Headline rates
| China | Portugal 2026 | |
|---|---|---|
| Standard rate | 25 % (Enterprise Income Tax Law, art. 4) | IRC 19 % (18 % in 2027, 17 % from 2028) plus a municipal surcharge (derrama) of up to 1,5 % and a state surcharge of 3 %, 5 % and 9 % on profit above 1,5, 7,5 and 35 million € |
| Small companies | 20 % on a quarter of taxable income — 5 % effective — for companies with taxable income up to 3 million CNY, 300 staff and 50 million CNY of assets, until 31 December 2027 | 15 % on the first 50 000 € of taxable income for SMEs and small mid-caps, 19 % above |
| High-tech | 15 % for certified high-tech enterprises (art. 28) | no special rate; SIFIDE R&D credit and RFAI investment credit instead |
| Non-resident companies | 20 % statutory on Chinese-source passive income, reduced to 10 % by the Implementation Regulations (art. 91) | 25 % withholding on dividends, interest and royalties paid to non-residents; treaty 10 %; 0 % on dividends to a qualifying parent |
| Sole traders and partnerships | outside corporate tax (art. 2); partners taxed under individual income tax at 5–35 % | category B of IRS; simplified regime up to 200 000 € |
A Portuguese SME with 260 000 € of profit — about 2 million CNY — pays 7 500 € on the first 50 000 € and 39 900 € on the rest, 47 400 € before the municipal surcharge, 18 %. A Chinese company with 2 million CNY of taxable income qualifies as small and low-profit and pays 100 000 CNY, about 13 000 €, 5 %. Above the Chinese thresholds the comparison turns: 25 % against 19 %.
- 25 % vs 19 % — standard rates; 5 % vs 15 % on small companies' profit
- 10 % vs 25 % — withholding on dividends to foreign parents before the treaty; both 10 % under it, and 0 % from Portugal to a 10 % Chinese corporate shareholder
- 200 % — R&D costs deducted twice in China; 32,5 % + 50 % SIFIDE credit in Portugal
- 6 months — building sites and service projects become a permanent establishment under the treaty
Tax base and losses
China taxes resident enterprises — those incorporated in China or effectively managed there — on worldwide income (art. 3), with a credit for foreign tax. Deductible: costs, expenses, taxes and losses actually incurred (art. 8); donations up to 12 % of profit (art. 9); not deductible: dividends, the tax itself, penalties, sponsorship, unverified provisions (art. 10). Dividends between qualified resident enterprises are exempt (art. 26). Losses carry forward five years (art. 18), ten for certified high-tech and science-and-technology SMEs since 2018.
Portugal taxes companies with their seat or effective management here on worldwide income, with a participation exemption on dividends and gains from holdings of at least 10 % held twelve months (CIRC, art. 51.º), losses carried forward without time limit for periods from 2023, within 65 % of each year’s taxable profit (CIRC, art. 52.º), and a credit for foreign tax up to the treaty rate.
Incentives that matter to Chinese groups
- R&D in China: expenses deducted at 200 % since 1 January 2023 — 100 % on top of the actual cost — and intangibles amortised at 200 % (MOF/STA Announcement 2023 No. 7). In Portugal: SIFIDE gives a credit of 32,5 % of R&D spending plus 50 % of the increase over the previous two years (Código Fiscal do Investimento, art. 38.º).
- Investment: RFAI credits 30 % of qualifying investment up to 15 million € in eligible regions, 10 % above (CFI, art. 23.º); in China the high-tech certificate is the route to 15 %.
- Regional: Portugal’s Madeira free zone taxes licensed companies at 5 % until 31 December 2033 for licences issued by 31 December 2026, on condition of jobs and investment (EBF, art. 36.º-A); interior regions add a lower SME rate. China’s western-region and free-trade-zone regimes are outside this page.
Cross-border: the permanent establishment trap
The convention treats a building site, or the supply of services through employees on one project, as a permanent establishment after six months in any twelve (art. 5 n.º 3) — half the OECD standard. A Chinese engineering group installing equipment in Sines for eight months has a Portuguese PE and files IRC on the profit attributable to it; a Portuguese architecture practice with staff seven months on a Shenzhen project has a Chinese one. Profits of a PE are taxed where it is (art. 7); dividends from a Portuguese subsidiary to a Chinese parent carry 10 % under the treaty, or nothing under CIRC art. 14.º n.º 3 when the parent holds 10 % for a year and proves its Chinese residence and tax status.
Compliance
| China | Portugal | |
|---|---|---|
| Tax year | calendar year | calendar year (or chosen period) |
| Filing | monthly or quarterly prepayments within 15 days; annual return within five months of year end (art. 54) | Modelo 22 by 31 May; IES by 15 July; three payments on account in July, September and December |
| Withholding on non-residents | by the payer, 10 %; treaty relief self-assessed with the information report (STA Announcement 2019 No. 35) | by the payer, 25 %; treaty relief on Modelo 21-RFI with a Chinese residence certificate |
| Accounts | Chinese GAAP; statutory audit for foreign-invested enterprises common | SNC accounting; certified accountant compulsory for companies |
Choose the vehicle
Portuguese Lda under a Chinese parent, or a personal holding: the 0 % dividend exemption needs a corporate shareholder with 10 % for a year.
Watch the six months
Project staff in the other country counted against the PE threshold before the contract is signed.
Claim the incentives
SIFIDE and RFAI applications with the Portuguese return; the Chinese super-deduction in the annual reconciliation.
Treaty paperwork
Chinese residence certificate for Modelo 21-RFI and the art. 14.º exemption; the information report on the Chinese side.
Access Portugal incorporates and runs Portuguese companies for Chinese groups — accounting, IRC, VAT, payroll, treaty claims — and coordinates with your accountants in China on the group picture. Ask for a proposal.
Questions
Is a Chinese subsidiary's profit taxed again in Portugal when repatriated?
Not when the Portuguese parent holds at least 10 % for twelve months and the subsidiary is subject to Chinese corporate tax at 25 %: the participation exemption (CIRC art. 51.º) excludes the dividend. China withholds 10 % under the treaty; that cost is final.
Can a Portuguese company use China's 5 % small-company rate?
Only through a Chinese-resident subsidiary that meets the thresholds; a Portuguese company selling into China from Portugal has no Chinese corporate tax unless it has a permanent establishment there.
Does Portugal's 15 % SME rate apply to a company owned by a Chinese parent?
Yes, if the Portuguese company qualifies as an SME on the EU definition, which counts the group's staff and turnover — a subsidiary of a large Chinese group usually does not qualify and pays 19 % from the first euro.
Sources and official references
- Enterprise Income Tax Law of the PRC, English text — art. 2 scope, art. 3 residence, art. 4 rates, art. 8–10 deductions, art. 26 exempt income, art. 28 preferential rates — checked 19.9.2026
- Implementation Regulations for the Enterprise Income Tax Law, English text — art. 91 (10 % on non-resident enterprises), art. 92 (small low-profit enterprise definition) — checked 19.9.2026
- MOF/STA Announcement 2023 No. 12 — small low-profit enterprises: 25 % of income taxed at 20 % until 31 December 2027; thresholds 3 million CNY, 300 staff, 50 million CNY — checked 19.9.2026
- MOF/STA Cai Shui [2018] No. 76 — loss carry-forward extended to ten years for high-tech and science-and-technology SMEs — checked 19.9.2026
- Código do IRC, artigo 52.º — losses carried forward without time limit, 65 % cap; artigo 104.º — payments on account in July, September and 15 December — checked 19.9.2026
- MOF/STA Announcement 2023 No. 7 — R&D expenses: 100 % super-deduction and 200 % amortisation of intangibles from 1 January 2023 — checked 19.9.2026
- STA Announcement 2019 No. 35 — non-resident taxpayers claim treaty benefits by self-assessment with the information report (in force 1 January 2020) — checked 19.9.2026
- Convenção Portugal–China (1998) — art. 5 n.º 3 (six-month permanent establishment), art. 7, art. 10, art. 23 — checked 19.9.2026
- Lei n.º 64/2025 — IRC 19 % in 2026, 18 % in 2027, 17 % from 2028; 15 % on the first 50 000 € for SMEs — checked 19.9.2026
- Código do IRC, artigo 87.º-A — state surcharge 3 %, 5 %, 9 % — checked 19.9.2026
- Código do IRC, artigo 14.º n.º 3 — exemption of dividends paid to a corporate shareholder in a treaty state holding 10 % for one year — checked 19.9.2026
- Código do IRC, artigo 51.º — participation exemption on inbound dividends (10 %, twelve months, subject to tax at 60 % of the IRC rate) — checked 19.9.2026
- Código do IRC, artigo 87.º n.º 4 and artigo 94.º — 25 % on non-residents — checked 19.9.2026
- Código Fiscal do Investimento, artigo 23.º (RFAI 30 % / 10 %) and artigo 38.º (SIFIDE 32,5 % + 50 %) — checked 19.9.2026
- Estatuto dos Benefícios Fiscais, artigo 36.º-A — Madeira free zone 5 % until 2033 for licences up to 31 December 2026 — checked 19.9.2026
- European Central Bank — euro reference rate, 18 September 2026 (1 € = 7,6755 CNY) — checked 19.9.2026