As has been the case in recent years, companies have little reason to smile on the current Portuguese State Budget Proposal (“SB Bill”). The main surprise is the increased additional taxation of vehicles, from 10% to 15% for vehicles valued at up to € 25,000, and from 35% to 37.5% for vehicles valued at more than € 35,000. This change will hit small and medium-sized enterprises hardest.
Curiously enough, the additional taxation of vehicles was introduced in 2001 at a relatively low rate at first of 20% on the corporate income tax (IRC) rate in force at the time, but has since increased to 71% of the IRC rate for the lowest value vehicles (reaching 120% in the case of companies recording a tax loss, as a result of the increase in additional taxation by 10 percentage points) and to 178% for the highest value vehicles (a rate that reaches a staggering 226% in the case of companies recording losses). These values speak for themselves and prove that additional taxation has become a kind of minimum collection on companies.