On the 14th October 2016, the Government presented in Parliament, the draft law No. 37/XIII/2016 related to the Portuguese State Budget Proposal for the year of 2017. Following, we present a brief resume of the measures that we have considered more significant.

Corporate Income Tax (IRC)

Tax losses

It is cancelled the rule that determines the deduction of tax losses according to the FIFO (first in, first out) criteria. This amendment allows to be deducted first the tax losses whose reporting period runs out first, avoiding the expiration of the latest tax losses as a result of the decrease in the carry-forward period from 12 to 5 years, which applies to tax losses generated from 1 January 2017 onwards.

Autonomous taxation

As already happens for costs related to passenger vehicles, also the costs regarding to representation expenses, daily and mileage allowances (km’s) are subject to autonomous taxation independently of their deductibility for tax purposes. Thus, it is proposed that such expenses booked in the accounts, even those that are not tax deductible, should be subject to autonomous taxation.

Personal Income Tax (IRS)


In line with the expected inflation rate, the yield ranges for IRS purposes are updated in 0.8%. Therefore, the practice table of IRS (mainland) for application in 2017.

Extraordinary rates

It is foreseen the reduction of the extraordinary IRS rates with a progressive phase out of the monthly withholding tax, which will be made applying to 2016 withholding tax rates.

The new table of extraordinary IRS rates applicable to 2017 income.

Meal allowance

The increase of €0,25/day in the meal allowance of State employees results in an increase in the limit of the tax exemption for the meal allowance to private employees. Therefore, the new IRS exemption limits planned for 2017.

Value Added Tax (VAT)

Invoicing communication (SAFT file)

The SAFT file to communicate invoicing data becomes of mandatory delivery until the 8th day of the following month to the issuance of the invoice (currently this deadline is on the 25th day of the following month).

Real Estate Municipal Tax (IMI)

Additional IMI (AIMI)

The AIMI is an additional tax to the IMI, having a fixed rate of 0.3%, and it will focus on the Taxable Value (VPT) of urban buildings located in Portuguese territory, with the exception of real estate allocated to industrial and tourist activities.
As a general rule, this tax applies only when the sum of all the VPT of the same owner (individual or legal entity) exceeds €600,000, excluding from the taxable amount the VPT of real estate to which were granted an IMI exemption in the previous year.

However, this deduction of € 600.000, shall not apply to the following entities:

  • Companies whose properties are not related to its activity (commercial, industrial or agricultural) and which represent more than 50% of the value of its assets;
  • Companies whose activity is the buying and selling of real estate;
  • Entities with tax debts to the Portuguese Tax Authorities or to Social Security;
  • Entities located in preferential tax regime jurisdictions.

This tax, whenever is due, will be levied by the Portuguese Tax Authorities in the month of June of each year, being the respective payment due in September.

Stamp Duty (IS)

Real Estate with Taxable Value (VPT) equal to or higher than €1 million

It is intended to revoke the taxation of stamp duty at the rate of 1%, on the urban real estate for residential purposes (buildings and land for construction) with Taxable Value (VPT) equal to or higher than € 1million.