In 2017, tax burden increased to 34.7% of GDP (34.3% in the previous year). This increase in revenue was influenced by positive performance of all tax burden items. Direct taxes revenue increased 3.3%, while indirect taxes and social contributions revenue increased 6.1% and 6.0%, respectively.
Regarding direct taxes revenue, there was a very small decrease of 0.04% in individual income tax (IRS): However, revenue from corporate income tax (IRC) rose 10.2%.
Value added tax (VAT) revenue increased 6.4%. Regarding the remaining indirect taxes, it should be highlighted the increases observed in revenue from the real estate transfer tax collected by Local Government (31.6%), from tax on motor vehicle sales (12.7%), from the excise duties on tobacco (4.0%) and from tax on oil and energetic products (2.4%). The revenue from real estate tax collected by Local Government increased again (8.7%), due to a new surtax introduced in 2017.
Actual social contributions increased by 6.0% influenced by the increase in employment and, to a lesser extent, by the reversion of the reductions previously applied to the wages of civil servants.
Excluding taxes received by the European Union Institutions, Portugal continued to register in 2017 a lower tax burden than the EU average (34.6% compared to 39.3% in the EU28).
In 2015, the VAT gap was estimated at 1.06 billion euro, corresponding to 6.4% of the VAT revenue of the year, diminishing 1.4 percentage points comparing with the amount estimated for the previous year (1.24 billion euro).