The deputies approved on Wednesday, in the Assembly of the Republic, a series of fiscal changes, mainly targeting the Value Added Tax (VAT) and the Corporate Income Tax (CIT). So, what will change?
- New VAT Group Regime
The Parliament approved, in detail, a government bill that establishes a VAT group regime for economic groups to consolidate tax amounts payable or recoverable from the State.
The proposal from Luís Montenegro’s executive (PSD/CDS-PP) introduces the VAT group regime, “consisting of the consolidation of VAT balances payable or recoverable by group members, linked by financial, economic, and organizational ties,” as stated in the proposal submitted to Parliament on August 29.
The parliament approved today, in detail, a government bill establishing a VAT group regime for economic groups to consolidate tax amounts payable or recoverable from the state.
Lusa | 12:05 – 15/10/2025
The new model targets companies within the same economic group, based on “consolidating the tax balances deliverable or recoverable by group members”.
For this, companies must be linked “by close financial, economic, and organizational ties,” as noted by the Government in the proposal’s explanatory note.
According to the initiative’s explanation, consolidation occurs “in a VAT declaration provided by the Tax and Customs Authority and confirmed by the group member considered the dominant entity [the parent company of the economic group].”
In the proposal, the Executive clarifies that group companies “continue to submit their respective periodic returns, calculating their respective balance, creditor or debtor, which is then reflected in the group’s declaration.”
- CIT Will Decrease in 2026
The Parliament also approved, in detail, a government proposal to reduce the CIT rate to 19% in 2026 and for this taxation to keep decreasing over the following two years, reaching 17% in 2028.
The parliament approved today, in detail, a government proposal to reduce the CIT rate to 19% in 2026, with further reductions over the following two years, reaching 17% in 2028.
Lusa | 10:55 – 15/10/2025
In the bill, the Government proposes reducing the general CIT rate over the next three years to 17% in 2028, forecasting a reduction from the current 20% to 19% next year, then to 18% in 2027, and finally to 17% from 2028 onwards.
Beyond the reduction of the general rate, a reduction in the rate applied to the first slice of profits of small or medium-sized enterprises and small and medium-capitalization companies was also approved in detail, set to 15% from 2026.
Currently, the rate applied to the first €50,000 of taxable income for SMEs is already lower than the general CIT rate, standing at 16%.
- Change to CIT Incentive for Wage Increases
Finally, the Parliament approved, in detail, an amendment to the rules of the fiscal incentive for wage valuation, allowing companies to access the CIT deduction without having to reduce wage inequalities among employees.
Currently, for companies to deduct the costs of employee wage increases from the CIT, they must decrease the “wage gap” among workers, meaning the disparities in earnings between the top 10% and the bottom 10% of earners.
With the newly approved amendment, this condition is no longer necessary. The remaining criteria already established in the legislation for companies to access the fiscal incentive remain unchanged.
