PORTUGAL Trends and Developments Contributed by: João Riscado Rapoula and Hugo Leonardo, VdA
Outlook for 2026 In the context of ongoing economic challenges and the aftermath of the extraordinary legislative elections held in May 2026 – which may signal shifts in Portu - gal’s political landscape – the government’s commit - ment to the continued implementation of the Recovery and Resilience Plan through to 2026 remains central. This strategy is pivotal in sustaining the stable, inves - tor-friendly environment that Portugal has nurtured over the past decade and is expected to reinforce confidence among international investors. The successful approval of the State Budget Law for 2026, amid a fragmented parliament, alongside the continued introduction and optimisation of tax incentives – including further reductions to the CIT rate, refined IFICI and SIFIDE regimes, and innovative measures in the real estate and investment sectors – reflects Portugal’s clear focus on fostering economic resilience, competitiveness and sustainable growth. These developments affirm that Portugal’s corporate tax framework remains robust, modern, and highly attractive to both domestic and foreign investors, ensuring the country’s position as a leading destina - tion for business and investment in Europe throughout 2026 and beyond.
In the well-known case C-545/19 of 17 March 2022 ( AllianzGI-Fonds AEVN v Autoridade Tributária e Adu - aneira ), the ECJ confirmed that the Portuguese WHT on dividends paid to non-resident CIVs is incompat - ible with EU law, in line with the arguments that were presented at the above-mentioned proceeding before the Portuguese tax arbitration court. Following the ECJ decision, several cases have been brought before Portuguese tax courts by foreign (mostly EU) CIVs, leading to a full WHT refund. The impact of this decision goes beyond national bor - ders, paving the way for the elimination of WHT on dividends received by CIVs throughout Europe. In the aftermath of the ECJ’s ruling, Portuguese law was expected to be updated to remove the discrimi - natory regime. However, in similar instances where Portuguese law had to be amended due to incompat - ibilities with European law, changes were not immedi - ate, which appears to also be the case with the WHT regime applicable to CIVs. Foreign CIVs that have been subject to WHT on Por - tuguese-sourced dividends received in the past can request the refund of the amounts withheld in the previous two years, through a formal appeal submit - ted to the Portuguese tax authorities. Alternatively, Portuguese law also provides a mechanism through which foreign collective investment undertakings in this situation may request the Portuguese tax authori - ties to review the collection of the amounts withheld, which has the advantage of allowing the return of the amounts withheld in the previous four years. As the ECJ decision is based on the free movement of capi - tal, this WHT recovery should also be accessible to CIVs from countries outside the EU.
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