The State Budget proposal for 2026 (OE2026), submitted to the Assembly of the Republic on Thursday, seeks to extend several fiscal benefits to prevent their expiration. The proposal includes articles 19.º-A, 28.º to 31.º, 32.º-C, 52.º to 55.º, 59.º, 59.º-D, 59.º-G, and 62.º, 63.º, and 64.º of the Fiscal Benefits Statute (EBF) until December 31, 2026, to allow their review within the framework of an evaluation of fiscal benefits planned for the next year.
If approved by the deputies, taxpayers will be able to continue deducting cash donations to churches, religious institutions, and nonprofit organizations linked to religious confessions from their IRS (article 63.º).
The government also proposes that companies continue to deduct financial flows provided by social investors, recognized by them as expenses, under partnerships for social impact bonds in their IRC (article 19.º-A).
Similarly, the proposal aims to maintain the possibility for companies to deduct donations to the State, municipal associations, and parishes, foundations with State or local government participation, or exclusively private foundations with predominantly social goals from their IRC (article 62.º).
Moreover, interest from foreign capital related to loans and leasing of imported equipment, owed by the State, autonomous regions, and municipalities, will continue to be exempt from IRS or IRC (article 28.º).
The list of benefits to be extended also includes IRC incentives for financial services provided by public entities that finance companies using funds obtained from banks (article 29.º).
The proposal includes extending IRC exemptions on interest from loans granted by banks outside Portugal to credit institutions within the country and gains from swap operations (article 30.º).
Interest from time deposits made in authorized establishments by non-resident credit institutions will also remain exempt from IRC if the proposed measure is approved (article 31.º).
The same applies to gains from securities repurchase operations by non-resident banks conducted with Portuguese credit institutions (article 32.º-C).
The government initiative also plans to exempt management entities of origin denominations and geographic indicators of wines, vinegars, spirituous beverages of vinic origin, and flavored wine products from IRC, except on capital income (article 52.º).
Likewise, an IRC incentive exempting integrated management system entities of specific waste streams from tax, except on capital income, is proposed (article 53.º).
A tax benefit exempting up to 7,500 euros in income earned by sports, cultural, and recreational associations from IRC is also up for vote (article 54.º).
An exemption at risk of expiring, if not extended, is the IRC exemption (except on capital and commercial, industrial, or agricultural income) applicable to employer and union associations and public collective entities created to ensure professional discipline and representation of liberal professions (article 55.º).
The list of fiscal benefits to uphold includes maintaining the IRC exemption on community lands (article 59.º) and incentives for forestry activities (article 59.º-D) and forest management entities and units (article 59.º-G).
The government also intends to maintain, in specific cases, the VAT exemption on the free transfer of goods and provision of services by certain entities (article 64.º).
