Autonomous taxation (tributações autónomas) is one of the points that most surprises business owners when they receive their Corporate Income Tax (IRC) bill. Even companies operating at a loss may have to pay autonomous taxation. Understanding how they work helps in better planning.
What they are
Autonomous taxation (tributações autónomas) are taxes levied on certain company expenses, regardless of whether there is a profit or not. They were created to discourage expenses considered high-risk or difficult to control, and they are paid under Corporate Income Tax (IRC).
Which expenses they apply to
They apply, among others, to expenses with light passenger vehicles (whose rates vary according to the value and type of vehicle), representation expenses, per diems (ajudas de custo) and mileage not invoiced to clients, undocumented charges, and certain payments to entities in more favourable tax regimes.
Vehicles are the most common case
Company vehicles are, by far, the most frequent source of autonomous taxation. The applicable rate depends on the acquisition cost and the type of motorisation, generally being lower for electric vehicles and higher for high-value combustion vehicles.
How to legally reduce the impact
Always document expenses, because undocumented expenses are heavily penalised. Consider the motorisation of vehicles, as electric ones receive more favourable treatment. Evaluate whether certain expenses should be borne by the company or personally. And plan throughout the year, not just at year-end.
The aggravation due to losses
Companies with a tax loss may see their autonomous taxation rates increased. This is another reason to closely monitor the situation throughout the financial year.
At Grupo Your, we analyse your company's expense structure and identify legal ways to reduce autonomous taxation. Talk to us to optimise your IRC.
