIT Code;
- The impact of tax benefits on the taxable base.
Tax planning and compliance obligations
The taxation of rental income under CIT requires rigorous coordination between accounting and taxation.
Companies should ensure:
- The correct accounting recognition of property income;
- Proper documentation of lease agreements;
- Validation of the applicable tax framework;
- Correct preparation of the Modelo 22 tax return;
- Analysis of applicable tax benefits;
- Review of the impact on autonomous taxation and tax limitations.
Appropriate tax planning helps reduce risks and avoid errors with significant financial impact.
Conclusion
Taxable rental income in Portugal continues to gain increasing relevance within the corporate tax environment. The application of the coefficient established under Law No. 19/2022 represented an important support measure for the real estate sector, but its interaction with the limitations established under the CIT Code raised important interpretative questions.
The recent 2026 Binding Ruling provided greater legal certainty regarding the application of these rules, reinforcing the importance of rigorous technical analysis when determining the taxable base for CIT purposes.
In an increasingly complex tax environment, companies should ensure specialised accounting and tax support in order to guarantee the correct tax treatment of property income and minimise tax risks.
How Nominaurea can help
Nominaurea provides specialised accounting, tax and consultancy support for companies operating in Portugal, ensuring:
- Tax analysis of property income;
- Support regarding the CIT treatment of rental income;
- Review of the taxable base;
- Real estate tax planning;
- Preparation and validation of the Modelo 22 tax return;
- Assistance during tax inspections;
- Ongoing tax consultancy for holding companies and real estate businesses.
With a technical, rigorous and tax optimisation-oriented approach, Nominaurea helps companies and investors fulfil their tax obligations safely and efficiently.
