An entrepreneur has many responsibilities. Its main objective is the survival of the company and its growth. One of the main points to take into account is the payment of taxes.

If you fail to pay your tax obligations, your company can pay fines that affect your business. So, it is very important to know what you need to pay and when you need to pay.

This guide will help you to know what taxes your company has to pay.

What taxes do we have and when should I pay?

Companies are subject to the following taxes:

• IRC
• Social Security contribuitions (23,75%)
• Work Compensation Fund - FCT (1%)
• Autonomous Taxation (in expenses not directly related to the activity)
• Payment on IRC Account (depends on the previous year's profits, if any)
• VAT

In addition, you must also pay other taxes on behalf of employees, namely:

• IRS
• Social Security contribuitions(11%)

And on account of landlords:

• IRS or IRC - Buildings (of lease contracts).

Let's see some of the taxes in detail:

IRC

The Income Tax on Legal Entities is a tax on the profits of companies working in Portugal, which includes commercial companies, cooperatives, public companies and legal persons under public or private law.

When should you pay this tax?

IRC is paid annually, until May, and based on the taxable profit of the previous year. The rate is 21%, but Small and Medium Enterprises (SMEs) benefit from a reduced rate of 17% on the first 15 thousand euros of tax base (on the surplus 21% applies).

Associated with the IRC, there are also the following taxes:

1. Municipal surcharge, occurs at the time of paying the IRC and the rates depend on each municipality. You can check here the rates.
2. State surcharge, for companies with taxable profit above 1.5 million euros, paid at the time of paying the IRC. This rate varies between 3% to 7%.
3. Autonomous Taxation, applied to expenses not related / necessary to the company's activity, to undocumented expenses and car expenses, representation expenses, subsistence allowances and travel abroad, among others. Rates can go up to 50%. You can consult here.

Payment on account

Payment on Account is a tax required from companies that have assessed IRC and made a profit in the previous year. Self-employed workers may also be subject to payments on account, namely if they earn less than 10 thousand euros and do not withhold tax at source.

This tax is paid in 3 phases: July, September and December. And it corresponds to 80% of the value calculated from the IRC in the previous year for the companies that invoiced less than 500.000€ and 95% for the companies that invoiced more than 500.000€. If that amount is less than € 200, companies are exempt from paying.

If the amount calculated is higher, companies are required to pay the first two installments (July and September). And if it is possible to predict that these 2 payments were sufficient to pay the IRC calculated in that year, companies can be exempted from paying the 3rd installment in December.

VAT - Value Added Tax

Companies, whenever they make purchases and sales of goods and services, are subject to the payment of VAT. This tax is considered to be a burden, but in reality it is not a cost for the company as companies function as a vehicle for collecting and delivering this tax.

That is, when they issue an invoice and receive the total amount of the invoice with VAT, they will have to “return” that amount to the State. And the "return" is made through the periodic declaration. This declaration must be submitted to the State on a quarterly basis, every second month after the end of the quarter, for companies that in the previous year had invoiced less than 600.000€; and monthly in the second month thereafter for companies that earned more than 600.000€ in the previous year.

The total amount to be paid will be the total VAT received minus the total VAT paid to suppliers in expenses related directly to the company's activity.

Imposto de Selo
The Imposto de Selo is paid on all acts, contracts, documents, titles, books, papers, among others, that the company performs. It is therefore a tax that appears whenever this action exists and is paid on the spot.

IMT - Property Tax

It may be your case that you have a company and want to acquire a property. Like an individual, when buying a property, you must pay the Municipal Tax on Transfer of Property (IMT). Every year you own the property you are also required to pay the Municipal Property Tax (IMI).

Car taxes
If you also have a company vehicle, you must pay ISV when purchasing new vehicles (second-hand vehicles do not pay) and also the Single Circulation Tax, which is an annual tax.

Complementary Taxes
If your company hires employees you will have to pay the following taxes:

• IRS (Income Tax on Individuals), related to the salaries of employees and management. This tax is not a cost to the company, but rather paid on their behalf;
• TSU (Single Social Rate), which applies to the monthly salary of each employee at a fixed rate of 34.57% (11% is paid on behalf of employees, and 23.75% is paid / company cost);
• You can find other dates of other taxes in our article Corporate Tax Calendar.