Flash News NA 2025/10/23
CIT cut to 19 % In Portugal and new VAT group regime: what’s ahead for companies
Corporate income tax – CIT (IRC) will fall to 19 %, and a VAT group regime is introduced — impacts, challenges, and opportunities for businesses from 2026 onward.
The Portuguese Parliament approved in committee the proposal to reduce the corporate income tax (IRC) rate to 19 % in 2026, with further reductions to 18 % in 2027 and 17 % in 2028.
At the same time, a VAT group regime has been approved, allowing entities in a corporate group to consolidate their VAT payable or recoverable positions, provided they satisfy financial, economic, and organizational links.
Key implications
• Fiscal competitiveness: Lowering the CIT rate enhances the attractiveness of Portugal as a business destination and can boost corporate investment.
• Strategic adjustment: Companies must revise financial projections, cash flow models, and investment plans to reflect the new tax rates.
• VAT group benefits: Consolidation mechanisms allow intra-group offsetting of VAT positions, reducing inefficiencies and improving liquidity.
• Eligibility and compliance: Enrolment in the VAT group regime requires adherence to strict criteria and robust intercompany accounting practices.
• Implementation challenges: Firms must adapt accounting systems, ensure accurate reporting, and manage potential compliance risks when consolidating VAT.
Conclusion:
The shift to 19 % CIT and the introduction of VAT groups represent significant fiscal reform. To navigate these changes and seize the opportunities they bring, companies will benefit from expert guidance.
Nominaurea offers tailored tax and accounting consultancy to assist your business in adapting, complying and optimizing under the new regime. Reach out for support in this and other fiscal matters.
