Country comparison · 2026
Portugal vs France, Spain, Dubai:where to set up in 2026?
Portugal has tightened its taxation in recent years: it is no longer the « paradise » sometimes sold to you. But the real question is not chasing the lowest tax rate. The criterion that decides everything is where you actually live and from where you run the business. Here is an honest comparison, figures given as orders of magnitude, to be validated with a tax adviser, and the alert few providers give you.
75+ entrepreneurs supported since 2025 · Lisbon, Portugal
Before comparing rates
The real criterion: where do you live?
Someone will always sell you an attractive tax rate somewhere. But a company is only taxable « over there » if it is genuinely run there and has economic substance there. For a French tax resident, the registered address changes nothing if decisions, work and value are produced from France: the tax authority looks at reality, not paper. Before choosing a country, ask yourself these questions first.
The comparison
Four destinations, four different logics
The figures below are indicative orders of magnitude for 2026, to be confirmed with a tax adviser for your case. They do not say « where to pay the least »: they show the type of profile for which each country makes sense.
| Country | Corporate tax | Charges / VAT | Substance required | Who it suits |
|---|---|---|---|---|
| Portugal (EU) | IRC 19% (15% SMEs on the first €50,000) | IVA 23% · moderate employer charges | Real substance needed (management, activity) | Those genuinely relocating to and living in Portugal |
| France (EU) | IS 25% | VAT 20% · high employer charges (≈ +42% indicative) | Domestic market and activity | Those living, working and selling in France |
| Spain (EU) | IS 25% (reduced 15% for new companies, ~first 2 years) | IVA 21% | Real substance needed | Those relocating to Spain or whose market is there |
| Dubai / UAE (non-EU) | Corporate Tax 9% above a threshold (~AED 375,000) | No EU-style VAT (VAT 5%) | Real substance required, and outside the EU | Those genuinely emigrating to the UAE (strong CFC risk for a French resident) |
Honest reading: a low rate does not « win » the comparison. A 9% company in Dubai run from Paris may end up taxed in France, with interest and penalties on top. The right country is the one where your life and activity are genuinely based.
Portugal
EU · IRC 19%- Corporate tax
- IRC 19%, reduced 15% rate for SMEs on the first €50,000 of taxable profit.
- VAT
- Standard IVA at 23%.
- Substance
- Real substance needed: management and activity on the ground. EU member, extensive tax treaties.
France
EU · IS 25%- Corporate tax
- IS at 25%.
- Charges & VAT
- High employer charges (≈ +42% indicative on gross), VAT at 20%.
- Relevance
- Logical for a domestic market and activity: your clients and your life are in France.
Spain
EU · IS 25%- Corporate tax
- IS at 25%, with a reduced 15% rate for new companies over their ~first 2 profitable years.
- VAT
- IVA at 21%.
- Substance
- Real substance needed. EU member, logistically close to the Iberian market.
Dubai / UAE
Non-EU · CT 9%- Corporate tax
- Corporate Tax at 9% above a profit threshold (~AED 375,000).
- VAT
- No equivalent to EU VAT; a local 5% VAT applies.
- The critical point
- Real substance required and a non-EU jurisdiction. For a French tax resident, the controlled-foreign-company and permanent-establishment risk is major (see the alert below).
Read this first
CFC & permanent-establishment alert
This is what many sellers of « offshore companies » keep quiet. If you are a French tax resident and you set up a company abroad run from France, you expose yourself to two mechanisms that can bring taxation back to France, whatever rate is advertised elsewhere.
The first: the controlled-foreign-company (CFC) regime, set out in Article 209 B of the French tax code, which targets structures established in low-tax countries and controlled from France. The second: the notion of permanent establishment and place of effective management, if decisions are actually made in France, the activity can be attached there and taxed.
- A 9% company in Dubai run from France can be reclassified and taxed in France, with late-payment interest and penalties.
- Real « substance » (offices, staff, decisions, presence) is required, especially in Dubai. A mere address is not enough.
- The « I live in France but my company is elsewhere » setup is precisely what these rules are designed to neutralise.
- The only sound way to benefit from foreign taxation is to genuinely move your tax residence and activity there.
Without overselling
Why Portugal stays relevant (for the right reasons)
Portugal is no longer a tax haven, and that is for the best: its relevance today comes from the coherence of the project, not from a miracle rate. For those genuinely relocating to Lisbon or Porto, living there, running their activity there, having their substance there, Portugal offers a solid, readable framework.
EU member: free movement, single market, extensive tax treaties, no « non-EU » complications.
IRC at 19%, with 15% for SMEs on the first €50,000, competitive without being an aggressive setup.
Share capital for a Unipessoal Lda or a Lda from €1 per partner: accessible to incorporate.
Quality of life, accessible language, a French-speaking community: real « substance » settles there without pain.
The right instinct: choose Portugal because you live there, not to escape the tax authority of your country of residence.
To go further
Useful pages before you decide
Frequently asked questions
What people ask me about choosing a country
- What is the best EU country to set up a company in 2026?
- There is no « best » country in the abstract: the right country is the one where you genuinely live and run the activity. Within the EU, Portugal (IRC 19%, 15% for SMEs on the first €50,000) is competitive against France and Spain (IS 25%), but that rate only makes sense if your substance is on the ground. The decisive criterion remains your tax residence, not the advertised rate.
- Can you set up a company in Dubai while living in France?
- It is legally possible, but it is precisely the riskiest setup for a French tax resident. A Dubai company run from France triggers exposure to the controlled-foreign-company regime (Article 209 B of the French tax code) and to reclassification as a permanent establishment or place of effective management: the activity can then be taxed in France, with interest and penalties. Dubai only makes sense if you genuinely move your residence and activity there, with real substance. To be validated with a tax adviser without fail.
- Portugal or France: which to choose?
- If your life, your clients and your activity are in France, France remains the logical answer despite IS at 25% and high charges: setting up elsewhere would only create risk. If you genuinely relocate to Portugal, living, running and producing value there, Portugal becomes coherent, with IRC at 19% and EU membership. It is not a rate trade-off, it is a choice of where to live.
- Is a lower tax rate enough to justify the choice of a country?
- No. A low rate advertised elsewhere does not protect you if the activity is actually run from your country of residence: it can be attached and taxed there. The total cost also includes the substance to put in place, compliance, audit risk and double taxation. The rate is only one parameter among many.
- Is Portugal still attractive tax-wise in 2026?
- Portugal has tightened its taxation (end of the classic NHR, a more restrictive IFICI that excludes retirees and is often not open to nomads with a 100% foreign client base). It remains relevant for those who genuinely settle there: IRC at 19%, 15% for SMEs on the first €50,000, EU membership, quality of life. But it is no longer a tax haven, and that is good news for the legal security of your project.
Disclaimer
This page is for information and general comparison only; it does not constitute personalised legal, accounting or tax advice. The rates and thresholds quoted (IRC, IS, IVA/VAT, Corporate Tax, charges) are indicative orders of magnitude, current as of 2026 and subject to change with each country's finance acts. The situation of a French tax resident setting up a company abroad depends on complex rules (Article 209 B of the French tax code, permanent establishment, tax treaties) assessed case by case. Business Portugal is a consultant in company formation and setup, not a law or tax firm: for any decision, have your case validated by a tax adviser. Book a meeting to frame your project.
Let's talk about your project, not a rate
A first free conversation, with no commitment, to frame where you live, where you run the activity and which structure holds up. We look at your situation honestly, and if a tax adviser is needed, we connect you with the right partner.
No commitment · Introduction · Lisbon, Portugal