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As of 1st April 2023, the UK Corporation Tax rate is set to rise to 25%. While this may seem like a disadvantage, there are some surprising benefits to the new rate. Businesses with profits of £250,000 or more can benefit from a 5% corporate tax rate. And this can be further improved with the help of the UK-Portugal double taxation treaty. Let’s discuss the surprising benefits of the UK’s rising corporation tax; and how to make sure your business takes advantage.

How the 25% corporation rate will effect businesses

All UK companies must pay corporation tax on any profits generated, and this rate has been set to 25% from 1st April 2023. This means that if your business profits exceed £250,000 per year, then you’ll pay the higher rate of 25%. Even though businesses that earn less than £50,000 per year in profits are still going to be taxed at 19%. This new 25% rate can stop many business owners from developing their businesses even further.

This can be a major issue for small business owners. As they are now forced to pay the same tax rate as larger companies. We want to help people continue to develop their businesses, which is why this blog will begin to explain how the 5% tax rate in Portugal will benefit you.

The 5% tax rate in Portugal can be a great way to keep your business profitable. While ensuring that you don’t have to pay too much in taxes. We will also look at the UK-Portugal Double Taxation Treaty. This allows people to benefit from reduced taxes when trading between the two countries. So, if you’re looking for a way to save money on your taxes, then keep reading!


How to make use of the 5% tax rate in Portugal

Businesses with profits of £250,000 or more can benefit from the 5% corporate tax rate in Portugal – it’s as simple as that. As long as you reach the Portuguese guidelines,  then you should be able to benefit from the 5% tax rate. We have designed an online calculator to help you determine if you can take advantage of the 5% corporate tax rate in Portugal, it will only take seconds to reach a conclusion! Whether you’re eligible or not, please arrange a consultation with our team, to discuss what advantages Portugal can offer you. Following your discussions with our team, we can create a personalised proposal to suit your specific situation. This will include all the services we provide to become more tax efficient.

Even if you earn less than £250,000 per year and cannot benefit from the 5% tax rate, there are still many other benefits that Portugal has to offer such as a cheaper and more relaxed lifestyle. We have plenty of other business owners, who often choose to relocate to Portugal due to these advantages. If you would like to learn more about the opportunities available to you, our team would be happy to arrange a free consultation. We have excellent knowledge surrounding the issues related to taxes between the UK and Portugal. So we can provide you with tailored advice regarding the best course of action when it comes to taxation matters.

Furthermore, Portugal has a very advantageous workforce which can also help your company to reach further success. Again any new clients can arrange a free consultation with our team, to discuss their opportunities. Our team understand the complexities of the double taxation treaty between the UK and Portugal and can offer detailed advice and support on how to make the most of the tax benefits in both countries. We are passionate about helping our clients to achieve success. We will do our best to ensure that your transition is as smooth and hassle-free as possible.


How the UK-Portugal Double Taxation Treaty works

The UK and Portugal have a long-standing Double Taxation Treaty that dates back to 1970. This treaty seeks to protect against double taxation between the two countries, as well as providing certainty of treatment for cross-border trade and investment. The treaty is designed to prevent excessive taxation and other forms of discrimination against UK business interests abroad. Companies, entrepreneurs, retirees and individuals can all benefit from double taxation agreements.

Under the UK-Portugal Double Taxation Treaty, both countries agree to tax certain income on either a territorial or international basis. On a territorial basis, income arising in one country is taxed in that country. Whereas income arising in two countries may be taxed in either country depending on the agreement. The treaty also provides exemptions from taxation for certain types of income.  Such as pension payments and government grants, as well as eliminating the risk of double taxation by allowing the country of residence to grant a credit for taxes paid in the other country.

By taking advantage of the UK-Portugal Double Taxation Treaty, businesses and individuals can benefit from reduced tax liabilities; and more certainty when it comes to international business transactions. With the right advice and planning, businesses can also benefit from tax-efficient processes, such as the 5% corporate tax rate available in Portugal as long as their business profits exceed 250,000 euros per year.


How can I move to Portugal?

If you are looking to move to Portugal, there are several routes you can take. For UK residents, even though we are no longer in the EU, there are still many ways to relocate to Portugal. This includes the Golden Visa, D6 visa, D7 visa or Digital Nomad visa. These visas allow non-EU citizens to obtain residency in Portugal.

Alternatively, if you have dual citizenship and EU status, then the process of relocating to Portugal is simpler as you just need to apply for a CRUE (Certificate of Right of Residence).

Whatever your residency status may be, our lawyers at RHJ Law can help you decide which route is best for you. We can provide legal advice on the requirements and procedures for each visa. And assist you in making sure that all the necessary paperwork is completed correctly. We will also advise you how to take advantage of the UK-Portugal Double Taxation Treaty to benefit from tax-efficient processes.

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💬 PSA: between April & June our Portuguese team have limited meeting availability due to the Tax Return Submission Period 🇵🇹