Portugal has strengthened its position as one of Europe’s most attractive destinations for business and investment by becoming one of only three OECD countries to cut corporate tax in 2025.
At a time when many jurisdictions are opting to raise rates or keep them steady, Portugal’s decision to reduce its corporate income tax from 21% to 20% sends a clear message that the country is committed to competitiveness, stability and long-term economic growth.
The OECD’s (Organisation for Economic Co-operation and Development) latest Corporate Income Tax Statistics report highlights that only Iceland, Luxembourg and Portugal reduced their corporate tax rates this year, while four jurisdictions introduced increases.
With political backing across much of Parliament, this reduction is part of a broader government ambition to continue lowering rates gradually in the coming years.
This pro-business trajectory offers confidence to investors who value transparency and forward-looking fiscal policy when choosing a home for their capital.
The significance of this decision becomes even clearer when viewed through the lens of global tax trends. According to the OECD, average corporate tax rates have remained largely stable over the past six years, sitting at 21.7% in 2019 and 21.2% in 2025.
Portugal’s rate now sits below this average, giving it a tangible competitive advantage within Europe and beyond.
For businesses comparing potential headquarters or operational bases, a lower tax rate can shift investment decisions, especially when combined with the country’s growing reputation for innovation, talent and lifestyle appeal.
Portugal has long been recognised for offering an attractive ecosystem for entrepreneurs and high-value industries.
The OECD reports Portugal is already among the countries providing the most comprehensive tax incentives for companies, particularly small and medium-sized enterprises and those engaged in research and development.
These incentives, coupled with a lower headline rate, make Portugal especially appealing for technology firms, start-ups and investors seeking an environment that actively encourages innovation and growth.
For foreign investors, the reduction in corporate tax also improves forecasted returns and enhances the overall attractiveness of Portuguese-based ventures.
One of the biggest drivers of Portugal’s economy and a significant incentive for foreign investment is the Golden Visa residency-by-investment programme.
Golden Visa holders gain freedom of movement across the 29 EU Schengen region countries, a clear pathway to dual EU citizenship after the qualifying residency period, and a minimal annual stay requirement of just seven days per year – providing flexibility for international families.
About Portugal Pathways
Portugal Pathways has supported hundreds of Golden Visa residency-by-investment applications and provides expert guidance through its professional supply chain network on estate planning, wealth management, Golden Visa and tax optimisation, including post-NHR / IFICI tax regime planning, as well as private healthcare, money transfers and bespoke relocation and luxury real estate solutions to enhance life and investment in Portugal
Disclaimer: The information on the Portugal Pathways and Portugal Investment Owners Club (P Club for short) websites and in email communications is for general informational purposes only and should not be construed as legal, tax, or financial advice. You should consult and check with a qualified professional advisor before relying on any information provided on this website or in email communications. As it relates to investments in Golden Visas or other wealth management solutions offered by regulated and professional advisors, it is important to note that past performance is no guarantee of future returns. Private equities can be highly illiquid and come with risk and should always be under professional independent advice. Golden Visa investments need to be held for 6 to 7 years to allow for permanent citizenship/passport in the EU.
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