Competitive Tax Differential
The Autonomous Region of the Azores has an advantageous tax differential of 20% in comparison to the rest of Portugal in terms of Corporate Income Tax (CIT), Personal Income Tax (PIT) and Value Added Tax (VAT). The Region also benefits from the 8th lowest CIT rate in the European Union and the 2nd lowest VAT rate.
Corporate Income Tax (CIT)
The standard rate in the Azores is 16.8% (21% for Mainland Portugal).
Value Added Tax (VAT)
The VAT rates applicable in the Azores are as followings:
- Reduced rate – 4% (6% at Portuguese mainland).
- Intermediate rate – 9% (13% at Portuguese mainland).
- Standard rate – 18% (23% at Portuguese mainland).
Personal Income Tax (PIT)
- The first echelon is 30% lower than in Mainland Portugal
- The second echelon is 25% lower than in Mainland Portugal and Madeira.
- All other echelons are 20% lower than in Mainland Portugal and Madeira.
Tax Regime for Non-Habitual Residents:
- Non-habitual residents are taxed for 10 consecutive years at a fixed PIT rate of 16% (20% lower than Mainland Portugal and Madeira).
- Pensioners and retired individuals with incomes from dependent and independent work are exempt from Personal Income Taxation, provided that they are taxed in the source State, in accordance with the double taxation convention between Portugal and this State.
- If there is no such convention, income is taxed in the source State, as long as it is not obtained in the Portuguese territory, according to the Personal Income Tax Legislation.
Personal Income Tax (IRS)