Speaking at a budget conference on 21 October 2026, Finance Minister Miranda Sarmento signaled the government’s intention to review the state surcharge (derrama estadual) on corporate profits in the 2028 budget cycle. The surcharge, currently levied at progressive rates of 3% (profit €1.5M–€7.5M), 5% (€7.5M–€35M), and 9% (above €35M), has been criticized for creating a high marginal tax burden that distorts investment decisions. The Minister indicated a preference for flattening the structure and potentially lowering the top rate to improve Portugal’s corporate tax competitiveness within the OECD, while preserving progressivity for SMEs.
Key Takeaways
- Competitiveness Goal: Portugal’s combined statutory corporate rate (21% + up to 9% surcharge + up to 1.5% municipal) reaches 31.5%, above the OECD average of 23.5%.
- Phased Approach: Any reform would likely be gradual, starting with the top bracket, to manage revenue impact estimated at €300M per percentage point.
- EU Alignment: Changes must respect the EU’s minimum taxation directive (Pillar Two) and avoid triggering anti-avoidance rules.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement