IRC
Imposto sobre o Rendimento das Pessoas Coletivas · Corporate Income Tax
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Portugal's corporate income tax. Standard rate 19% (2026), with reduced rates for SMEs (15%) and startups (12.5%) on the first €50k. The IRC simplified regime offers effective rates as low as 1.5% on service revenue.
IRC is the tax companies pay on their profits. If you operate as a sole proprietor, you pay IRS instead. The distinction matters because the rates and rules are fundamentally different.
Rates (2026)
| Scenario | Rate |
|---|---|
| SME (PME), first €50k | 15% |
| Startup, first €50k | 12.5% |
| Standard | 19% |
A municipal surcharge (derrama) of 0–1.5% may also apply.
The simplified regime
Companies meeting micro-entity thresholds can use the IRC simplified regime, which applies coefficients to revenue instead of tracking actual expenses:
- General services: 10% of revenue is taxable → ~1.5% effective rate
- Goods sales: 4% of revenue is taxable → ~0.6% effective rate
This makes the IRC simplified regime one of the most favorable corporate tax setups in Europe for small service companies. See the full rate table.
IRC vs IRS for freelancers
The same €40,000 in consulting revenue results in very different tax:
- As sole proprietor (IRS): 75% taxable → ~€6,270 in income tax
- As Lda (IRC simplified): 10% taxable → ~€600 in corporate tax
But the company has additional costs: contabilista certificado, IES filing, Social Security as sócio-gerente, and profit extraction taxes (salary or dividends). The total tax picture depends on how you extract money from the company.
See the full comparison for details.
Frequently asked questions
What is IRC?
IRC stands for Imposto sobre o Rendimento das Pessoas Coletivas, Portugal's corporate income tax. It applies to companies (Lda, SA, etc.), not individuals. The standard rate is 19% in 2026, with reductions to 18% in 2027 and 17% in 2028.
What is the IRC simplified regime?
Companies meeting micro-entity thresholds (revenue ≤ €200k, balance sheet ≤ €500k) can opt into the IRC simplified regime. Instead of deducting actual expenses, a coefficient is applied to revenue. For general services, only 10% of revenue is taxable, resulting in an effective tax rate of approximately 1.5%.
How is IRC different from IRS?
IRS is personal income tax (for individuals, including sole proprietors). IRC is corporate income tax (for companies). A sole proprietor pays IRS on business income. A company pays IRC. The rates and rules are completely different, which is why many founders switch from sole proprietor to Lda at higher revenue levels.
Related terms
Portugal's personal income tax: the annual tax that solo entrepreneurs pay on their individual income, declared each spring for the previous year's earnings.
Contabilista CertificadoCertified AccountantA certified accountant registered with the Ordem dos Contabilistas Certificados (OCC). Required by law for companies and for sole proprietors on the normal regime, but not for the simplified regime.
IESInformação Empresarial Simplificada · Simplified Business InformationAn annual filing obligation for Portuguese companies (Lda, SA) combining accounting, tax, and statistical reporting into one electronic submission. Due by July 15 of the following year.