This week: an IRS cut, a budget at 18%, and the Madeira clock

The first six IRS brackets fall for all 2026 income: 12.2%, 15.2%, 20.7%, 23.6%, 30.6% and 34.6%, down 0.3 to 0.5 points; brackets seven to nine are unchanged. It applies to income declared in April–June 2027. Promulgated but not yet published in the Diário da República, and a decree-law setting the rates is still to follow.

Who it affects: Resident individuals, including owner-managers on payroll. Non-residents taxed at flat rates are unaffected.

IRS withheld on salaries and pensions paid between 1 and 30 November 2026 is 50% of the amount under the current tables; normal tables return on 1 December. Pay above roughly €20,200 a month keeps full withholding. Advisers note the cut is larger than the actual rate reduction, so some employees will owe tax when they file in 2027.

Who it affects: Every employer running Portuguese payroll, including payments to managers. Payroll software must apply it on the November run.

The general IRC rate would fall from 19% to 18% for 2027 profits, keeping the published path to 17% in 2028; the SME rate stays at 15% on the first €50,000. SIFIDE II is extended through 2027. The proposal amends neither the CIRC, the VAT code, the Stamp Tax code nor the IMI code. General vote on 28 October, final vote on 24 November.

Who it affects: All Portuguese companies. The 18% would first be paid in 2028, when 2027 profits are settled.

All IRS bracket limits would rise 3.88%. Productivity and profit-share bonuses stay free of IRS and social security up to 6% of annual base pay, but only if the company raises average base pay by 4.5%. Regressar, the 50% exclusion for returning residents, is extended to people becoming resident by end-2027. According to one adviser summary IFICI is unchanged; we have not yet checked that against the bill.

Who it affects: Employers designing pay packages and owner-managers relocating to Portugal.

The mandatory accounting SAF-T would apply only to 2028 periods, filed in 2029. PDF invoices remain valid electronic invoices until 31 December 2027. The extra 10 points of autonomous taxation for loss-making companies would again be disapplied for companies with a profit in one of the three previous years and returns filed on time, and for start-ups in their first three periods.

Who it affects: Small foreign-owned companies, especially early-stage ones with company cars or entertainment costs.

Under the current regime a company must be licensed in the Madeira International Business Centre by 31 December 2026 to get the 5% rate, which runs to 2033. A successor regime has been discussed with Brussels but nothing has been enacted, and commentators say the budget bill contains nothing on it. Without new legislation, no new admissions from 1 January 2027.

Who it affects: Anyone planning a new Madeira company. The licence application, not incorporation, is what has to land in time.

The Council moved Panama and Viet Nam to Annex II pending new reviews; Belize left Annex II. Annex I now has eight jurisdictions: American Samoa, Anguilla, Guam, Palau, Russia, Turks and Caicos, the US Virgin Islands and Vanuatu. Next update in February 2027. Portugal’s own list, Portaria 150/2004, is separate and unchanged.

Who it affects: Groups paying into or holding through those jurisdictions.