The Parliament approved the State Budget for 2024 (the "2024 State Budget"). In this newsletter, we summarize the main tax changes set out for 2024.


Regarding Personal Income Tax (PIT), the Parliament approved the following changes in addition to the changes contained in the Government's proposal:

  • Statement of foreign income and assets. The 2024 State Budget establishes that the income subject to flat rates or not subject to PIT, more than €500, must be reported in the annual tax return, as well as the assets held in countries, territories, or regions with a clearly more favorable tax regime.
  • Partial deduction of domestic worker's remuneration.The 2024 State Budget establishes a tax relief equal to 5% of the amount paid by any member of the household as remuneration for domestic work, with an overall cap of €200.
  • Increased deduction of rents. The tax relief in respect of rents paid for permanent residence property, relating to lease agreements entered under the Urban Lease Framework, will be subject to a cap of €600 instead of the current cap (€502).
  • Non-habitual residents.  Despite the revocation of this regime, the 2024 State Budget allowed the registration as a non-habitual resident until 31 December 2024, provided that the non-resident submits one of following documents:

-    Promissory employment agreement signed by 31 December 2023;

-    Visa or residency permit valid until 31 December 2023;

-    Visa application submitted by 31 December 2023;

-    Lease agreement in respect of a property located in Portuguese territory signed until the 10th of October 2023;

-    Reservation contract or promissory agreement for the acquisition of real estate located in Portuguese territory signed until the 10th of October 2023; or

-    Enrolment or registration for dependents in an educational establishment domiciled in Portuguese territory completed until the 10th of October 2023.

  • Progressive withholding tax rates applicable to independent workers.The 2024 State Budget requires the Government to implement the necessary software changes to apply progressive withholding tax rates to independent workers. However, for the time being, the current withholding tax rates will remain the same.


Concerning Corporate Income Tax (CIT), no changes have been approved between the proposal and the 2024 State Budget.


As to Value Added Tax (VAT), the following additional changes were approved:

  • VAT refund in congress, fair and exhibition organization activities. Entities whose main economic activity is the organization of fairs, congresses, and other similar events and/or travel agencies can now benefit from a total or partial refund of the VAT paid. This refund will only apply to expenses relating to the organization of congresses, fairs, exhibitions, seminars, conferences, and similar events.
  • No duplication of VAT refunds. VAT refunds to private social solidarity institutions, the Armed Forces, security forces and services and firefighters will only occur in the following cases, to avoid duplication of benefits:

-    The input VAT is not deductible; and

-    The equivalent amount has not been refunded under another tax scheme.


Concerning Special Consumption Taxes, we highlight the following changes:

  • Products used in the production of electricity, electricity and city heat or gas (except biofuels, biomethane, green hydrogen, and other renewable gases):  Products falling within CN code 2707 99 99, consumed in the Autonomous Regions of the Azores and Madeira and used in the production of electricity, electricity and heat (cogeneration), or city gas, by entities that carry out these activities as their main activity, will also be taxed at a rate corresponding to 75% of the ISP rate and with a rate corresponding to 75%  of the additional charge over CO2 emissions. It is also set to rise to 100% on 1 January 2025.
  • Tax on alcoholic beverages. Regarding the tax for consumption in the Autonomous Region of Madeira on spirits, the increase in the tax to 1,379.07 euros/hl was eliminated.


Regarding the Single Circulation Tax (IUC), the Parliament revoked the Government’s proposal foreseen for passenger cars and mixed-use vehicles registered between 1981 and June 2007 and for motorbikes, mopeds, tricycles, and quadricycles registered since 1992 due to carbon emissions as well as the maximum ceiling for the annual increase in category "A" and "E" taxes of €25.


Regarding the Real Estate Transfer Tax (RETT) and the Municipal Property Tax (MPT), no changes were made to the Government’s proposal.


Regarding Stamp Duty, we highlight the following changes:

  • Donations between family members.  Donations between spouses or civil partners, descendants, and ascendants, up to the amount of €5,000, are now expressly excluded from the taxable basis of stamp duty. However, the exemption applicable to gratuitous transfers (donations and heritages) between spouses or civil partners, descendants, or ascendants, will remain regardless of the amount.
  • Stamp duty exemptions on State transactions. The State will be exempt from stamp duty on transactions carried out through the General Directorate for Treasury and Finance, regardless of who is liable for the tax.


In what concerns the Special Contributions, the final version of the 2024 Budget State establishes that transport operators that are part of economic groups that operate in the refining or storage of crude oil or petroleum products will be subject to the extraordinary levy on the energy sector regardless of the percentage of total annual turnover.


Regarding Tax Benefits, we highlight the following changes:

  • Incentive to companies’ capitalization.  The deduction ceiling of €2,000,000 was increased to €4,000,000.
  • Incentive to scientific research and innovation. Taxpayers who become tax residents and have not been residents in any of the previous five years may benefit from a flat rate of 20% over employment and self-employment for a 10-year period provided they are:

-    Employees or members of corporate bodies in legal entities recognized as centres of technology and innovation;

-    Members of corporate bodies in companies that benefit from investment contractual benefits;

-    "Highly qualified" employees in (i) companies with relevant investments that benefit or have benefited from investment tax benefits and (ii) industrial and service companies that export at least 50% of their turnover;

-    Qualified employees and members of corporate bodies in entities that carry out economic activities recognized by AICEP, EPE, or IAPMEI, IP as relevant to the national economy;

-    Personnel whose costs are eligible under the R&D tax incentive system;

-    Employees and members of corporate bodies in start-ups; and

-    Employees or other professionals developed in the autonomous regions, to be defined by the respective regional governments.

  • Benefits Applicable to the Entities Licensed in the Madeira Free Trade Zone.  These benefits will be extended for one year, covering the income earned between 1 January 2015 and 31 December 2024, continuing to be taxed at a rate of 5% until 31 December 2028.
  • Incentive to the Sale of Property to the State. The PIT and CIT exemption will apply not only to the capital gains from the sale of the property to the Portuguese State, autonomous regions, public housing companies, and local authorities, but also to the sale of land for construction to these entities.

For more information on the other tax changes introduced by the 2024 State Budget, click here.


Portugal has recently transposed Directive (EU) 2019/2121, of 27 November 2019 ("Directive") on cross-border conversions, mergers and divisions of commercial companies, that amended Directive 2017/1132, of 14 June 2017 ("Directive (EU) 2017/1132"), on mergers and divisions of public limited liability companies at national level and cross-border mergers of limited liability companies at European level.

This has been done through Decree-Law no. 114-D/2023, of 5 December ("Decree-Law") which made changes to the rules of the Commercial Companies Code, to the Commercial Registry Code and to Decree-Law no. 24/2019 on cross-border transformations, mergers and divisions, to be applicable within the European Union; removed restrictions on the exercise of freedom of establishment, and added protection to employees, creditors and shareholders in those actions.

Of those changes, we highlight the following:

  • Obligation on the part of the board of directors of the participating companies to draw up a report for shareholders and employees setting out the legal and economic grounds for the decision to merge, divide or convert across borders;

  • A legal requirement for prior review of the legality of cross-border conversions, divisions and new mergers, in addition to those already enshrined in Directive (EU) 2017/1132, now amended;

  • Obligation to register projects and internal or cross-border conversions, mergers and divisions;

  • Obligation on the part of the national commercial registry, as in other member states, to notify the competent national registry of each of the participating companies of all acts relating to the process, to make the acts more transparent and subject to easier and more efficient supervision; and

  • Protection of employees through participation in cross-border conversions, mergers and division processes, while guaranteeing their right to consult the respective projects and related documents.

This Decree-Law will enter into force on 4th January 2024.


The Portuguese Energy Secretary of State, on November 28, 2023, issued the Ministerial Ordinance 397/2023 disclosing the model documents for the public tender procedures to award low-voltage ("LV") electricity distribution concessions in Portugal.

The Decree-Law 15/2022 of 14 January 2022, known as the Portuguese Electricity System Law, empowers municipalities to manage low-voltage (LV) electricity distribution through concession contracts lasting for a period of 20 years. The Ordinance provides the instruments that municipalities must use when launching tenders for such concessions.

The tender procedures will be divided into two phases: first, a qualification phase for the submission of applications; and a second phase for the submission of proposals by the candidates who have qualified in the initial phase. Regarding the award criteria, tenderers will be evaluated based on the criterion of the most economically advantageous tender for the contracting authorities, so no base price has been established.

The discussion on the size of the concessions has a long history. Law 31/2017, of 31 May 2017, established that a territorial delimitation criterion will determine the number of competitive procedures to be launched. In 2019, the Energy Services Regulatory Authority ("ERSE") proposed a territorial delimitation in three regions of the country (North, Centre, and South), indicating that there will be three competitive procedures.

However, municipalities have the power to decide on the territorial delimitation proposed by ERSE. If they choose to establish a different territorial area, they must demonstrate significant advantages for the public interest in doing so.

These tenders were initially planned for 2019 because most of the concession contracts were set to expire between 2021 and 2022. Extensions have been granted to the concessionaires in the meantime. The publication of the model tender documents is a first step, but there is no indication of when the tender for awarding LV electricity distribution concessions will take place. So, it is unclear if this will happen soon or if stakeholders will continue to wait for a long period for their opportunity in this market.


The call for expressions of interest on the offshore wind energy auction has closed and,  as of yesterday, the list of entities interested in participating in the competitive procedure is already available on the website of  DGEG, the Portuguese energy ministerial department.

Fifty companies from over 10 countries have expressed their interest in participating in the auction. This includes utilities such as Iberdrola, Repsol, GALP and TotalEnergies and developers such as GreenVolt,  BlueFloat, Acciona and Cerulean Winds.

All these companies will be invited to participate in the dialogue phase, the details of which are still unknown. This phase will run until January 2024, allowing the Portuguese Government to understand the specific intentions of each group and only then formulate the specific terms of the auction.

There is a high level of uncertainty about how the government’s fall and the general elections scheduled for March 10, 2024, will impact the auction’s structure and timeline. However, government officials have recently announced a two-phase auction.

The first phase, involving maritime space rights, will begin in early 2024. The date for the second phase, which involves the allocation of grid connection rights and the CfD, is yet to be determined.


On 18th October 2023, Directive (EU) 2023/2413 of the European Parliament ("Directive") was published, amending Directive (EU) 2018/2001, Regulation (EU) 2018/1999 and Directive 98/70/EC regarding the promotion of energy from renewable sources, and revoking Council Directive (EU) 2015/652.

The Directive enters into force on 20th November 2023 and aims to reduce greenhouse gas emissions, energy dependence and energy prices through strategies that must be adopted by the Member States. We highlight the following:

(1) Member States should provide a framework facilitating the purchase of electricity from renewable sources, removing obstacles to the supply of electricity from renewable sources, such as those related to licensing procedures, and addressing the development of the necessary transmission, distribution and storage infrastructure for renewable energy;

(2) To increase the share of renewable energy used by the construction sector, Member States should set target for 2030 and introduce appropriate measures in national regulations for this purpose (for instance requiring the use of minimum energy from renewable sources);

(3) Member States should identify areas in their national territory with potential for speeding-up the development of renewable energy projects (on land, artificial surfaces, inland waters and at sea);

(4) Member States should establish appropriate polices and measures to increase the share of renewable sources consumed by the industry sector; and

(5) Member States should require relevant economic operators to enter data on the transactions carried out and the sustainability characteristics of the fuels used, including their greenhouse gas emissions, in the Union database, as well as ensure the accuracy of such data.

Member States are required to execute this directive until 21st May 2025.


The call for expression of interest in the offshore wind auction announced by the Portuguese Government at the beginning of October is now open.

Interested parties will be invited to participate in a dialogue phase aimed at discussing multiple options related to pre-qualification and bidding models.

The purpose of the auction is to award a title for the reservation of injection capacity in the Portuguese public electricity grid for the generation of electricity by offshore wind power plants located at sea and allocate seabed rights for the use of the national maritime space. The auction will encompass the areas defined in the draft Allocation Plant for Offshore Renewable Energies (PAER), which is currently under public consultation and be accessed via ConsultaLEX Portal or the PARTICIPA Portal.

Expressions of interest must be submitted to the Portuguese Directorate of Energy (DGEG) until 14 November via email to offshore@dgeg.gov.pt, accompanied with a set of documents, including, inter alia, identification of the company and the promoter's representative, track record of onshore and offshore development of renewable energy projects, identification of the interested lots, financing models and development plans for equipment supply chains and project assembly.

The first auction is expected to be launched by the end of the year and will allocate approximately 3.5 GW of capacity, distributed across seven lots located in Viana do Castelo (2), Leixões (1), and Figueira da Foz (4), each lot having approximately a total capacity of 500 MW.


On October 4th, 2023, the Portuguese Prime Minister announced a request for expressions of interest in the first Portuguese auction of offshore wind energy.

The task force appointed by the Portuguese Government one year ago to support the deployment of the 2023-2030 Portuguese offshore wind plan had already recommended a preliminary phase for expressions of interest as an initial step towards gauging the interest of potential promotors.

In this preliminary phase, companies will express their intention to participate in the competitive procedure, promoting the formation of consortia of participants, and indicating the trade-offs and investments they intend to make.

This expression of interest will have the mere purpose of identifying potential candidates. Therefore, it will not grant any participation rights.

In the pre-qualification phase, scheduled for the end of the year but most likely to occur at the beginning of 2024 and lasting no less than 3 months, the bidders will have to fulfill the criteria set by the auction rules, as a condition to participate in the tender stage. Interested parties will have to demonstrate the technical feasibility of the project, previous experience in implementing wind farms, financial viability, and sustainable business models, as well as a positive economic impact.

The Portuguese Energy Secretary of State, Ana Fontoura, mentioned in a recent public event that starting by tendering the rights of use of the maritime space is a possibility because it would give time to the bidders to gain first-hand experience in the design of the projects (not having to offer immediately with a price offer that could be too expensive for consumers); as well as would allow them to eventually consider merchant projects without a feed-in-tariff for the sale of electricity.   

The final stage would be the auction of 'contracts for difference' (CfD) for the sale of electricity.

The inaugural auction will assign approximately 3.5 gigawatts (GW) of capacity, distributed across seven lots located in Viana do Castelo (2), Leixões (1), and Figueira da Foz (4), each lot having approximately a total capacity of 500 MW. Of these, it is intended to have 2 GW in operation by 2030.

Despite all these recent announcements, there is still great uncertainty on the tender structure and whether the timings set by the Portuguese Government will be kept. Hopefully, the soon-coming notice for the manifestations of interest will thread some light on what comes next.


The Portuguese Government has presented the draft State Budget Law for 2024 (SBL 2024).

Below is a summary of the key changes impacting employment and labour law:

(A) Provisions Concerning the Public Administration and the Public Business Sector

(i) Mobility situations existing as of the entry into force of SBL 2024, with a maximum duration limit occurring in 2024, may exceptionally be extended until 31 December 2024, by mutual agreement. This extension also applies to mobility situations whose end occurs before the entry into force of SBL 2024.

(ii) The subsistence allowance, overtime, and night work schemes, as provided in Decree-Law 106/98 of 24 April, as amended, and in the Portuguese General Law on Public Employment, shall apply to employees of public foundations governed by public law, public foundations governed by private law and public establishments, without prejudice to the provisions of collective bargaining instruments.

(iii) Public entities with employees under individual employment contracts may contract health and personal accident insurance, provided it is intended for the majority of employees, as well as other insurances required by law or provided for in a collective bargaining instrument.

(iv) Public legal persons, even if they enjoy administrative autonomy or statutory independence, must recruit employees for open-ended or fixed-term employment contracts, in accordance with the provisions of the budget implementation decree-law, otherwise the recruitment will be null and void.

(v) Public business sector companies shall recruit employees for open-ended or fixed-term employment contracts, following the terms of the budget implementation Decree-law, otherwise the contracts shall be deemed null and void.

(vi) Public bodies or services are responsible for presenting a plan for the development of their employees, under the terms defined in the budget implementation Decree-law, applying, as a rule, the collective bargaining instruments and other legal or contractual instruments in force or, in their absence, the provisions of the budget implementation Decree-law.

(vii) Retired persons with relevant experience in the areas of railway maintenance or as train drivers may work for public companies in the railway sector that provide public passenger transport while maintaining their retirement pension, along with up to 75% of the remuneration corresponding to their category and, as applicable, level or salary position held at the time of retirement, as well as their working regime.

(B) Specific Provisions for Public Companies

(i) Public companies pursue a policy of optimizing operating expenses that promote operational balance, pursuant to the provisions of the budget implementation Decree-law, without prejudice to ensuring the necessary administrative and financial autonomy, particularly, for the execution of budget items relating to the hiring of employees.

(ii) Public companies are limited in their indebtedness to 2%, which must be calculated in accordance with the terms to be defined in the budget implementation Decree-law, without prejudice to their necessary administrative and financial autonomy to implement the budget items relating to investment programs provided for in the SBL.

(C) Amendment to the Tax Benefits Statute

The costs corresponding to the salary increase for employees with open-ended employment contracts, for purposes of determining the taxable profit of IRC taxpayers and IRS taxpayers with organised accounting, are considered at 150 % of the respective amount, accounted for as a cost for the year.

The final text of the 2024 State Budget is now awaited to be approved and published.


Ahead of the commencement of the procedures for the first Portuguese offshore wind auction, the Public Consultation on the Proposal for Offshore Renewable Energies Zoning Plan ("PAER") on the Portuguese seabed allocation for windfarm projects will be open from October 30 to December 13, 2023.

The need to designate areas for offshore wind farms requires an effort to reconcile activities in the national maritime space, particularly commercial fishing, and environmental conservation.

In the preparation of its Preliminary Environmental Report, the working group appointed by the Portuguese government concluded that there are significant knowledge gaps, especially concerning the complexity and state of marine ecosystems and the impact of infrastructure installation on the marine environment.

By discussing them with all the relevant industry sectors and stakeholders, it is possible to combine uses and activities in the national maritime space while respecting marine ecosystems and safeguarding underwater cultural heritage.

The Portuguese government has in mind that the use of maritime space should not be exclusive. And that, on the contrary, different activities must coexist, considering various constraints such as biodiversity protection, safeguarding fishing, maritime transport, recreation, leisure, and cultural heritage.

The release of the Final Environmental Report expected before the end of December and will incorporate all necessary amendments and adjustments to prevent significant environmental impacts, taking into account the contributions from the Public Consultation.




The Portuguese Government presented the State Budget proposal for 2024. In this newsletter, we summarise the main tax changes foreseen in this proposal.

Personal income tax

The main proposed changes to Personal Income Tax (PIT) are the following:

  • Former residents PIT. The former resident tax regime, which includes a 50% tax exemption applicable to employment income and professional income, will be amended. Under the new rules, the exemption will now have a limit of €250,000 and will cover taxpayers who become tax residents between 2024 and 2026 and who have not been resident in Portugal in any of the previous five years. The exemption is limited to five years.
  • Youth PIT. The exemptions of the Youth PIT regime are now as follows:

- 100% in the first year, with a limit of 40 times the value of the Social Support Index;

- 75% in the second year, with a limit of 30 times the value of the Social Support Index;

- 50% in the third and fourth year, with a limit of 20 times the value of the Social Support Index; and

- 25% in the fifth year, with a limit of 10 times the value of the Social Support Index.

  • PIT brackets update and PIT rates reduction. The PIT brackets will be updated in 3%. As an example, the first bracket will increase from €7,479 to €7,703 and the last from €78,834 to €81,199. PIT rates up to the fifth income bracket will be reduced according to the following table:
  • Minimum income. The minimum income subject to PIT increases from €10,640 to €11,480.
  • Deduction of training and education expenses. The expenses incurred in connection with professional training will be deductible by up to 30%.
  • Employee’s housing tax incentives. Between 2024 and 2026, employment income in kind related to the use of a primary residence, located in Portuguese territory, and provided by the employer, will be exempt from PIT and social security contributions, as long as it does not exceed the rent ceiling established by the Rental Support Program (Programa de Apoio ao Arrendamento). However, this exemption does not apply to holders of a direct or indirect stake of at least 10% in the employer's share capital or voting rights.
  • Employee profit sharing. The amounts paid to employees as a profit share (gratificações de balanço), will be exempt up to 5 times the amount of the guaranteed minimum monthly wage. To be eligible for this exemption, the fixed earnings per employee must increase, in 2024, in average, 5% or more. However, this income will have to be considered when calculating the rate applicable to the aggregated taxable income.
  • Non-habitual residents. The non-habitual resident regime will be revoked. However, it will continue to apply to:

- Taxpayers who, on the date of publication of the 2024 State Budget, are registered as non-habitual residents and the ten-year period has not elapsed yet; and

- Taxpayers who, until 31 December 2023, meet the conditions for registration as non-habitual residents or hold a valid visa on this date, provided they apply until 31 March 2024.

  • Annual tax returns. If the taxpayer does not file the annual tax returns after being notified by the Portuguese Tax Authorities, the Portuguese Tax Authorities will calculate the tax income on the basis of the PIT withholdings that have been made, the application of the minimum income and the expenses that are known to the Portuguese Tax Authority.


Regarding Corporate Income Tax (CIT), we highlight the following proposals:

  • Startups CIT rate. Companies that qualify as startups will be subject to CIT at a rate of 12.5% on the first €50,000 of taxable income provided that such companies:

- Are innovative companies with a high growth potential or which have been recognised as suitable by ANI, due to their R&D activities or technology sector certification;

- Have completed at least one round of venture capital financing or received equity or quasi-equity contributions from, inter alia, business angels; and

- Have received investment from the Portuguese Development Bank (Banco Português de Fomento), or from funds managed by it, or by its subsidiaries, or from one of its equity or quasi-equity instruments.

  • Intangible assets tax deduction. The acquisition cost of intangible assets will be tax deductible if it is autonomously recognised in the taxpayer's individual accounts pursuant to the accounting rules, as follows:

- Industrial property, such as trademarks, permits, production processes, models or other similar rights, acquired for consideration and which do not have a limited period of time: in equal shares, during the first 20 tax years after the initial recognition; and

- Goodwill acquired in a business combination: in equal shares, during the first 15 tax periods after initial recognition.

  • Autonomous taxation. The autonomous taxation rates for light good vehicles, motorcycles or motorcycles will be reduced from 10%, 27.5% and 35% to 8.5%, 25.5% and 32.5%.
  • Capitalisation funds. Capitalisation funds managed by social security institutions referred to in articles 94 and 106 of Law 4/2007 of 16 January 2007, as well as the remuneration of public debt paid to these entities will be CIT exempt.
  • Remuneration of public debt. The remuneration of public debt will also be CIT exempt when paid to social security institutions.


In what concerns Value Added Tax (VAT), the following proposed changes stand out:

  • End of Zero VAT. The basic food basket will no longer benefit from the zero VAT rate approved to mitigate the effects of inflation.
  • Assistance to disabled people. The provision of services that consist of providing a visit, guided or not, to different events, of a recreational and cultural nature, to people accompanying others with a degree of permanent disability, duly proven by a medical certificate of multipurpose disability issued under the terms of the applicable legislation, equal to or greater than 60%, and on which they depend for their visit, will be VAT exempt.
  • Goods and services subject to intermediate tax. Juices, nectars and carbonated waters, when supplied within the scope of catering, will benefit from the intermediate fee.

Special Consumption Taxes

Rules on special consumption taxes will also change as follows:


  • Coloured and marked diesel. The special rules approved in relation to the use of coloured and marked diesel by small farmers, holders of family farming status, small fish farmers and for small-scale artisanal and coastal fishing using coloured diesel and marked with an annual consumption of up to 2,000 litres, of 0.06 euros per litre on the reduced rate applicable to the equipment used, will remain in force in 2024. This subsidy will be increased by 0.04 euros per litre for small farmers with family farming status.
  • Artisanal fisheries, coastal fisheries, small fish farmers and sea salt extraction companies. A subsidy corresponding to the discount on the final price of gasoline consumed equivalent to that resulting from the reduction in the rate applicable to diesel consumed in the respective activity remains in force in 2024. The subsidy corresponding to the discount on the final price of liquefied petroleum gas (LPG) equivalent to that resulting from the reduction in the rate applicable to diesel consumed in the respective activity will also be maintained.
  • Products used in the production of electricity, electricity and city heat or gas (with the exception of biofuels, biomethane, green hydrogen and other renewable gases):

- Products falling within CN codes 2710 19 62 to 2710 19 67 and CN 2710 20 32 and 2710 20 38, used for the production of electricity and cogeneration, or city gas on the mainland, will be taxed at a rate corresponding to 100% of the ISP rate and a rate corresponding to 100% of the CO2 emission surcharge;

- Products falling within CN codes 2710 19 43 to 2710 19 48, CN 2710 20 11 to 2710 20 19, CN 2710 19 62 to 2710 19 67, CN 2710 20 32 and 2710 20 38, consumed in the Autonomous Regions of the Azores and Madeira and used in the production of electricity, electricity and heat (cogeneration), or city gas, by entities that carry out these activities as their main activity, will now be taxed at a rate corresponding to 75% of the ISP rate and with a rate corresponding to 75% of the additional charge over CO2 emissions, an increase foreseen in the previous State Budget. An increase to 100% will take place on 1 January 2025;

- Products falling by CN code 2711, used in the production of electricity, electricity and heat (cogeneration) or city gas, by entities carrying out such activities as their main activity, with the exception of those used in the autonomous regions, will be taxed at a rate corresponding to 50% of the ISP rate and at a rate corresponding to 50% of the additional charge over CO2 emissions, which had been foreseen in the previous State Budget;

- Products falling under CN codes 2701, 2702, 2704, 2713 and 2711 12 11 which are used in installations subject to an agreement on the rationalization of energy consumption (ARCE), and fuel oil with a sulphur content of 0,5% or less, classified under CN codes 2710 19 62 and 2710 19 66, will be taxed at a rate corresponding to 65% of the additional charge over CO2 emissions. This change was already contemplated in the previous State Budget. On 1 January 2025, an increase to 100% is approved.


  • Tax on alcoholic beverages. The rates will be updated and will reach in case of (i) beers, between 9.64 euros/hl and 33.85 euros/hl, (ii) fermented, still, and sparkling beverages, 12.06 euros/hl, (iii) intermediate products, 87.92 euros/hl and (iv) spirits, 1,602.51 euros/hl. Regarding the rate for consumption in the Autonomous Region of Madeira, the rate increases to 1,379.07 euros/hl.
  • Tax on non-alcoholic beverages. The taxable unit will be updated, and the tax rate will range from 1.16 euros/hl (sugar content less than 25g/l), 6.95 euros/hl (sugar content is less than 50g/l and equal to or greater than 25g/l), 9.26 euros/hl (sugar content less than 80g/l and equal to or greater than 50g/l) and 23.18 euros/hl (sugar content equal to or greater than 80g/l). In liquid form, the values increase to €6.95/hl, €41.72/hl, €55.62/hl and €139.06/hl, respectively; and in the form of powder, granules or other solid forms increase to €11.59/hl, €69.53/hl, €92.71/hl and €231.78/hl per 100 kilograms of net weight, respectively.


  • Regular tobacco. Increase of the specific element to EUR 151.88 and of the ad valorem element to 1%.
  • Heated tobacco. Increase of the specific element to EUR 0.0935/g. The tax shall not be less than half of the equivalence-weighted minimum tax on cigarettes of 0.325 g of heated tobacco per unit of cigarette.
  • Cigars and cigarillos. The mileage of cigars and cigarillos increases to €451.92 and €151.88 respectively.
  • Fine-cut tobacco, other smoking tobacco, snuff, chewing tobacco. Increase of the specific element to €0.091/g, and the amount of the tax may not be less than two-thirds of the minimum tax on cigarettes weighted by the equivalence factor of 0.5g of those tobacco products per unit of cigarette.
  • Liquid for electronic cigarettes. Introduction of a tax of €0.351/ml for nicotine-containing liquid and €0.175/ml for nicotine-free liquid. In nicotine liquids, the tax may not be less than 25% of the minimum on cigarettes weighted by the equivalence factor of 0,05 ml of liquids. In the case of nicotine-free liquids, the tax may not be less than 12.5 % of the minimum on cigarettes, weighted by the same equivalence factor.


  • Rates. The ISV rates applicable to cars, motorcycles, tricycles, and quadricycles, will be increased in relation to their cylinder capacity and environmental component.
  • Exemption for leased vehicles. Thisexemption will only apply if there is an operating lease agreement in place.


  • Rates. The IUC rates applicable to all vehicles will be updated.
  • Old vehicles. Increase of the IUC for passenger cars and mixed-use vehicles registered between 1981 and June 2007 and motorcycles, mopeds, tricycles, and quadricycles registered since 1992 due to carbon emissions.
  • Maximum ceiling. The annual increase in the rates applicable to categories "A" and "E" may not exceed €25.


The brackets used to calculate the Real Estate Transfer Tax (IMT) over the acquisition of urban property or units of urban property for housing purposes will be updated. As an example, the first bracket will be increased from €97,064 to €101,917.

Stamp Duty

Concerning stamp duty, we must highlight the following changes:

  • Primary residence mortgage loans. The transactions involved in the temporary fixation of primary residence mortgage loans instalments and the capitalisation of principal and interest will be exempt of stamp duty.
  • Other exemptions. Acts, contracts and transaction in which the Portuguese Development Bank (Banco Português de Fomento) is an intervening party or a recipient will be exempt.


The State Budget includes the following proposals:

  • Special contributions. The special contributions that were in force in 2023 will continue to apply in 2024, including:

- Audiovisual contribution;

- Banking sector contribution;

- Banking sector solidarity surcharge;

- Pharmaceutical industry contribution; and

- Extraordinary contribution over suppliers of the National Health Service of medical devices.

  • Ready-to-eat meals single-use packaging contribution. In addition to the extension of this contribution to other types of packaging (i.e. ready-to-eat and takeaway packaging or packaging of ready-to-eat meals at the point of sale to the consumer), the applicable rate is reduced from €0.30 to €0.10 per package, plus VAT.
  • Energy sector extraordinary contribution. The extraordinary contribution on the energy sector (EESC) will remain in force in 2024 with some changes, including the following:

- Operators that transport crude oil and petroleum products will be taxed only when more than 50% of their annual turnover derives from this activity; and

- Assets that are qualified as substantial contributions in certain areas related to climate change and environmental protection by the Portuguese Environment Agency, I. P. and in accordance with the European Scheme for the Promotion of Sustainable Investment, should not be considered in the calculation of the contribution.

A contribution on very light plastic carrier bags equivalent to €0.04 plus VAT will be created for each lightweight carrier bag, in addition to the existing contribution applicable to lightweight carrier bags.

Tax Benefits

The 2024 State Budget proposal includes the following changes to the Tax Benefits Statute (EBF):

  • Start-ups stock plans. The PIT incentive applicable to stocks plan will be amended as follows:

- The incentive will now be granted to entities that are eligible as start-ups in the year of approval of the respective plan;

- If the employee loses the Portuguese resident status, the gains tax will no longer be calculated over the positive difference between the market value and the exercise price of the option or right, but rather under the terms set out in the PIT Code, being the income partially exempted up to the value of 20 times the value of the Social Support Index; however, the income will be computed for determining the rate applicable to the overall income;

- The exemption will apply only once by the taxable person;

- The governing bodies of the company responsible for the plan will no longer be excluded from the application of the incentive.

  • Waves increase incentive. The 150% relief applicable to companies or businesses that increase salaries of employees under open-ended employment contracts will only apply to employees covered by a dynamic IRCT and provided that the remuneration increases by, at least, 5% above the guaranteed minimum monthly wage.
  • Companies’ capitalisation incentive. The tax relief applicable to the capitalisation of companies with headquarters or effective management in Portugal will be determined based on the average 12-month Euribor rate plus a spread of 1.5% (instead of the previous rate of 4.5%) or, in case of micro, small, medium-sized enterprise or mid-cap enterprise, 2%.
  • Residential leases entered before the Urban Lease Law. Rents charged under these leases will be PIT exempt for the duration of the contracts. A municipal property tax (IMI) exemption will also apply.
  • Urban buildings for housing purposes. Buildings or parts of buildings built as new, expanded, improved or acquired for consideration will be IMI exempted, upon the first transfer, in the part intended for lease for the tenant's primary residence.
  • Scientific research and innovation incentive. Taxpayers who become tax residents and have not been residents in any of the previous five years may benefit from a flat rate of 20% over employment and self employment provided they:

- Develop (i) a career of higher education and scientific research, (ii) a qualified job within the scope of the productive investment contractual benefits regime or (iii) a research and development job;

- Present a level 8 of the National Qualifications Framework or higher.

This incentive may only be used once by the same taxable person.

  • First-time set-up awards for young farmers. A coefficient of 0.1 is applied to the first-time set-up premiums for young farmers, and this income is considered only at 50% when covered by the organised accounting system.
  • Common Agricultural Policy. Taxable persons receiving subsidies or subsidies under the CAP in 2024 may opt for their taxation in that year. The annual tax return may be submitted whenever the payment of the allowances or allowances takes place after the normal deadline for filing such returns.
  • Expiry of tax benefits. The 2024 State Budget proposal includes, in the rule that excludes the 5-year limitation period for certain tax benefits, the benefit that refers to "capital gains obtained by non-residents".