Digest · Tuesday 3 November 2026
This week: the budget clears its first vote, and the IRS decree waits for print
Six things that moved for foreign-owned companies in Portugal between 28 October and 3 November, each marked as law, approved, or only a proposal. The 2027 budget is a bill until the final vote on 24 November; we flag every point that rests on it.
28 Oct
Budget 2027 passes the general vote; amendments close on 6 November Proposal
Parliament approved the 2027 State Budget bill in general on 28 October: PSD and CDS-PP voted in favour, PS, PAN and JPP abstained, and Chega, IL, Livre, PCP and BE voted against. Ministers and bodies such as the Tribunal de Contas and the Conselho das Finanças Públicas are now being heard in the Budget committee; the hearings end on 6 November, which is also the deadline for parties to table amendments. Committee votes follow and the final overall vote is set for 24 November.
Who it affects: All companies. Every measure in the bill, including the 18% IRC rate covered in our 20 October issue, can still be amended and is not law until the final vote, promulgation and publication.
29 Oct
IRS rate cut: decree-law approved, not yet published Approved, not yet published
Using the authorisation in Lei 64-B/2026, the Council of Ministers approved the decree-law that amends art. 68.º(1) CIRS and lowers the rates of the first six brackets to 12.2%, 15.2%, 20.7%, 23.6%, 30.6% and 34.6%, with effect from 1 January 2026. It still needs promulgation and publication: as of 3 November we have not found it in the Diário da República, so its text is not yet public. The Government presents it as relief on employment and pension income, but art. 68.º is the general rate table, so once in force it applies to all 2026 income taxed at progressive rates, settled in the return filed in April–June 2027.
Update 10 Nov: Published as Decree-Law 212/2026 on 4 November and in force from 5 November, with effect from 1 January 2026. See the 10 November issue.
Who it affects: Resident individuals, including owner-managers on payroll. Non-residents taxed at flat rates, and IFICI holders on their qualifying income taxed at 20%, are unaffected.
1 Nov
Half withholding is now running, and Madeira joins in In force
Since 1 November, IRS withheld on salaries and pensions paid in November is 50% of the table amount, including a Christmas subsidy paid this month; normal tables return in December (details in our 20 October issue). Madeira, which the national despacho did not cover, adopted the same cut on its regional tables by Despacho 434/2026, published in the regional Official Journal (JORAM) on 29 October. Pay above the upper limit of the penultimate withholding bracket keeps full withholding, and a payer that gets November wrong may correct it until the end of December.
Who it affects: Every employer running Portuguese payroll, including companies with staff or managers resident in Madeira.
28 Oct
VAT groups: applications now filed online In force
The VAT group regime approved by Lei 62/2025 applies to tax periods starting on or after 1 July 2026. Under Ofício-circulado 90088/2026, the dominant company’s certified accountant now files the application on the Portal das Finanças as a change-of-activity return (Alteração de Atividade – Grupos de IVA). The interim procedure of Ofício-circulado 90087 of 25 June 2026 is revoked, and the new route applies to applications filed from 28 October.
Who it affects: Groups with several Portuguese companies that want to account for VAT as one group. The eligibility conditions are in the law, not in this circular.
Source: AT, Ofício-circulado 90088/2026
29 Oct
Nationality rules regulated; new AIMA board appointed Approved, not yet published
The Council of Ministers approved the decree-law regulating the new Nationality Law. According to the Government it sets legal residence of seven years for nationals of the Portuguese-speaking African countries and EU citizens and ten years for everyone else, and lays down the test of Portuguese language, culture, history and institutions, the means-of-subsistence requirement, a declaration of adherence to the democratic rule of law and biometric collection, with more of the process handled digitally. On the same day the Council appointed César Teixeira as president of AIMA’s board. The decree-law is not yet published.
Who it affects: Founders and staff who plan to apply for Portuguese citizenship. Neither measure changes residence permits or the routes for hiring non-EU staff.
1 Nov
EU: a €2 handling fee on every item sold to consumers from outside the EU In force
From 1 November 2026, customs collect a Union handling fee of €2 per item on goods sold in distance sales to EU consumers and imported from outside the EU; the amount is set by Delegated Regulation (EU) 2026/2152. Unlike the temporary €3 duty on consignments up to €150, which has applied since 1 July 2026 and runs until 1 July 2028, the fee applies whatever the value and has no end date. The Commission’s guidance confirms it is charged per item, not per parcel.
Who it affects: Online shops and marketplaces shipping to EU consumers from stock held outside the EU. Goods imported in bulk and sold from stock in Portugal are not distance sales of imported goods.
Source: European Commission guidance; Garrigues
What to do this week
- Check the November payroll: 50% withholding on the salary and on any Christmas subsidy paid this month, including for staff in Madeira, and warn employees that some will owe tax when they file in 2027.
- If your company owns property in Portugal and its IMI is over €100, the last instalment is due in November (art. 120.º(1) CIMI); our property tax guide sets out the instalments. Diary the third IRC payment on account for 15 December (art. 104.º(1)(a) CIRC), explained in our annual accounts guide.
- Do not price 2027 on the budget bill yet: amendments close on 6 November and the final vote is on 24 November. Plan on 19% IRC until then.
- If a non-EU founder or employee is counting on Portuguese citizenship, plan on ten years of legal residence and keep the residence permit current. For new non-EU hires, start with our guide to hiring non-EU staff.
- Paying fees, royalties or interest to a foreign company before the year end? Hold the treaty form before you pay, not after: see our guide to withholding on payments abroad.
Not sure which of these touches your company?
Send us your structure and we will tell you, in a paragraph, what this week means for you and what to do before which date.