Draft Portuguese budget limits finance deductions but expands favorable incentives

European Tax Newsalert

The Portuguese parliament recently received the 2013 draft budget. The most significant measures impact personal income tax although other measures would increase the tax burden for corporate entities either operating in Portugal or deriving Portuguese-sourced income.

The proposed measures would apply to current and subsequent financial years with some transitional periods including one for deducting net finance expenses. In addition to that provision, US multinationals may be affected by the withholding taxes on commissions, services and royalties derived by non-treaty countries.

We expect parliament approval of the budget law by the end of November 2012.



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