Netherlands vs Portugal for founders and companies

Where Portugal wins

The lower rates are already in the law. The mainland rate is 19% in 2026, 18% in 2027 and 17% in 2028. Small and medium-sized companies and small mid-caps pay a reduced rate of 15% on the first €50,000 of taxable income. The autonomous regions have lower standard rates. Companies licensed in the Madeira International Business Centre pay 5% corporate tax until the end of 2033. The European Union approved this regime, which sets it apart from offshore arrangements. It therefore passes tax checks that similar regimes elsewhere often fail.

Portugal is also strong for hiring staff. It was sixth of 123 countries in the 2025 EF English Proficiency Index. Salaries are much lower than in the Netherlands. Lisbon and Porto have large teams of engineers and product developers. A founder who relocates to Portugal can use the IFICI regime. Qualifying Portuguese income from employment and self-employment is then taxed at a flat 20% for up to ten years. Most qualifying foreign income is also exempt, if the professional activity qualifies each year. The climate, the cost of living and full membership of the European Union are further reasons to relocate.

What to check besides the 19% rate

The surtaxes. The 19% is only the headline rate. A municipal surtax of up to 1.5% applies to taxable profit. A state surtax of 3%, 5% and 9% applies to higher profit bands. A profitable company therefore pays a higher effective rate than 19%. The Dutch rates are 19% up to €200,000 and 25.8% above, and Dutch municipalities add zero surtax.

Dividends paid abroad. Dividends paid to non-resident companies have a standard withholding tax of 25%. Under the parent-subsidiary directive, the rate is zero for qualifying European parent companies. The condition is a holding of 10% for twelve months. For other countries, a treaty rate can apply. Choose the country of the parent company above a Portuguese company early. Dutch dividends paid abroad have a standard rate of 15%, and 0% for qualifying EU parent companies. Interest and royalties have a standard withholding rate of zero. See withholding tax in the Netherlands for the details.

The conditions in Madeira. For the 5% rate, you need a licence and you must meet thresholds for jobs and investment. The rate applies only up to a maximum amount of taxable income. This maximum depends on the substance of the company. The regime is for companies with real activity on the island.

Location for goods. Large volumes of goods for the European Union are shipped through Rotterdam and Antwerp. With an Article 23 licence, you declare the import VAT in your periodic VAT return. Portugal is at the Atlantic edge of the same customs union. It suits services, software and teams better than container shipments. See the calculation in the e-commerce test.

Combining Portugal and the Netherlands

In a common structure, the founder lives in Lisbon or Madeira and uses the IFICI regime. The European operating company, which signs the contracts, is a Dutch BV. A Dutch holding above it is ready for a later sale. With a shareholding of 5% or more, the participation exemption covers both dividends and sale proceeds. The same structure works for development teams in Porto with customers across Europe. You can compare all points in the master table. Then use the questions on the page where to incorporate.

Frequently asked questions

What is Portugal's corporate tax rate in 2026?

The mainland rate is 19%, down from 20% in 2025, with 18% legislated for 2027 and 17% for 2028. Small and medium-sized companies pay 15% on the first 50,000 euro of taxable income. A municipal surtax of up to 1.5% and a state surtax of 3%, 5% and 9% on higher profit bands apply on top.

What is the Madeira 5% rate and who qualifies?

Companies licensed in the Madeira International Business Centre pay 5% corporate tax until the end of 2033. The licence has conditions for jobs and investment. The 5% rate applies only up to a maximum amount of income. This maximum depends on the substance of the company on the island.

What replaced the Portuguese non-habitual resident regime?

The IFICI regime replaced the non-habitual resident regime. IFICI is the tax incentive for scientific research and innovation, often called NHR 2.0. Under this regime, qualifying Portuguese income from employment and self-employment is taxed at a flat 20% for up to ten years. Most qualifying foreign income is exempt. Whether you qualify depends on your professional activity, and this is checked each year.

Portugal or the Netherlands for selling into the EU?

Both are EU member states, so a company in either country can take on the European roles. The choice depends on your business. For large volumes of goods, licences and European contracts, the Netherlands is often the better choice. It has Rotterdam and the Article 23 deferment. For teams, services and a personal relocation, Portugal is often the better choice. You can also combine the two countries with a Dutch holding.