According to the report by the European Commission on Tax Policies in the European Union (EU), Portugal is the 2nd country with the lowest effective marginal tax rate in Europe.
Portugal has the second lowest effective marginal tax rate in Europe. This rate is the combined effect of what a person received on income taxes and what they withdrew from state benefits. That is, the lower the effective marginal tax rate is, the more favorable the tax system in this country is to promote corporate investment.
Portugal was able to reduce its effective marginal tax rate because in 2008 introduced a tax incentive, Conventional Remuneration of Social Capital, which made changes in 2014, 2017, and 2018. This benefit consists of the deduction of a portion of capital contributions from taxable profit made by the partners to the companies and applies to all companies, namely:
- Civil commercial companies in commercial form;
- Cooperatives;
- Public companies;
- Other legal persons governed by public or private law with headquarters or effective management in Portuguese territory.
In order, The countries with the lowest effective marginal tax rates are Belgium, Portugal, Italy, and Cyprus. Spain and France are the countries with the highest rates.
If you are interested in investing in Portugal, see how Lamares, Capela & Associados can help you.
