Portugal enacts comprehensive tax simplification measures: Key takeaways from Decree-Law No. 49/2025

On March 27, 2025, the Portuguese Government enacted Decree-Law No. 49/2025, a sweeping reform package designed to simplify and modernise tax obligations across the personal and corporate tax spectrum. These measures come into force on July 1, 2025, and are part of the broader SIMPLEX+ Fiscal initiative.

Notable updates include:

• 📅 Unified and extended deadlines for IRS declarations, particularly regarding household composition, dependent expenses, education, healthcare and rental deductions;

• 🧾 Introduction of automatic VAT return filing, based on pre-filled data made available via the tax portal;

• 🔄 Greater flexibility in switching VAT reporting frequency, especially for SMEs, eliminating the mandatory three-year lock-in period;

• 🗂 Streamlining of the IES (Simplified Corporate Information) with the removal of annexes O and Q;

• 💶 Increase in exemption threshold for withholding tax, from €5 to €25 for various income categories (B, E, F, and IRC);

• 📦 Simplified export documentation for low-value goods, easing administrative burden for compliant exporters;

• 🧮 Mandatory e-invoice classification via the Tax Authority portal, replacing traditional paper records for businesses without organised accounting.

These reforms represent a strong signal toward digitalisation, administrative efficiency, and a more predictable tax environment.