know the amount of tax to pay

The IRC is levied on the income of companies obtained in Portugal. It is calculated by multiplying the IRC rate by the taxable income. Learn how to calculate IRC.

The Corporate Income Tax (IRC) is a tax levied on the income of companies working in Portugal. To have an idea of ​​the tax to be paid, it is essential to know how to calculate IRC.

Private limited companies and public limited companies are some of the entities that are subject to the payment of this tax.

How to calculate IRC?

The IRC is a complex tax that involves different steps such as the taxable profit and gives collectible matter. Then the corresponding IRC rates according to the level of profits in which the legal person is.

The IRC due is then calculated on the calculated taxable income, by applying that of the IRC rate, with subsequent deduction and addition of certain amounts arising from the Law, to quantify the tax payable or recoverable.

Here are the elements to take into account when calculating the IRC:

Taxable profit

The taxable profit of entities whose main activity is a commercial, industrial or agricultural activity consists of the net income for the year plus positive changes in equity and deducted from negative changes in equity. These adjustments are made in Table 07 of the Income Statement Model 22.

collectible matter

The taxable income results from the deduction from taxable income of tax benefits and tax losses subject to deduction. It is calculated in Table 09 of the Income Statement Model 22, based on the taxable income calculated in Table 07.

IRC rates

The normal rate of IRC for resident companies or for permanent establishments of non-resident companies that carry out these activities is 21%, to which is added, in most municipalities, the municipal surcharge at the maximum rate of 1.5%, levied on the taxable profit.

Additional fees apply to the portion of taxable income in excess of €1,500,000:

• Above 1,500,000 euros up to 7,500,000 euros the additional fee is 3%;
• Above 7,500,000 euros up to 35,000,000 euros, the additional fee is 5%;
• From 35,000,000 the rate to be added is 9%.

Most beneficial scheme for SMEs

Small and Medium Enterprises enjoy lower taxation. benefit from a reduced rate of 17% on the first €15,000 of taxable income.

spill

It is important to mention that the surcharge may accompany the IRC (Imposto sobre o Income de Pessoas Colectivas), not being included in the tax. The surcharge is a municipal revenue determined annually by the municipalities and is levied on the taxable income of companies.

It is regulated by the Financial Regime for Local Authorities and Intermunicipal Entities, which was published by Law No. 73/2013. The surcharge rate to apply depends on the address of the establishments where the company carries out its activity.

It is updated every year through the publication of the decree containing the rates defined by each municipality.

autonomous taxation

There are expenses of entities subject to IRC that are subject to autonomous taxation. Its application is not conditioned by any situation other than the fact that the company bears certain expenses that are identified in the Art. 88 of the Collective Income Tax (CIRC), namely:

• Undocumented expenses;
• Charges with light passenger vehicles, light goods vehicles, motorcycles or motorcycles;
• Representation expenses;
• Payments to resident entities under a clearly more favorable tax regime or accounts opened with financial institutions resident or domiciled there;
• Subsistence allowances and compensation for travel in own vehicle not billed to customers;
• Expenses or charges related to indemnities arising from the termination of manager, administrator and manager functions;
• Expenses or charges relating to bonuses and other variable remuneration paid to managers, directors and managers;
• Profits distributed to taxable persons who benefit from total or partial exemption.

Who is subject to filing the Model 22 declaration?

According to article 2 of the CIRCthe following entities are subject to IRC:

• Legal persons, with headquarters or effective management in Portuguese territory, that carry out an activity of a commercial, industrial or agricultural nature (commercial companies, cooperatives);
• Legal persons, with headquarters or effective management in Portuguese territory, that do not carry out an activity of a commercial, industrial or agricultural nature (associations, foundations, civil societies without legal personality);
• Legal persons not resident in Portuguese territory who carry out their activity through a permanent establishment;
• Legal persons not resident in Portuguese territory without a permanent establishment.

What income is subject to IRC?

According to article 3 of the CIRCthe income that is subject to IRC is as follows:

• Profit obtained by resident entities with legal personality that mainly operate a commercial, industrial or agricultural activity;
• Overall income, which corresponds to the algebraic sum of income from all income tax categories, as well as the equity increments received free of charge (in the case of residents who do not primarily carry out an activity in the agricultural, commercial or industrial areas);
• Income from all IRS categories obtained by non-resident entities, without a permanent establishment, or with income that cannot be attributed to a permanent establishment;
• Profit obtained by non-resident entities, but which have a permanent establishment in the national territory.