Why the Azores
Why a company here pays less tax
The Azores set their own rate of company tax. This page gives the rate and the law it comes from. Then the arithmetic, at three levels of profit.
The islands set their own tax
The Azores are part of Portugal, but they set their own tax rules. The regional government sets the rate each year, in its budget. It is lower than the mainland rate.
Small companies pay 8.75%
On the first slice of profit a small or medium company pays 8.75% instead of 19%. Small means fewer than 250 staff, and either under €50 million coming in or under €43 million owned.
The company must really be here
An address is not enough. The work, and the people making decisions, have to be on the islands. This is the first thing an inspector checks.
What you keep
Say the company earns €50,000 after costs. Here is the bill in each place, and what is left after it.
The low rate covers the first slice of profit for a small or medium company. Earn well above that and the rate rises, but it still stays below the mainland. Town taxes are extra.
Three rules you must follow
Be based here for real
Office, team and decisions on the islands. A postbox in São Miguel while you work from Lisbon does not count.
Stay small or medium
Fewer than 250 staff. Also under €50 million in sales, or under €43 million in what the company owns.
Use a Portuguese accountant
Every company has to have a proper accountant sign off its books. That is the law, not an extra you can skip.
What the low tax does not cover
Tax on your own wages
You still pay income tax on money you take out of the company.
Social security on staff
Wages carry their own charges and the low rate does not touch them.
Sales tax
Sales tax is separate. Lower in the Azores too, but a different tax.
Town taxes
Your local council can add a small charge of its own.
Quick answers
Can I register here but live in Lisbon?
No. The company must be run from the islands, and it is the first thing checked.
Does the low tax start straight away?
Yes, from the first year. The company has to be based there. And it has to count as small or medium.
Will it still be 8.75% next year?
The islands decide every year, in their budget. 2026 is confirmed. We re-check in February.
Do I really need an accountant?
Yes, by law. For a small company expect around €120 a month.
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