Import Procedures

The following documents must be presented to the Customs office:

1. a brief declaration (air or maritime manifest) of the goods.
2. a common law declaration (SAD, single administrative document), as well as the accompanying documents to allow their clearance. The SAD form can be obtained from Chambers of Commerce or an authorised printer. A computerised Customs clearance platform (SOFI: International freight computer system) can be accessed in Customs offices or in some Chambers of Commerce.
3. Commercial invoice
4. Packing list
5. Certificate of origine
6. Insurance certificate (where applicable)

In the case of deliveries and purchases within the European Union, the declaration of exchange of goods (DEB) or Intrastat declaration must be sent to the Customs service.
All companies established outside of the EU are required to have an Economic Operator Registration and Identification (EORI) number if they wish to lodge a customs declaration or an Entry/Exit Summary declaration.

As part of the 'SAFE' standards advocated by the World Customs Organisation (WCO), the European Union has set up a new system of import controls, the 'Import Control System' (ICS), which aims to secure the flow of goods at the time of their entry into the customs territory of the EU. This control system, part of the Community Programme eCustoms, has been in effect since January 1, 2011. Since then, operators are required to pass an Entry Summary Declaration (ENS) to the customs of the country of entry, prior to the introduction of goods into the customs territory of the European Union.

The Modernised Customs Code (MCC) of the European Union simplifies various procedures such as: introducing a paperless environment, centralised clearance and more. For more information, check the EU’s Customs website. Further details are available on the website of Portuguese customs (in Portuguese).

Specific Import Procedures

As a member of the European Union, goods entering Portugal may be placed under any of the following treatments:

 

Transit, which comprises external and internal transit:

• External transit: non-Union goods may be moved from one point to another within the customs territory of the EU without being subject to import duties, other charges related to the import of the goods (i.e. internal taxes) and commercial policy measures. Moving goods to another EU Member State means the customs clearance procedures are transferred to the customs office of destination.
• Internal transit: Union goods may be moved from one point to another within the customs territory of the EU without any change to their customs status. This includes transporting goods through another territory that is outside the EU customs territory.

Storage, which comprises customs warehousing and free zones:

• Customs warehousing: non-Union goods may be stored in premises or any other location authorised by the customs authorities and under customs supervision ('customs warehouses') without being subject to import duties, other charges related to the import of the goods and commercial policy measures.
• Free zones: Member States may designate parts of the customs territory of the Union as free zones. They are special areas within the customs territory of the Union where goods can be introduced free of import duties, other charges (i.e. internal taxes) and commercial policy measures, until they are either assigned another approved customs procedure or re-exported. Goods may also undergo simple operations such as processing and re-packing.

Specific use, which comprises temporary admission and end-use:

• Temporary admission: Non-Union goods can enter the EU without the payment of import duties, provided they are intended for re-export without being changed. The maximum period for temporary import is two years.
• End-use: goods may be released for free circulation under a duty exemption or at a reduced rate of duty on account of their specific use.

Processing, which comprises inward and outward processing:

• Inward processing: Goods can be imported into the EU, without being subject to duties, taxes and formalities, to be processed under customs control and then re-exported. If the finished products are ultimately not exported, they become subject to the applicable duties and formalities.
• Outward processing: Union goods may be temporarily exported from the customs territory of the Union for processing purposes. The processed goods may be released for free circulation with total or partial relief from import duties.

The EU framework sets forth several regulations that can have an impact on import procedures: Waste Electrical and Electronic Equipment Directive (WEEE Directive), the ROHS Directive, Cosmetics Regulation, and Registration, Evaluation and Authorisation of Chemicals (REACH), agricultural documentation and sanitary certificates (Fisheries).

Distribution channels

The Portuguese population is concentrated along the coast. The major distribution centres are Lisbon in the south and Porto in the north, although the regional centres of Braga (north of Porto) and Setubal (south of Lisbon) have come into their own in recent years. The Lisbon area has the highest purchasing power in the country and suffers.

In 2020, the retail sector was negaitvely impacted by the Covid-19 pandemic but the food segment performed well. According to figures from the Portuguese Association of Distribution Companies (APED), food retail sales increased 8.1% in volume in 2020 compared to the previous year. In value, food sales in large-sized commercial establishments increased by 2.9% compared to 2019, reaching EUR 13.8 billion in 2020 (INE). Supermarkets remained the largest channel within grocery retailing in the country in terms of value in 2021. Given the increasing trend for local consumers to make more frequent trips to grocery retailers (although with a lower overall spend), major chains have been adapting by opening smaller stores nearer to local neighbourhoods and enhancing customers in-store experience (for example introducing leisure areas). At the same time, the weight of promotions in food retailing continued to increase, making Portuguese consumers those who show greater appetite for promotional campaigns in Europe.

The competitive environment is quite concentrated in the grocery store-based retailing, with Continente accounting for the largest share, followed closely by Pingo Doce. The market share of the five major distribution groups in Portugal has considerably increased in the last decade, accounting for around 70% (USDA, latest data available). However, in 2019 the Spanish retailer Mercadona opened its first store in Portugal (it had 32 stores in July 2022), and it could impact retail dynamics in the Portuguese market.

Changing consumer habits, demographic factors and the development of e-commerce and new technologies are leading the sector to conceive new commercial formats, where consumers increasingly appreciate proximity and value-added services. Consumers are buying more online and retailers are increasingly investing in this channel, especially following the outbreak of the COVID-19 pandemic and the restrictions that followed.

Distribution market players

Portugal's retail sector is among the most concentrated and competitive in Europe. Grocery retailers remain the largest of the retail sector.

According to the latest figures available from the USDA, the Portuguese food retail market is highly concentrated, with a market share divided as follows (2020):

•    Sonae Group (including Continente, Modelo Continente - hypermarkets brand leader) is the country's most popular grocery retailer with a market share of 26.8%
•    Jeronimo Martins in the challenger (Pingo Doce - supermarket leader) has a share of 22.9%
•    German discount Lidl - 11.3%
•    Intermarché (France) - 8.8%
•    Auchan Group (from France) - 5.6%
•    Dia (Span) - 3.9%
•    Leclerc (France)
•    Aldi (Germany)

Retail Sector Organisations

Portuguese Association of Distribution Companies (APED)
Ministry of Economy

Consumption Taxes

Nature of the Tax

Imposto Sobre o Valor Acrescentado (IVA) = Value-Added Tax (VAT)

Tax Rate

23% (Mainland Portugal); 22% (Madeira); 16% (Azores)

Reduced Tax Rate

Reduced VAT rates are available at 13% and 6%.
The 13% rate (12% in Madeira and 9% in Azores) applies to: some foodstuffs; restaurant & cafe food; some agricultural supplies; wine; mineral water; diesel for agriculture; some goods and services for consumption onboard transportation; access to direct broadcasting of concerts, theatres, amusement parks, museums, cinemas and similar events; sale and installation of specific heaters and boilers that work with biomass; pellets and briquets made from biomass. Click here for a full list.
The 6% rate (5% in Madeira and 4% in Azores) applies to: basic foodstuffs; water supplies; certain pharmaceutical products; medical equipment for disabled persons; children’s car seats; children’s diapers; domestic passenger transport; some books (excluding e-books); certain newspapers and periodicals; TV licence; social housing; renovation and repair of private dwellings; certain agricultural supplies; hotel accommodation; some social services; some medical and dental care; collection of domestic waste, minor repairs of bicycles; domestic care services; fruit juices; firewood; cut flowers and plants for decorative use and food production; construction work on new buildings; some legal services; some goods for consumption onboard transportation; treatment of wastewater; some works of art, collectors' items and antiques. Click here for a full list.
The reduced rate for electricity supply, excluding fixed components, is extended until 31 December 2024 for power up to 6.90 kVA, covering up to 100 kWh per 30 days, or 150 kWh per 30 days for large families (households with five or more people).

Other Consumption Taxes

There are different types of excise duties, such as petroleum and energy products tax, alcohol and alcoholic beverages tax, tobacco tax, vehicle tax, excise on non-alcoholic beverages with added sugar, etc.
Other taxes include a vehicle tax (IUC), payable each year from the day of registration of a vehicle with Portuguese authorities. Its rate varies according to the model of the vehicle, size, date of manufacture and CO2 emission rate. A 10% stamp duty is levied on gifts and inheritances (unless the heir is the spouse, descendant or ancestor of the donor/decease). An acquisition tax for property sales and transfers also applies.

A carbon tax due by the user in the amount of EUR 2 applies on air, sea and river travel. A levy amounting to EUR 0.30 per package applies to disposable plastic and aluminium packages (the latter contribution shall not apply to single-use beverages and still has to come into force).

Corporate Taxes

Company Tax

21% for mainland Portugal

Tax Rate For Foreign Companies

A company is deemed to be resident in Portugal if its head office or effective management is located in Portugal.
Any fixed place of business (e.g. a place of management, a branch, an office, a factory, a workshop, etc.) in Portugal through which the business of an enterprise is wholly or partly carried on is deemed to constitute a permanent establishment in the country.

Capital Gains Taxation

Realized capital gains are included in taxable corporate profits, but share disposal gains may be exempt under the participation exemption. The acquisition cost of capital assets disposed of after two years can be adjusted for inflation using official indices.
Fifty percent of gains from disposing of tangible fixed assets, biological assets, and intangible assets (excluding those from related parties or investment properties) held for at least one year can be excluded from tax if reinvested within a specified period. This does not apply to gains from mergers, demergers, or asset-for-share deals, nor to transfers unrelated to the business.
Capital gains from the indirect disposal of certain immovable property in Portugal are subject to corporate tax. This includes nonresident companies disposing of shares in another nonresident company if, within the past 365 days, over 50% of the share value is tied to immovable property in Portugal, subject to conditions.
Under Portugal’s participation exemption, dividends received and capital gains realized by a resident company from a domestic or foreign shareholding are tax-exempt if the shareholder, not a transparent entity, has held at least 10% of the capital or voting rights for at least 12 months. The subsidiary must not be in a listed tax haven and must be subject to a qualifying income tax.

Main Allowable Deductions and Tax Credits

Expenses incurred to generate profits and certain provisions (including bad debt and inventory losses) are deductible from the corporate tax base. With certain limitations, impairment losses on doubtful debts are deductible for tax purposes when insolvency or recovery has been requested or the credits have been claimed in court. Small companies also benefit from special tax regimes. Start-up and research expenses are deductible for tax purposes in the respective tax year.

Donations to authorized charitable institutions are allowable up to 0.8% of turnover, with a possible increase of the actual amount spent up to 150%. This also applies to donations of computers, software, training, and consultancy in computing to the national government, municipalities, foundations, museums, and other charitable institutions. Donations to authorized educational, sport, and environmental institutions are allowable up to 0.6% of turnover, with a potential increase of the actual amount spent up to 140%. Contributions to the state, municipalities, and foundations where the state or municipalities have an initial capital stake can be fully deducted, with a possible increase in the deductible amount up to 140%.

Pension, invalidity, and health schemes are tax-deductible up to a rate of 15% of annual staff expenses, only if, among other conditions, they are available to all employees and the management and disposition of the benefits are outside the control of the taxpayer. Companies may only deduct net financing expenses up to the higher of the following limits: EUR 1 million or 30% of the earnings before depreciation, amortisation, taxes, and net financing expenses, adjusted for tax purposes.

A corporate tax credit of 32.5% is available for qualifying research and development (R&D) expenses, which can be carried forward for eight years. Taxpayers can claim an additional incremental credit of 50% on R&D expenses exceeding the average spent in the previous two years, capped at EUR 1.5 million. For SMEs not actively engaged in business for at least two years and not previously benefiting from the increased rate, the base rate is increased by 15 percentage points, resulting in a 47.5% credit on qualifying expenses. This tax credit can offset up to the total corporate income tax liability and is available until 31 December 2025.

Tax losses from tax years starting on or after 1 January 2023 can be deducted against future taxable profits indefinitely. This rule also applies to tax losses from years before 1 January 2023 if their carryforward period is still active. However, the deduction of carried forward tax losses is limited to 65% of the taxable income. Loss carrybacks are not allowed.

Until 31 December 2027, tax benefits for investment projects over EUR 3 million may be granted for up to 10 years. These benefits include a corporate tax credit of 10% to 25% of investment expenses and exemptions from real property tax, transfer tax, and stamp duty. The annual credit is capped at 25% of the total tax benefit or 50% of the corporate income tax liability. From 2024, eligible expenses include certain salaries for personnel with level 7 or 8 NQF qualifications.
A corporate tax credit of 10% to 30% is available for acquiring new tangible and intangible assets, with some exceptions. This credit can offset up to 50% of the corporate income tax liability and be carried forward for 10 years. Eligible expenses now include specific salary costs for NQF level 7 or 8 personnel.
Income from patents, designs, industrial models, and software copyrights may be tax-exempt, determined by a specific formula. SMEs in inland areas receive an additional 20% tax deduction for job creation expenses, totaling a 120% deduction.
A wage increase incentive allows a 50% additional deduction, totaling 150%, for expenses related to a minimum 5% wage increase for employees with indefinite contracts in 2024.
A capitalization incentive provides an annual deduction based on the 12-month Euribor rate plus 1.5 percentage points (2 points for micro companies, SMEs, or small mid caps) applied to net equity increases. This deduction increases by 50%, 30%, and 20% in 2024, 2025, and 2026, respectively. To offset rising energy costs, a special scheme offers a 20% additional deduction, totaling 120%, for 2024 expenses exceeding those of 2021.
For agricultural production, an additional 40% deduction, totaling 140%, is available for expenses on fertilizers, soil amendments, feed, and other items.
A new incentive for renewing freight transport fleets offers tax exemptions for vehicles sold and reinvested in newer vehicles from 2024. This is subject to EU de minimis aid rules. There are also incentives for acquiring electric and hybrid cars.

Other Corporate Taxes

Other taxes levied include property municipal real estate holdings (Imposto Municipal sobre Imóveis or IMI - 0.3% to 0.45% for urban real estate, 0.8% for rural real estate, 7.5% for property owners residing in a tax heaven); stamp duties (0.5% to 20%, the latter being applicable to gamblings).

Real estate transfer tax (Imposto Municipal sobre as Transmissões Onerosas de Imóveis or IMT), imposed by municipalities, is up to 7.5% on residential property transfers, 5% on rural property transfers, 6.5% on other urban property transfers, and 10% if the purchaser is in a listed tax haven or controlled by an entity in a listed tax haven. An additional 0.8% stamp duty also applies. This tax is also due on the acquisition of shares in certain companies (e.g., an SA or an Lda) if more than 50% of the company's asset value is from real estate in Portugal (valued at the higher of tax or book value), the real estate is not used for agricultural, industrial, or commercial activity, or is used for real estate trading, and a shareholder gains 75% or more of the company’s share capital through the transaction.

A standalone tax of 35% is levied on indemnities and compensation as well as bonuses paid to members of the board and managers (if exceeding 25% of their annual remuneration and EUR 27,500). Certain deductible expenses are subject to a standalone tax, including entertainment expenses (10%), undocumented expenses (taxed at 50%, or 70% in the case of taxpayers enjoying a partial or total tax exemption), expenditures on private cars (taxed at rates from 5% to 35% depending on the acquisition price of the car), daily allowances and employees' travelling costs (taxed at 5%).

A special contribution is levied on companies operating in the financial sector, with two different tax bases: the contribution is applicable at a maximum of 0.11% on base I and at 0.00030% on base II. Moreover, the aforementioned credit institutions are also subject to a solidarity surcharge, levied upon the same taxable base as the bank levy, the rate being 0.02% on Base I and 0.00005% on Base II.

Social security contributions paid by the employer amount to 23.75% of the monthly gross remuneration.

A carbon tax due by the user in the amount of EUR 2 applies on air, sea and river travel. A levy amounting to EUR 0.30 per package applies to disposable plastic and aluminium packages (the latter contribution shall not apply to single-use beverages and its implementation has been postponed several times).

Special taxation rules apply to entities engaged in activities such as oil exploration, prospecting, and production, and to those operating in the gaming industry.

Other Domestic Resources

Portuguese Tax and Customs Authority

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed

Double Taxation Agreements (DTA) signed by Portugal

Withholding Taxes

• Dividends paid to a nonresident company are subject to a 25% withholding tax (35% if paid to a resident of a listed tax haven), but this can be reduced to 0% under the domestic participation exemption regime if the recipient is in the EU/EEA or a tax treaty jurisdiction, or reduced under a tax treaty if the exemption doesn't apply. Dividends to nonresident individuals are subject to a 28% withholding tax (35% for listed tax havens), unless reduced by a tax treaty. Dividends paid to resident companies by other resident companies are typically subject to a 25% withholding tax, reducible to 0% under the participation exemption. Dividends paid to resident individuals by resident entities are generally subject to a 28% withholding tax.
• Interest paid to a nonresident company incurs a 25% withholding tax (35% for residents of listed tax havens), with possible reduction under tax treaties. Payments to qualifying EU recipients are exempt under the EU interest and royalties directive. Interest paid to a nonresident individual faces a 28% withholding tax (35% for listed tax haven residents), subject to treaty rate reductions. Portuguese-source interest paid to resident companies is typically taxed at 25%, but exempt for qualifying recipients under Portugal's implementation of the EU interest and royalties directive. Portuguese-source interest paid to resident individuals is generally subject to a 28% withholding tax.
• Royalty payments to nonresident companies incur a 25% withholding tax (35% for listed tax haven residents), reducible under tax treaties, with exemptions for qualifying EU recipients under the EU interest and royalties directive. Nonresident individuals face a 28% withholding tax (35% for listed tax haven residents), subject to treaty rate reductions. Resident companies typically face a 25% withholding tax, but exemptions apply under Portugal's implementation of the EU interest and royalties directive. Resident individuals are subject to a 16.5% withholding tax on royalty payments.