World Tax Atlas

Portugal: from company profit to money in your pocket

If you own the company you work through, two taxes hit the same money in turn. The company pays corporate tax on its profit. Then you pay income tax on the dividend you take out of what is left. In Portugal the second tax gives you no credit for the first one, so the two stack. That is what the numbers below are showing you, and it is why a calculator that works out only one of them is telling you half the story.

Company profit €200,000, taken out in full

€115,920 in your pocket

  • You keep €115,920
  • Corporate tax €36,000
  • Dividend tax €45,080

Typical case: turnover under €50,000,000.

Where the money goes, step by step

Taking the typical case, turnover under €50,000,000:

Company profit €200,000
Corporate income tax -€36,000 PME / Small Mid Cap (reduced rate on the first EUR 50,000)
Derrama municipal (municipal surtax) -€3,000 Lisboa: 1.5% of taxable profit
Tax on dividends -€45,080 Final withholding tax of 28%, nothing more to declare
In your hands €115,920 Total tax rate 42.0%

Portugal makes a founder answer two questions. The first is the one every country asks: how much of the profit leaves the company as salary, and how much as dividend. The second is Portugal’s own, and it only arrives once the first is settled. Having decided to pay yourself a dividend, you still choose how it is taxed.

The table above picked a route without asking you

The default needs no decision: the company withholds 28% as it pays you, and the taxa liberatória is the end of it. Nothing is declared, nothing is settled the following June, and the rest of your income cannot reach it. That is the route in the table.

Englobamento is the other one. You elect it in your annual return, the dividend joins your general IRS base, and it is taxed on the same scale as everything else you earn, except that only 50% of a profit distribution enters that base. No corporate tax is credited back to you; the second tax simply reaches half the money instead of all of it. The 28% taken at source becomes a payment on account, and where the scale asks for less, the difference comes back.

The half-inclusion is not a rounding detail. With the dividend as your only income, the combined bite on company profit drops from roughly 40% to the twenties or low thirties. What argues against electing is never the arithmetic: it is that the election takes your whole investment income category with it: bank interest and coupons come onto the scale alongside the dividend, and they come in whole. The dividend page prices both routes properly.

Your salary is an input to that choice

A salary is deductible, so the euro leaves the company before IRC touches it. It then climbs the IRS scale with the rest of your income, topping out at 48%, and social security takes 11% from your side of the payslip and another 23.75% from the company’s. A dividend deducts nothing (the profit behind it has already been taxed once) and carries no social security at all.

That much is the trade every country makes you make. The Portuguese part is what it collides with: the scale englobamento drops your dividend onto is the same scale your salary is already climbing. Pay yourself more salary and you make aggregation dearer. Pay yourself less and you make it cheaper. The two decisions are one decision, and you cannot take them in order.

So no optimal split is coming from us. Price the pieces and put them together yourself: what the salary costs, what each dividend route costs.

The profit was taxed before it ever reached you

The company pays 15% on its first €50,000 of taxable profit and 19% above that, and then a derrama municipal on top, levied by the council the company is registered with, up to a ceiling of 1.5%. Which city you incorporated in changes what the company owes; the corporate page has the rates and the argument.

None of it comes back to you. Portugal gives the resident shareholder no imputation credit, so the same euro of profit is taxed inside the company and taxed again in your hands. The half-inclusion under englobamento softens the second hit. It does not refund the first.

The first-year derrama we charge you is probably not owed

  • We bill a municipal surtax you may not owe. Most councils waive the derrama for companies under a small turnover threshold, and a first-year company is usually under it. The calculator waives nothing, so the total above runs high. Of everything on this page, that is the error most likely to be yours.
  • And the rate we charge it at is last year’s. No council has set one for the current tax year, and the consolidated table only lands in the February after the year closes, so we carry the last deliberation forward, which is what stays in force until a council votes otherwise. Best estimate available; not the figure you will be assessed on.
  • Autonomous taxation is missing, and it runs the other way. Company cars, entertainment and undocumented spending are taxed on the expense rather than on the profit, so no profit figure can produce them. That part of the corporate bill is understated here.
  • Expense credits. The IRS side shows what you pay if you claim nothing. Receipts for health, education and rent cut it, and only on the englobamento route.
  • Mainland only. Madeira and the Azores set their own rates, and none of this reaches them.

None of this shape exists next door. A Spanish founder makes the salary-or-dividend call and is done: the savings scale is the only route a Spanish dividend has, and there is nothing to elect in any year.

Questions people actually ask

Should I pay myself a salary or dividends in Portugal?

Both, in most owner-managed companies. Salary is a cost to the company, so it comes off the profit before corporate tax, but it climbs the progressive IRS scale and carries social security on both sides, yours and the company's. A dividend saves the company nothing, because it is paid out of profit that has already been taxed, and it carries no social security at all. Portugal then adds a second turn of the screw: elect englobamento and the dividend is pulled onto the same IRS scale the salary is already climbing, so the salary you set moves the price of the dividend. No single split fits everyone, and anyone offering you one has not asked about your other income.

What is englobamento, and should I elect it?

It is the option to have your dividend taxed on the general IRS scale together with the rest of your income, instead of leaving it under the flat final withholding. Only half of a company profit distribution enters the base when you do, so on the arithmetic alone it beats the flat route for most founders. The catch is that the election covers your whole investment income category for the year, not one dividend: bank interest and bond coupons get dragged onto the scale too, and they enter in full. Our dividend calculator prices both routes for the dividend itself; the rest of your investment income is on you.

Does Portugal give me credit for the corporate tax the company already paid?

No. The Portuguese personal income tax has no imputation credit, so both levels take their cut of the same euro. Electing englobamento leaves half the dividend out of your taxable base, which is real relief, but it is relief inside your base, not a refund of the company's tax. It is worth half your marginal rate, and nothing at all if you stay on the flat final withholding.

Does it matter which municipality my company is registered in?

Yes. On top of corporate tax, most councils levy a municipal surtax on taxable profit, and each one sets its own rate up to a statutory ceiling. Two identical companies in two cities pay different tax. Councils also commonly exempt small companies from it by turnover, and some by sector or by job creation, which the calculator does not model.

Why do you call the municipal surtax rates provisional?

Because no rate for this tax year exists yet. A council sets its rate during the year and reports it to the tax authority, which only publishes the consolidated national table in the February after the year is over. We therefore apply last year's rate, which stays in force until a council votes to change it. It is the best available estimate, not the figure you will eventually be assessed on.

What this assumes

One figure is already applied in practice but not yet fixed in law for this tax year. We use them, and we show exactly what each one rests on.

Figures not yet fixed for this tax year 1

These amounts are applied in practice, but the text that fixes them for this tax year does not exist yet: either the statute has not been passed, or the body that sets the figure publishes it later than the year it applies to. We show them because leaving them out would give you a worse answer, not a safer one, and we show you exactly what each one rests on.

  • surcharges[derrama_municipal].localities[].rate: These are the rates levied on the 2025 tax period, not 2026. A Portuguese municipal council sets its derrama municipal rate for a year during that year and reports it to the tax authority, which publishes the consolidated national table only in the February that follows: the 2025 table appeared on 2 February 2026, so the 2026 table is not due until around February 2027. No 2026 rate therefore exists for any municipality today. All eleven rates offered here (Lisboa 1.50%, Porto 1.50%, Cascais 1.00%, Oeiras 1.50%, Sintra 1.50%, Braga 1.50%, Coimbra 1.45%, Faro 1.20%, Matosinhos 1.50%, Vila Nova de Gaia 1.25%, Setúbal 1.50%) come from that one official 2025 list. A derrama deliberation stays in force until the council passes a new one (art. 18.º/1 of Lei n.º 73/2013), and most councils leave their rate unchanged for years, so last year's rate is the best available estimate for 2026. But it is an estimate, not the 2026 rate: a council is free to raise or cut it, and you would not learn of the change until 2027. The alternative was to omit the surcharge, which would understate the tax of a company based in Lisboa by 1.5% of its taxable profit. (what we relied on) · we re-check after 2027-02-01

Your result can move: personal deductions, family status and special regimes we do not model can make your real tax lower in 2 cases, and higher in 3 cases.

Important limitations 6

Every rule below is real and is left out on purpose. Modelling it would need information this form does not ask you for, or a mechanism we have not built yet. What matters is not that something is missing, but which way it moves your number, so that is what we tell you.

  • Your real tax may be LOWER: Most councils charge no municipal surcharge at all on companies whose prior-year turnover was EUR 150,000 or less (Porto and Vila Nova de Gaia charge a reduced rate instead). The calculator applies the full municipal rate to everyone, so it shows a surcharge you may not owe. Applies to: Companies with prior-year turnover of EUR 150,000 or less, which is most founders in their first year.
  • Your real tax may be LOWER: The reduced 15% band is granted by a headcount test (fewer than 250 staff, or fewer than 500 for a small mid cap), not purely by turnover. We approximate it with the EUR 50,000,000 turnover limit, so a small mid cap above that turnover is denied the band here even though the law may grant it. Applies to: Companies above EUR 50,000,000 turnover with fewer than 500 staff.
  • Your real tax may be HIGHER: Autonomous taxation (tributacoes autonomas) is a real corporate charge, but it falls on certain expenses (company cars, entertainment, undocumented spending) rather than on profit, so it cannot be derived from the numbers this form asks for. Applies to: Companies that run cars or incur entertainment expenses.
  • Your real tax may be HIGHER: The reduced 15% band is granted here to every company at or below the turnover limit, but the law also demands a headcount test and a commercial, industrial or agricultural main activity. A company under the turnover limit that fails either test would not get the band. Applies to: Companies below the turnover limit with 500 or more staff, or whose main activity is not commercial, industrial or agricultural.
  • May not apply to you: Corporate tax is charged on the taxable base after carried-forward losses and tax benefits, while both surcharges are charged on taxable profit before them. This calculator uses one profit figure for all three, so the numbers diverge once you carry losses forward. Applies to: Companies carrying losses forward or claiming tax benefits.
  • Your real tax may be HIGHER: Aggregation (englobamento) is not a per-dividend choice: electing it drags every item of your investment income for the year (other dividends, bank interest, bond coupons) onto the scale as well, and those enter in full, while only company profits enter at 50%. This page compares the two routes for one dividend in isolation, so it understates what aggregation really costs you. Applies to: Anyone with investment income beyond this dividend who is considering aggregation.

This calculator is for information only and is not tax advice. Rates and thresholds change; check the methodology page for sources and verification dates, and confirm your own situation with a qualified adviser.