Payments on Account (PPC) remain, in 2026, one of the main tax obligations for companies subject to Corporate Income Tax (CIT) in Portugal.
This mechanism works as an advance payment of the tax due, with a direct impact on companies’ cash flow throughout the financial year. Incorrect management of Payments on Account may result in cash flow imbalances, penalties, compensatory interest and difficulties at year‑end closing.
Although the legal framework remains structurally stable, practice shows that many companies still struggle with the correct determination of amounts, the request for reduction or suspension, and the proper alignment with actual business activity and expected results.
At FA ACCOUNTING, we work daily with both national and international companies and know that a strategic approach to Payments on Account is essential to ensure tax compliance and financial stability.
In this article, we explain the legal framework applicable in 2026, which entities are covered, how Payments on Account are calculated, the most common risks and how to ensure efficient tax management.
What Are Payments on Account in CIT?
Payments on Account are advance payments of CIT made by companies during the tax year based on the tax assessed in the previous financial year.
The aim is to anticipate part of the tax that will be determined in the Annual CIT Return (Modelo 22), reducing the risk of non‑compliance at the time of final settlement.
In 2026, this regime applies to entities with:
- Commercial, industrial or agricultural activity;
- Liability to CIT;
- Positive tax assessed in the previous year.
Payments on Account do not constitute an additional tax, but rather an advance payment to be deducted from the final CIT due.
Who Is Required to Make Payments on Account in 2026?
Entities subject to CIT are required to make Payments on Account when, in the previous year, they recorded:
- CIT assessed exceeding €200;
- Active business operations during the tax year.
The following entities are excluded, among others:
- Entities fully exempt from CIT;
- Companies in their first year of activity;
- Entities with no tax assessed in the previous year.
How Payments on Account Are Calculated
In 2026, Payments on Account generally correspond to:
- 80% of the CIT assessed in the previous year;
- 95% in the case of entities classified as large companies.
The amount is divided into three instalments, payable in:
- July;
- September;
- December.
The calculation may be adjusted based on:
- Negative results or a significant decrease in activity;
- Extraordinary tax charges in the previous year;
- Relevant changes in the company’s structure.
Reduction or Suspension of Payments on Account
The legislation in force in 2026 allows for the reduction or suspension of Payments on Account when it is foreseeable that the final tax due will be lower than the amount advanced.
This option is particularly relevant for companies that:
- Have experienced a sharp drop in turnover;
- Operate in highly volatile sectors;
- Are undergoing restructuring;
- Expect to incur tax losses.
The request must be properly substantiated, as errors may lead to:
- Compensatory interest;
- Additional penalties;
- Future tax adjustments.
Most Common Error Situations in 2026
- Calculations based on incorrect prior‑year tax figures;
- Failure to consider applicable tax benefits;
- No request for reduction despite decreased results;
- Late payments;
- Lack of coordination between accounting, tax and cash‑flow management.
These situations may result in:
- Penalties for late payment or non‑compliance;
- Compensatory interest;
- Negative impact on liquidity;
- Unfavourable adjustments in the final CIT assessment.
Impact of Payments on Account on Cash Flow
Payments on Account have a significant impact on companies’ financial management, especially for:
- Small and medium‑sized enterprises;
- Businesses with irregular cash flows;
- Seasonal activities.
Inadequate forecasting may lead to liquidity shortages and the need for short‑term financing.
Best Practices for Managing Payments on Account in 2026
- Early analysis of expected results;
- Review of the previous year’s tax assessed;
- Regular monitoring of business activity;
- Strict compliance with legal deadlines;
- Specialised professional support.
How Can FA ACCOUNTING Help?
Proper management of Payments on Account is essential for companies’ financial and tax balance.
At FA ACCOUNTING, we provide:
- Accurate calculation of Payments on Account;
- Assessment of reduction or suspension possibilities;
- Integrated CIT tax planning;
- Ongoing monitoring of financial and tax position;
- Support with communications with the Tax Authority.
We develop a Personalised Tax Plan, tailored to each company’s reality and objectives.
Avoid Tax Surprises in 2026
Contact FA ACCOUNTING and ensure efficient and secure management of your CIT Payments on Account.
Note: This article is for informational purposes only and is based on legislation in force in 2026. It does not replace specialised professional advice.
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