Portugal approves State Budget for 2024


On 29 November 2023, the Portuguese parliament approved the State Budget for 2024 (Draft Law 109/XV/2), including some modifications proposed after the primary proposal on 10 October 2023. This budget includes the following tax measures:

  • Reduced Corporate Tax Rate for Start-ups: Introduction of a reduced corporate tax rate of 12.5% for eligible innovative start-ups, applicable to the first 50,000 EUR of taxable income.
  • Tax Incentive for Capitalization: Amendment of the tax incentive for the capitalization of companies, transitioning from a fixed 4.5% deduction rate to a variable rate based on the 12-month EURIBOR rate plus 1.5% or plus 2.0% for small or medium-sized companies. Deductions increase by 50% in 2024, 30% in 2025, and 20% in 2026.
  • Autonomous Taxation Rate Reductions: Reduction in autonomous taxation rates for expenses related to certain vehicles to 8.5%, 25.5%, and 32.5%.
  • Goodwill Acquisition Cost Deduction Period: Reduction in the deduction period for the acquisition cost of goodwill in business combinations from 20 to 15 tax years.
  • Extension of Extraordinary Support Regimes:
    • Extension of support regimes for electricity and gas costs with a 20% increased deduction (120% total) until 2024.
    • Extension of support regimes for agricultural production costs with a 40% increased deduction (140% total) until 2024.
  • Accelerated Depreciation for Employee Housing: Introduction of accelerated depreciation at a rate of 4% for properties allocated by employers as permanent housing for employees.
  • Personal Income Tax Bracket Revisions: Revision of personal income tax brackets with reduced rates for the first 5 brackets.
  • Amendments to Tax Exemptions: Amendment of tax exemption on income for individuals aged 18 to 26 (or 30 for those with a doctorate), with increased exemption amounts.
  • Tax Exemption for Returning Residents: Amendment of the 50% tax exemption for former residents returning to Portugal, applicable to those becoming residents by 2026 with a EUR 250,000 cap.
  • Repeal of Non-Habitual Tax Resident Regime: Repeal of the non-habitual tax resident regime from 1 January 2024, with existing beneficiaries retaining benefits for their 10-year eligibility period.
  • New Tax Incentive for Scientific Research and Innovation: Introduction of a special tax rate of 20% for 10 years on net income for individuals engaged in specified activities and becoming tax residents in Portugal.
  • Exemptions and Changes in VAT Rates
    • Introduction of personal income tax and social security contribution exemptions on benefits derived from employer-provided permanent housing.
    • Extension of VAT exemptions and reduced rates for various products and services until 31 December 2024.
    • Elimination of the zero VAT rate previously applied to essential food items.
  • Corporate Tax Exemption for Land Sales: Introduction of a corporate tax exemption on gains from the sale of land for construction to specific entities in the housing sector.
  • Reduced VAT Rates: Application of the reduced VAT rate of 6% to various products and services, including fish pastes, lessons at tutoring centers, and equipment for alternative energy sources.



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