On 8 October 2026, the Government submitted Bill No. 110/XVII/2.ª, concerning the 2027 State Budget, to the Portuguese Parliament.
The legislative initiative includes measures directly affecting personal income taxation, corporate and real estate taxation, and compliance with tax obligations. Overall, it seeks to balance administrative simplification and tax predictability with economic competitiveness.
Below, we summarize the main proposed tax changes. The analysis distinguishes between measures included in the 2027 State Budget Bill and measures arising from legislation already enacted that will apply in 2027.
PERSONAL INCOME TAX (IRS)
Update to the guaranteed minimum monthly wage
The guaranteed minimum monthly wage is to increase to €970.00.
Update to tax brackets and reduction of tax rates
The 2027 State Budget proposal provides for a 3.88% increase in the thresholds of the nine IRS tax brackets and incorporates, for the first six brackets, the rates set out in the separate legislative initiative submitted by the Government for 2026 (Articles 68 and 68-B of the IRS Code).
It also proposes increasing the threshold for the application of the 2.5% additional solidarity tax rate to €89,995 (Article 68-A of the IRS Code).
Furthermore, the reference amount for the minimum subsistence allowance is to increase to €13,580, without prejudice to the statutory formula linked to the Social Support Index (Indexante dos Apoios Sociais – IAS) (Article 70 of the IRS Code). The previous amount was €12,880, corresponding to 1.5 × 14 × IAS.
The indexation to the IAS of the specific deduction applicable to employment income and pensions is maintained, pursuant to Articles 25 and 53 of the IRS Code.
Taken together, these measures aim to mitigate the effects of inflation and the progressive nature of income taxation on households’ disposable income.
Productivity and performance bonuses
Article 78 of the Bill maintains, for 2027, the IRS exemption applicable to amounts voluntarily awarded on a non-regular basis to employees or members of statutory corporate bodies as productivity or performance bonuses, profit-sharing payments or balance-sheet bonuses, up to a limit of 6% of annual basic remuneration.
Eligibility for this tax benefit is conditional upon the employer implementing a salary increase qualifying under Article 19-B of the Tax Benefits Statute. For this purpose, the proposal requires a minimum increase of 4.5% (compared with 4.6% in 2026), both in the company’s average annual basic remuneration and in the annual basic remuneration of the employees covered by the statutory criteria.
Where these requirements are met, the relevant amounts are also excluded from the contribution base of the Social Security contributory system, pursuant to Article 78(5) of the Bill.
The annual income statement must expressly confirm compliance with the salary increase requirement.
Regressar Programme
The proposal extends by one further year the possibility for former Portuguese tax residents to benefit from a 50% exemption on employment and self-employment income for a period of five years, provided they become tax resident in Portugal during 2027.
Under the currently applicable wording, taxpayers must become tax resident in Portugal by 2026.
The measure concerns Article 12-A of the IRS Code, which establishes the tax regime applicable to former residents.
CORPORATE INCOME TAX (IRC)
General rate of 18% in 2027
For tax periods beginning in 2027, the general corporate income tax rate will be reduced to 18%, in implementation of the phased reduction schedule established by Law No. 64/2025 of 7 November, which amended Article 87 of the Corporate Income Tax Code.
This is not a new measure introduced by the 2027 State Budget proposal, but rather the implementation of a legislative decision previously approved.
For SMEs and small and mid-cap companies qualifying under the relevant regime, the 15% rate on the first €50,000 of taxable income remains applicable, pursuant to the same Article 87 of the Corporate Income Tax Code.
Autonomous taxation
Under Article 77 of the proposal, the Government intends to maintain in 2027 the non-application of the 10-percentage-point increase in autonomous taxation rates in cases where a tax loss is incurred, as provided for in Article 88(14) of the Corporate Income Tax Code, subject to the conditions already applicable in previous tax periods.
This applies where:
- a) The taxpayer recorded taxable profits in at least one of the three preceding tax periods and complied, within the statutory deadlines, with the filing obligations laid down in Articles 120 and 121 of the Corporate Income Tax Code for the two preceding tax periods.
- b) The relevant tax period is the period in which the activity commenced or one of the following two tax periods.
SIFIDE II – Tax Incentive System for Business R&D
Among the tax incentives, the proposal extends SIFIDE II, governed by Articles 35 to 42 of the Investment Tax Code, for tax periods from 2014 to 2027.
Corporate taxpayers resident in Portugal that principally carry on agricultural, industrial, commercial or service activities, as well as non-resident taxpayers with a permanent establishment in Portugal, may deduct from their corporate income tax liability, up to the amount of that liability and in accordance with Article 90(1)(a) of the Corporate Income Tax Code, eligible research and development expenditure that has not been funded through non-repayable public financial support.
The regime covers expenditure incurred in tax periods beginning between 1 January 2014 and 31 December 2027.
Companies should verify the eligibility of their research and development expenditure, as well as the applicable deadlines and other requirements for claiming the incentive.
Article 77 of the Bill also extends various transitional regimes relating to tax compliance.
Invoicing
The submission of the SAF-T (PT) accounting file, for the purposes of pre-filling Annexes A and I of the Simplified Business Information Statement (Informação Empresarial Simplificada – IES), will apply to tax periods beginning in 2028 and subsequent years, with submission taking place in 2029 or thereafter.
In parallel, invoices issued in PDF format will continue to be accepted as electronic invoices until 31 December 2027. The exemption from reporting inventory quantities and values will also remain in place in the cases provided for in the same article.
Companies are advised to review their tax compliance calendars and assess any necessary adjustments to their accounting and invoicing systems in good time, considering the final wording of the legislation and the relevant effective dates.
IMT – MUNICIPAL PROPERTY TRANSFER TAX
Update to tax thresholds
Regarding IMT, Article 65 of the proposal provides for a 2.3% increase in the thresholds applicable to acquisitions of urban buildings or autonomous units intended exclusively for residential use, by amending the tables set out in Article 17 of the IMT Code.
For acquisitions intended as a permanent and primary residence, the general exemption threshold will increase to €108,792 (previously €106,346). For other properties intended exclusively for residential use, the single rate of 7.5% will apply to acquisitions exceeding €1,177,323.
Under the regime applicable to the acquisition of a first permanent and primary residence by individuals aged 35 or under, the full IMT exemption threshold will increase to €338,141 (previously €330,539).
Property purchasers and real estate investors should consider the thresholds and limits ultimately approved when calculating the IMT due on transactions carried out in 2027.
Housing
Housing remains one of the proposal’s priority areas, with measures addressing access to housing and instruments supporting property acquisitions.
These measures should, however, be analyzed alongside existing tax regimes, particularly the IMT and Stamp Duty exemptions applicable to young purchasers who meet the statutory requirements.
It is therefore important to distinguish tax measures expressly included in the 2027 State Budget proposal from other legislative initiatives or public policy measures that may be approved separately.
Tax incentive for employee housing (Article 70 of the proposal)
Benefits in kind arising from the use of a permanent residential property located in Portugal and provided by the employer, under Article 2(3)(b)(4) of the IRS Code, will be exempt from IRS and Social Security contributions for the period from 1 January 2027 to 31 December 2027.
For these purposes, the IRS and Social Security contribution exemptions apply up to the rental value limits established under the Rental Support Programme, approved by Decree-Law No. 68/2019 of 22 May, even where the relevant properties are not included in that programme.
For the purposes of determining the employer’s taxable profits, properties owned, constructed, acquired or converted by the employer for use as employees’ housing and qualifying for the regime described above may benefit from a depreciation rate equal to twice the rate resulting from the table annexed to Regulatory Decree No. 25/2009 of 14 September.
Legislative process and next steps
Bill No. 110/XVII/2.ª is still undergoing parliamentary consideration.
The general debate and vote are scheduled for 27 and 28 October 2026, followed by consideration at committee stage and the final overall vote, scheduled for 24 November 2026.
Until the State Budget Law is approved, promulgated and published, the measures described remain proposals and may be amended during the parliamentary process. Their application should therefore be confirmed against the final wording of the legislation.