Measures impacting individuals and companies
Law Proposal 37/XVII/1
This guide to the State Budget Law Proposal 2026 (Law Proposal 37/XVII/1) (“2026 State Budget Proposal”) provides a clear and detailed overview of the main tax measures proposed by the Portuguese Government affecting both individuals and companies.
The proposal’s distinctive feature is the absence of substantial changes to tax regulations, which are being discussed in separate initiatives, including a reduction in the corporate income tax (“CIT”) rate, measures to enhance housing accessibility, the introduction of the VAT group scheme, and reforms to tax litigation procedures. Note that all these proposed initiatives remain subject to approval.
The 2026 State Budget Proposal is focused on extending (i) existing measures, such as updating the personal income tax (“PIT”) brackets and municipal property transfer tax (“IMT”) rates to reflect inflation and other indices; and (ii) the scope of the autonomous taxation (tributação autónoma) on plug-in hybrid vehicles.
The most noteworthy measures highlighted in this guide include the extension of the PIT exemption and exclusion from Social Security for payments linked to productivity bonuses, performance bonuses, profit-sharing bonuses, and balance-sheet bonuses.
The proposal also seeks to curtail certain existing contributions and regimes, such as the extraordinary energy sector contribution, which will have a narrowed impact. The banking sector solidarity supplement is also set to be revoked.
This guide is not a full legal review. Rather, it is intended as an easy-to-use tool for companies to understand and benefit from the tax provisions and incentives introduced in the 2026 State Budget Proposal. For specific applications, in-depth analysis is advised.