What is the simplified CIT regime
The simplified regime for determining the taxable base is set out in Article 86-A of the Portuguese Corporate Income Tax Code and constitutes an alternative to the traditional method of determining taxable profit based on accounting records.
Under this regime, the taxable base does not derive from the profit effectively recorded in the company’s accounts. Instead, the legislator presumes a certain profit margin through the application of statutory coefficients to the income earned, considering that the remaining portion corresponds to the costs inherent to the activity.
The purpose of this model is to simplify compliance with tax obligations and reduce administrative complexity, allowing smaller companies to determine their taxable base in a more straightforward and predictable manner.
This regime is primarily intended for companies with low-cost structures and relatively simple activities and is particularly common among small service companies.
Eligibility requirements for the simplified regime
The application of the simplified regime depends on the cumulative fulfilment of certain legal requirements.
According to the Corporate Income Tax Code, companies may opt for this regime provided that, among others, the following conditions are met:
- annual turnover not exceeding EUR 200,000 in the previous tax period;
- total balance sheet not exceeding EUR 500,000;
- no obligation to appoint a statutory auditor;
- not being directly or indirectly held, by more than 20% of the share capital, by entities that do not meet the requirements for applying this regime.
If any of these conditions cease to be met, the company automatically becomes subject to the general CIT regime, based on accounting records and the determination of actual taxable profit.
Coefficients applicable to service activities
One of the key features of the simplified regime is the application of statutory coefficients for determining the taxable base, which vary depending on the nature of the income obtained.
In the case of service activities, namely:
- consultancy
- management
- commercial intermediation
- professional services in general
a coefficient of 0.75 generally applies.
This means that 75% of the income obtained is considered taxable for CIT purposes, assuming that only 25% of the turnover corresponds to business costs.
In practice, this mechanism results in a simplified taxation model where tax is levied on a presumed profit margin, regardless of the company’s actual cost structure.
Tax advantages of the simplified regime
The simplified regime offers several advantages, particularly from an administrative and predictability perspective.
It significantly reduces the complexity of determining taxable profit, avoiding the need to calculate multiple tax adjustments provided for in the Corporate Income Tax Code.
Additionally, it provides:
- greater simplicity in calculating the taxable base;
- reduced administrative burden in terms of tax compliance;
- increased predictability in determining the taxable amount.
For these reasons, this regime may be particularly suitable for service companies with high operating margins and low-cost structures.
Limitations and disadvantages
Despite its advantages, the simplified regime also entails relevant limitations that must be carefully assessed.
The main limitation lies in the fact that it does not allow the deduction of the actual expenses incurred by the company for tax purposes.
Thus, in service activities subject to the 0.75 coefficient, it is assumed that only 25% of turnover represents costs, even where the company’s actual expenses are significantly higher.
Consequently, this regime may be less tax efficient in situations where:
- the company has high operating costs;
- there is a significant workforce structure;
- relevant expenses are incurred with facilities, technology or subcontracting.
In such cases, the general CIT regime, based on actual profit, may result in taxation more aligned with the company’s economic reality.
When is the simplified regime advantageous
The choice between the simplified regime and the general CIT regime should be based on a specific analysis of the company’s cost structure, business model and scale of operations.
In general, the simplified regime tends to be more efficient where:
- the company has high operating margins;
- actual costs represent a relatively low percentage of turnover;
- the activity is carried out through a simple operational structure.
Conversely, where operating costs exceed the presumed margin established by the applicable coefficient, the simplified regime may lead to higher taxation compared to the general regime.
Conclusion
The simplified CIT regime remains, in 2026, a relevant option for small companies in Portugal, allowing for a simplified determination of the taxable base and reduced compliance complexity.
However, in the case of service activities — including consultancy, management or intermediation — the application of the 0.75 coefficient, as provided for in Article 86-A of the Corporate Income Tax Code, implies that a significant portion of income is automatically considered taxable.
For this reason, opting for this regime should be preceded by a detailed tax analysis, in order to assess whether the legislator’s presumed cost margin reflects the company’s actual economic reality. The Tax Law Department of Belzuz Abogados, S.L.P. – Portugal Branch remains fully available to support and advise on this matter.