In Portugal, the taxation of stock options and equity plans depends on the applicable regime. Under the general regime, the gain at exercise (the difference between market value and exercise price) is employment income (Category A), taxed at progressive IRS rates and subject to Social Security. Under the startup regime (Law no. 21/2023), taxation is more favourable: deferred to the moment of sale and applied to only 50% of the gain, at a 28% rate.
General regime: taxed at exercise
When an employee exercises stock options outside a qualifying plan, the exercise gain — the difference between the shares' market value and the price paid — is treated as employment income (Category A). It is taxed at progressive IRS rates (up to 48%) and subject to Social Security, in the year of exercise, even if the employee has not yet sold the shares.
The startup regime (Law no. 21/2023)
The Startup Law created a much more favourable tax regime for option plans granted by qualifying startups. Key features:
- Taxation is deferred to the moment of sale of the shares (not at exercise);
- It applies to only 50% of the gain;
- It is taxed at a 28% rate (capital-gains category), not the progressive rates;
- Subject to conditions: the company must be a qualifying startup and the holder must keep the instruments for the required period.
In practice, this drastically reduces both the tax burden and the liquidity problem (paying tax before selling).
The difference in practice
On a EUR 100,000 gain: under the general regime it is taxed as salary (potentially ~48% + Social Security, at exercise). Under the startup regime, only 50% (EUR 50,000) is taxed at 28% = EUR 14,000, and only when you sell. The saving is huge — hence the importance of structuring the plan correctly from the start.
How HVR helps
We structure stock-option and equity plans tax-efficiently, validate eligibility for the startup regime and handle the IRS treatment. See our accounting for startups and the SIFIDE guide.
Frequently asked questions about stock options
How are stock options taxed in Portugal?
Under the general regime, as employment income at exercise (progressive IRS rates + Social Security). Under the startup regime, at 28% on 50% of the gain, deferred to sale.
What is the startup regime for stock options?
A regime under Law no. 21/2023 that defers taxation to sale, taxes only 50% of the gain at 28%, and requires the company to be a qualifying startup.
Do I pay tax when I exercise or when I sell?
Under the general regime, at exercise. Under the startup regime, only when you sell the shares.
What rate applies under the startup regime?
28% on only 50% of the gain — substantially lower than the progressive IRS rates of the general regime.
Does my company qualify for the startup regime?
It depends on meeting the legal startup criteria (age, size, innovative activity). HVR validates eligibility case by case.