PIT
PIT is levied on income obtained by individuals, under six different categories, and its taxation will depend on the individual’s tax status.
| Description | PIT | Social Security | |||
|---|---|---|---|---|---|
| Taxation | Exemption | Taxation | Exemption | ||
| Salaries, holidays and Christmas bonus, commissions | x | – | x | – | |
| Members of statutory board | x | – | x (minimum basis of 1 IAS) (1) |
– | |
| Cash shortage allowance | – | Up to 5% of the monthly salary | – | Up to 5% of the monthly salary | |
| Daily allowance in Portugal | Directors | – | Up to € 69.19/day | – | Up to € 69.19/day |
| Others | – | Up to € 50.20/day | – | Up to € 50.20/day | |
| Daily allowance for travel abroad | Directors | – | Up to € 100.24/day | – | Up to € 100.24/day |
| Others | – | Up to € 89.35/day | – | Up to € 89.35/day | |
| Mileage allowance | – | Up to € 0.36/Km | – | Up to € 0.36/Km | |
| Company car – acquisition/private use | x (2) | – | x (2) | – | |
| Travel expenses not related to the company’s activity | x | – | x | – | |
| Loans granted by the company – acquisition of permanent private house | x | (≤ €180,426.40 ) and (rate≥ 70% x ECB rate) | x | – | |
| Loans granted by other entity - the employer supports the interest (totally or partly) | x | – | x | – | |
| Loans granted by the company – others | x (3) | Interest rate ≥ reference rate | x | – | |
| Extraordinary profit distribution/profit distribution | x | – | x (4) | – | |
| Overtime/regular bonuses | x | – | x | – | |
| Working hours exemption | x | – | x | – | |
| Indemnity for the termination of the labour contract | – | Up to (average of the regular salary of the last 12 months)*years of work (5) | – | Up to (average of the regular salary of the last 12 months)*years of work (5) | |
| Retirement pension, company’s complement/Social Security | x | – | – | x | |
| Early retirement | x | – | x | – | |
| Retirement insurance | x | – | – | x | |
| Share plans | x | – | – | x (6) | |
| Lunch allowance | – | Up to € 4.77/day | – | Up to € 4.77/day | |
| Meal vouchers | – | Up to € 7.63/day | – | Up to € 7.63/day | |
| Child tickets | – | x | – | x | |
| Education tickets | x | – | – | x | |
| Housing allowance | x | – | x | – | |
| Employer subsidies (health, education) | x | – | – | x | |
(1) Portuguese reference remuneration for 2018 (Indexante dos Apoios Sociais - IAS) – € 428,90.
(2) The benefit from the private use of a company car is only liable to taxation when there is a written agreement. For the purpose of liability to Social Security Contributions, additional conditions are required.
(3) Reference rate has not yet been determined. In the absence of publication of the ordinance determining the reference interest rate, it is considered 70% of the minimum rate applicable by the ECB to its main refinancing operations or another rate legally equivalent, on the first working day of the year to which the income relates.
(4) Profits distributions attributed to employees are subject to Social Security contributions. However, this liability to Social Security will only enter into force when regulated.
(5) For managers, members of the board, public sector managers and representatives of permanent establishments of non-resident entities, the amounts received for the termination of the employment contract are totally taxable, on the part that respects to those functions only. The part of the compensation concerning the periods in which they exercised their duties as regular employees may continue to benefit from the tax exclusion. For Social Security purposes, no liability to contributions arises in respect of the compensation for termination of employment contract in the event of collective redundancy; non compliance with legal notice; extinction of employment; individual redundancies or dismissals caused by inadaptability of the employee; obsolescence; for resolution by the employee; for termination before the term of the employment contract.
(6) Provided that benefits from the Share Plans are not paid on a cash – settlement basis.
Note:
As from 1 January 2018, the Portuguese monthly minimum wage is increased to Eur 580.
Additional solidarity rate
The additional surcharge is progressive and it is applicable on the income subject to the marginal tax rates, exceeding € 80,000.A rate of 2.5% is applicable to taxpayers with a taxable income exceeding € 80,000 up to € 250,000 and a rate of 5% is applicable to the taxable income exceeding € 250,000.
Withholding tax rates
| PIT withholding taxes | ||||||
|---|---|---|---|---|---|---|
| Residents | Non residents | |||||
| Category | Rates % | Note | Rates % | Note | ||
| Employment income | A | 0 up to 45,3 | WTA | 25 | FTW | |
| Remuneration of board members | A | 0 up to 45,3 | WTA | 25 | FTW | |
| Comissions | B | 25 | WTA | 25 | FTW | |
| Rendering of services | B | 11,5/25 | WTA | 25 | FTW | |
| Royalties earned by the author/ Original owner | B | 16,5 | WTA | 25 | FTW | |
| Royalties earned by the non author/ Technical assistance | E | 28 | WTA (1) | 25 | FTW | |
| Equipment lease | E | 16,5 | WTA (1) | 25 | FTW | |
| Dividends | E | 28 | FTW (1) (2) (3) (4) (5) | 28 | FTW(3) | |
| Interest from bank deposits | E | 28 | FTW(1) (3) (4) | 28 | FTW(3) (6) | |
| Interest from shareholder loans | E | 28 | FTW(1) (3) (4) | 28 | FTW(3) (6) | |
| Interest from debt securities | E | 28 | FTW(1) (3) (4) | 28 | FTW(3) (6) | |
| Other investment income | E | 16,5 | WTA (1) | 28 | FTW | |
| Rental income | F | 25 | WTA(6) (7) | 25 | FTW(7) | |
Capital gains: |
capital gains on shares | G | 28 | (6) (7) (10) | 28 | (10) |
| capital gains arising the disposal of real estate | G | 14,5 up to 48 | (8) (9) (10) | 28 | (10) | |
| Pensions | H | 0 up to 40 | WTA | 25 | FTW | |
FWT: Final Withholding tax
WTA: Withholding Tax on Account of the final tax payment
(1) Taxed autonomously at a rate of 28% if paid by non-resident entities and not subject to withholding tax.
(2) Income paid or made available to recipients resident in Portuguese territory by non-resident entities without permanent establishment in Portugal, domiciled in jurisdictions with more favourable tax regimes is subject to a tax rate of 35%.
(3) Income paid or made available to accounts opened in the name of one or more holders acting on behalf of one or more unidentified third parties is subject to a final tax rate of 35%, unless the beneficial owner of the income is identified.
(4) Income paid or made available to recipients resident in Portuguese territory by a third party on behalf of non-resident entities domiciled in a more favourable tax regime is subject to a tax rate of 35%.
(5) The taxpayer can opt for 50% of the dividends earned to be taxed at the progressive rates in the annual income tax return, in which case only 50% of the income is liable to taxation. This is only applicable to dividends of Portuguese source or paid by an entity resident in European Union or in the European Economic Area.
(6) The taxpayer can opt to include this income in the annual income tax return.
(7) Subject to taxation at an autonomous/final rate of 28%.
(8) The capital gains obtained by tax residents on the sale of real estate are only considered in 50%.
(9) May be excluded from taxation, provided that the sale value is reinvested in the acquisition of a primary private residence, in certain conditions.
(10) Final rates. Not subject to withholding tax.
Taxation of company car in Category A
Depreciation Factor
Simplified regime of Category B
Taxpayers who have not exceeded an annual gross amount of € 200,000 in this category in the previous year and who have not opted for the organized accounts regime are covered by the simplified regime.
The taxable income of this category will be computed by applying the following coefficients to the gross income:
Simplified regime of Category B
Taxpayers who have not exceeded an annual gross amount of € 200,000 in this category in the previous year and who have not opted for the organized accounts regime are covered by the simplified regime.
The taxable income of this category will be computed by applying the following coefficients to the gross income:
Determination of the deduction amount to be applied to the gross income arising from service-rendering activities under the Category B
The income “deduction” arising from the application of the coefficients referred above on b) and c) (i.e. the generality of the service-rendering activities) is partially conditioned by the verification of expenses and charges effectively incurred and related to the activity. Therefore, to the taxable income determined by applying the coefficients will be added the positive difference between 15% of the gross income and the sum of the following amounts:
- € 4,104 or, when higher, the total amount of mandatory social security contributions (in the part not exceeding 10% of the gross income received);
- personnel expenses, wages or salaries communicated to the Portuguese tax authorities;
- property rentals communicated through the issue of an electronic receipt or a specific statement, whose invoices and other documents are communicated to the Portuguese tax authorities (if only partially assigned to the professional activity, it is considered only 25% of the total amount);
- 1.5% of the tax registration value of the properties assigned to the business or professional activity or 4% of the tax registration value assigned to hotel activities or local accommodation (if only partially assigned to the professional activity, it is considered only 25% of the total amount);
- other expenses with the acquisition of goods and services related to the activity, dully communicated to Portuguese tax authorities, namely expenses with current consumption materials, electricity, water, transports and communications, rents, litigation, insurance, leasing rents, mandatory fees paid to professional associations and other organizations representing professional activities to which the taxpayer belongs, travels and stays of the taxpayer and his employees (if only partially assigned to the activity, it is considered only 25% of the total amount);
- Imports and intra-Community acquisitions of goods and services related to the activity.
In addition to the amount of the above deduction, the amount of mandatory social security contributions paid, exceeding 10% of gross income and related to such professional activities, may also be deducted to the gross amount of income, if not deducted for other purposes.
Exemplification of the calculation of the amount of expenses to be presented by a taxpayer, in order to benefit from the full application of the legal coefficients to the gross income arising from the provision of services:
In the example above, a taxpayer who earns a total gross income of € 40,000 and incurs expenses in the amount of at least € 1,896 can benefit from the application of the coefficient in full, i.e. 75%.
Tax regime for non-habitual residents
The tax regime for non-habitual residents is part of the Investment Tax Code and is intended to attract individuals and investments to Portugal.
Taxation
Under the regime’s rules, employment and self-employment income from a Portuguese source, derived from “high value-added activities of a scientific, artistic or technical nature” (included in a list of activities published by the Portuguese Government) earned by non-habitual residents in Portugal will be taxed at a flat rate of 20%.
Additionally, the regime also establishes a tax exemption for foreign-sourced income, such as, employment income, self-employment income, rental income, interest, dividends as well as other investment income, under certain specific conditions.
The regime is applicable for a period of ten consecutive years.
Conditions
The regime will apply to individuals who become Portuguese tax residents under Portuguese domestic law in a certain year and have not qualified as tax residents in Portugal in any of the previous five years.
Practicalities
The status of non-habitual tax resident becomes effective upon registration with the Portuguese tax authorities, which should be applied for until 31 March of the year following the one during which the taxpayer became tax resident in Portugal.
Deductions against the gross income
| Category | Deductions |
|---|---|
| A | € 4,104 or, when higher, the total amount of the mandatory social security contributions. This amount can be increased to € 4,275, provided that the difference results from expenses incurred with mandatory fees paid to professional associations indispensable for the exercise of the respective activity
|
| B |
|
F |
|
| G | Consideration of 50% of the positive or negative balance arising from disposals made by tax residents: |
| H |
|
Personal allowances and tax benefits
| Amounts in Euros | Married | Not married |
|---|---|---|
| Tax credits in respect of taxpayers and their relatives | ||
| i) Taxpayer | N/A | N/A |
| ii) Single-parent taxpayers | – | – |
| iii) Dependants | 600 | 600 |
| Dependants <= 3 years old on December 31 of the year to which the tax relates | 726 | 726 |
| iv) Ascendants actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime | 525 | 525 |
| v) Only one ascendant actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime | 635 | 635 |
| People with disabilities | ||
| i) For each taxpayer | 3,800(1) | 1,900 |
| ii) For each dependant with disability | 1,187.5 | 1,187.5 |
| iii) For each ascendant with disability actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime | 1,187.5 | 1,187.5 |
| iv) 30% of education and rehabilitation expenditures | No limit | No limit |
| v) 25% of life assurance premiums or contributions paid to credit unions | 15% of computed tax | 15% of computed tax |
|
130 | 65 |
| Disability expenses for each taxpayer and each dependant, which level of permanent disability is ≥ 90% | 1,900 | 1,900 |
| Health Expenses (2) | ||
| Deduction of 15% of the following expenses: | ||
| a) acquisition of goods and services which are exempt from VAT or liable to the reduced VAT rate of 6%; | 15% of the expenses, with limit of 1,000 | 15% of the expenses, with a limit of 1,000 |
| b) acquisition of other goods and services duly justified by a medical prescription c) Health insurance premiums or contributions paid to mutualism associations or non-profit organizations that provide healthcare services In all the cases above, only the expenses communicated to the Portuguese tax authorities by issuers, through the tax authorities' website within sectors with relevant activities, will be considered. |
N/A |
|
| Education and training expenses(2) | ||
| i) 30% of amounts spent up to a limit of | 800(2) | 800(2) |
| ii) 30% of the amount spent with rented property, per member of the household aged 25 or under and who attends a recognised educational establishment located at more than 50 km from the permanent residence of the household, up to a limit of | 300(2) | 300(2) |
| Nursing home fees | ||
| 25% of charges for nursing homes fees and institutions to support the taxpayer, as well as charges with disabled persons, dependants, ascendants and relatives until the third degree who do not have income equal to or higher than the minimum monthly wage | 403.75 | 403.75 |
| Alimony | ||
| 20% of the amount spent | No limit | No limit |
| Real estate costs(2) | ||
| Tax credit of 15% of the following expenditures: | ||
a) rents paid, net of subsidies or official contributions, concerning an urban property or fraction for permanent residence under the Urban Rental Regime or the New Urban Rental Regime |
502 | 502 |
| b) debt interest, for contracts concluded until 31 December 2011, incurred on the acquisition, construction or improvement of property used as the taxpayer’s permanent private residence, or rent (paid) in respect of a tenant's duly substantiated permanent residence | 296 | 296 |
| c) instalments payable as a result of contracts concluded until 31 December 2011 with housing cooperatives or under the group purchasing regime, for the purchase of residential property for use as the (taxpayer’s) permanent residence or rental paid in respect of a tenant's duly substantiated permanent residence, to the extent in which they refer to interest of related debt | 296 | 296 |
| d) amounts paid by way of rent under a leasing contract concluded until 31 December 2011 in respect of a permanent residence, to the extent that it does not constitute a repayment of capital | 296 | 296 |
| The limit set out in paragraphs a) is increased as follows: | ||
| taxable income up to € 7,091 | 800 | 800 |
taxable income higher than € 7,091 and up to € 30,000
The limits set out paragraphs b) to d) are increased as follows: |
||
|---|---|---|
taxable income up to € 7. 091,00; |
450 |
450 |
taxable income higher than € 7,091 and up to € 30,000
| Retirement Savings Funds and Retirement Savings Plans (3) | ||
|---|---|---|
| Tax credit of 20% of the amount invested: | ||
i) people under 35 years old; |
800 |
400 |
ii) people between 35 and 50 years old; |
700 |
350 |
iii) people above 50 years old. |
600 |
300 |
Donations |
||
Tax credit of 25%: |
||
i) central, regional or local administration; Foundations (with conditions); |
No limit |
No limit |
ii) donations to other entities. |
15% of computed tax |
15% of computed tax |
Public Capitalisation Regime |
||
Tax credit of 20%: |
||
i) people under 35 years old |
800 |
400 |
i) people above 35 years old |
700 |
350 |
| Value Added Tax (VAT) borne | ||
Deduction of 15% of the VAT incurred by any household member regarding certain provisions of services (5) and deduction of 100% of the VAT incurred by any household member on monthly passes for the use of public transportation, in both cases if included on invoices communicated to the tax authorities |
250 |
250 |
Family general expenses |
||
Deduction of 35% of the amount of expenses incurred by any member of the household with the acquisition of goods and services, communicated to the Portuguese tax authorities and provided that the taxpayer number is included in the invoice |
500 |
250 |
Deduction of 45% of the amount incurred by any member of the household of a Single-parent taxpayers |
N/A |
335 |
| Limitation to computed tax deductions and tax benefits | |
|---|---|
| Limits to aggregate computed tax deductions | |
|
No limit |
- taxable income higher than € 7,091 and up to € 80,000
|
1,000 |
|---|
(1) Assuming that both taxpayers are people with disabilities.
(2) If there are simultaneously the expenses mentioned in i) and ii), the limit is € 1,000 instead of € 800
(3) Should the expenses be made outside of Portuguese territory, the taxpayer may report them using the Portuguese Tax Authorities' website.
(4) Amounts invested after the retirement date are not deductible.
(5) Deductible expenses incurred with services acquired in the following sectors of activity:
Maintenance and repair of motor vehicles;
Maintenance and repair of motorcycles and related parts and accessories;
Accommodation and food service activities;
Hairdressers and beauty saloons;
Vet expenses.
(6) Health and insurance expenses, education and training expenditures, nursing home fees, invoice requirement, costs with immovable property, alimony and tax benefits are included. In households with three or more dependents, the above limits are increased by 5% for each dependent or civil godson, which is not a taxpayer.
Personal allowances and tax benefits
| Amounts in Euros | Married | Not married |
|---|---|---|
| Tax credits in respect of taxpayers and their relatives | ||
| i) Taxpayer | N/A | N/A |
| ii) Single-parent taxpayers | – | – |
| iii) Dependants | 600 | 600 |
| Dependants <= 3 years old on December 31 of the year to which the tax relates | 726 | 726 |
| iv) Ascendants actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime | 525 | 525 |
| v) Only one ascendant actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime | 635 | 635 |
| People with disabilities | ||
| i) For each taxpayer | 3,800(1) | 1,900 |
| ii) For each dependant with disability | 1,187.5 | 1,187.5 |
| iii) For each ascendant with disability actually living in the same household with the taxpayer and who does not receive income greater than the minimum pension payable under the general regime | 1,187.5 | 1,187.5 |
| iv) 30% of education and rehabilitation expenditures | No limit | No limit |
| v) 25% of life assurance premiums or contributions paid to credit unions | 15% of computed tax | 15% of computed tax |
|
130 | 65 |
| Disability expenses for each taxpayer and each dependant, which level of permanent disability is ≥ 90% | 1,900 | 1,900 |
| Health Expenses (2) | ||
| Deduction of 15% of the following expenses: | ||
| a) acquisition of goods and services which are exempt from VAT or liable to the reduced VAT rate of 6%; | 15% of the expenses, with limit of 1,000 | 15% of the expenses, with a limit of 1,000 |
| b) acquisition of other goods and services duly justified by a medical prescription c) Health insurance premiums or contributions paid to mutualism associations or non-profit organizations that provide healthcare services In all the cases above, only the expenses communicated to the Portuguese tax authorities by issuers, through the tax authorities' website within sectors with relevant activities, will be considered. |
N/A |
|
| Education and training expenses(2) | ||
| i) 30% of amounts spent up to a limit of | 800(2) | 800(2) |
| ii) 30% of the amount spent with rented property, per member of the household aged 25 or under and who attends a recognised educational establishment located at more than 50 km from the permanent residence of the household, up to a limit of | 300(2) | 300(2) |
| Nursing home fees | ||
| 25% of charges for nursing homes fees and institutions to support the taxpayer, as well as charges with disabled persons, dependants, ascendants and relatives until the third degree who do not have income equal to or higher than the minimum monthly wage | 403.75 | 403.75 |
| Alimony | ||
| 20% of the amount spent | No limit | No limit |
| Real estate costs(2) | ||
| Tax credit of 15% of the following expenditures: | ||
a) rents paid, net of subsidies or official contributions, concerning an urban property or fraction for permanent residence under the Urban Rental Regime or the New Urban Rental Regime |
502 | 502 |
| b) debt interest, for contracts concluded until 31 December 2011, incurred on the acquisition, construction or improvement of property used as the taxpayer’s permanent private residence, or rent (paid) in respect of a tenant's duly substantiated permanent residence | 296 | 296 |
| c) instalments payable as a result of contracts concluded until 31 December 2011 with housing cooperatives or under the group purchasing regime, for the purchase of residential property for use as the (taxpayer’s) permanent residence or rental paid in respect of a tenant's duly substantiated permanent residence, to the extent in which they refer to interest of related debt | 296 | 296 |
| d) amounts paid by way of rent under a leasing contract concluded until 31 December 2011 in respect of a permanent residence, to the extent that it does not constitute a repayment of capital | 296 | 296 |
| The limit set out in paragraphs a) is increased as follows: | ||
| taxable income up to € 7,091 | 800 | 800 |
taxable income higher than € 7,091 and up to € 30,000
The limits set out paragraphs b) to d) are increased as follows: |
||
|---|---|---|
taxable income up to € 7. 091,00; |
450 |
450 |
taxable income higher than € 7,091 and up to € 30,000
| Retirement Savings Funds and Retirement Savings Plans (3) | ||
|---|---|---|
| Tax credit of 20% of the amount invested: | ||
i) people under 35 years old; |
800 |
400 |
ii) people between 35 and 50 years old; |
700 |
350 |
iii) people above 50 years old. |
600 |
300 |
Donations |
||
Tax credit of 25%: |
||
i) central, regional or local administration; Foundations (with conditions); |
No limit |
No limit |
ii) donations to other entities. |
15% of computed tax |
15% of computed tax |
Public Capitalisation Regime |
||
Tax credit of 20%: |
||
i) people under 35 years old |
800 |
400 |
i) people above 35 years old |
700 |
350 |
| Value Added Tax (VAT) borne | ||
Deduction of 15% of the VAT incurred by any household member regarding certain provisions of services (5) and deduction of 100% of the VAT incurred by any household member on monthly passes for the use of public transportation, in both cases if included on invoices communicated to the tax authorities |
250 |
250 |
Family general expenses |
||
Deduction of 35% of the amount of expenses incurred by any member of the household with the acquisition of goods and services, communicated to the Portuguese tax authorities and provided that the taxpayer number is included in the invoice |
500 |
250 |
Deduction of 45% of the amount incurred by any member of the household of a Single-parent taxpayers |
N/A |
335 |
| Limitation to computed tax deductions and tax benefits | |
|---|---|
| Limits to aggregate computed tax deductions | |
|
No limit |
- taxable income higher than € 7,091 and up to € 80,000
|
1,000 |
|---|
(1) Assuming that both taxpayers are people with disabilities.
(2) If there are simultaneously the expenses mentioned in i) and ii), the limit is € 1,000 instead of € 800
(3) Should the expenses be made outside of Portuguese territory, the taxpayer may report them using the Portuguese Tax Authorities' website.
(4) Amounts invested after the retirement date are not deductible.
(5) Deductible expenses incurred with services acquired in the following sectors of activity:
Maintenance and repair of motor vehicles;
Maintenance and repair of motorcycles and related parts and accessories;
Accommodation and food service activities;
Hairdressers and beauty saloons;
Vet expenses.
(6) Health and insurance expenses, education and training expenditures, nursing home fees, invoice requirement, costs with immovable property, alimony and tax benefits are included. In households with three or more dependents, the above limits are increased by 5% for each dependent or civil godson, which is not a taxpayer.
Other tax benefits
Acquisition of social participation by employees
Gains derived from stock options plans, subscription plans, attribution plans or equivalent share plans on securities issued by the employer are exempt, up to the limit of € 40,000, subject to certain conditions.
Retirement Savings Accounts
Interest is exempt on capital up to a balance of ≤ € 10,500
Intellectual property
Author rights obtained by the Portuguese tax resident original owner are taxed only at 50%, with the amount excluded from taxation being limited to € 10,000
Venture capital funds
Capital gains derived from the sale of participation units are taxed at a 10% rate
Real estate investment funds in forest resources
Capital gains derived from the sale of participation units are taxed at a 10% rate
Capital gains obtained by non residents
The following disposals are exempt:
- shares of Portuguese tax resident companies;
- other securities issued by Portuguese tax resident companies;
- autonomous warrants issued by Portuguese tax resident companies;
- derivatives negotiated on the regulated Stock Market;
- participation units in venture capital funds.
Exceptions
- residents in tax havens;
- disposal of shares in companies whose assets are comprised in more than 50% of real estate located in Portugal.
Contributions to social security regimes made by employers
Employers' contributions to pension funds (or other complementary social security regimes) are exempt from PIT in the moment the contributions are made, if certain conditions are met.
Athletes
- the premiums and awards for disabled athletes and high performance athletes and their coaches. are excluded from taxation
- awards for sport training for non-professional sport agents (players, referees, judges) are excluded from taxation, up to € 2,375.
Deposits
Deposit interest from any applications on financial institutions and public debt instruments benefit from a tax exemption in 1/5 and 3/5 of its value, if the capital is not withdrawn for at least 5 and 8 years, respectively, and the maturity occurs at the final of the contracted period.
Expatriates’ tax benefit
A tax benefit was created to employees that move from their normal work place to perform their professional activity in a foreign country during at least 90 days, of which 60 days have to be consecutive. This benefits consists in a PIT tax exemption applicable to the part of the remuneration paid to the employee, by the Portuguese employer, exclusively as compensation for moving and staying abroad (up to € 10,000)
The income obtained by the following individuals will be excluded from taxation:
- staff from diplomatic and consular bodies and international organizations;
- staff from peace missions;
- agreements and cooperation relations;
- contractors or auctioneers working on NATO shared infrastructures.
| Gross income of each category | |
|---|---|
(-) |
Deductions against the gross income |
(=) |
Net income of each category |
(-) |
Deductions of losses |
(=) |
Taxable income |
(÷) |
Family quotient (1 or 2) |
(x) |
PIT rate and additional solidarity rate |
(-) |
Deductions |
(x) |
Family quotient (1 or 2) |
(=) |
Subtotal |
(-) |
Tax deduction (including tax benefits) |
(=) |
Tax liability |
(-) |
Withholding tax + Payments on account |
(=) |
PIT (underpayment/reimbursement) |
Based on the following assumptions, we have prepared an estimate of the PIT due by the Pereira family.
Pereira Family
Both spouses are employed; in addition, the wife works as a self-employed individual as a lawyer. They are under the aged of 35.
| Example – background | |
|---|---|
| Mr. Pereira | Salary – € 12,000 Dividends – € 750 Rent from own real estate – € 8,000 Capital gains from the sale of rented real estate – € 10,000 |
| Mrs. Pereira | Salary – € 7,000 Rendering of services – € 13,000 |
| Expenses | Retirement Saving Plan (PPR) – € 2.000 x 2 Plumbing repairs of the rented property – € 300 Health expenses – € 1,200 Mortgage loans – € 5,200 (€ 2,600 regarding interests and € 2,600 regarding capital repayments) Family general expenses – € 1,500 |
| Withholding tax | |
| Withholding | Assuming a global amount withheld from the couple's income of € 4,769 |
Withholding tax
Mainland
The personal income tax withholding rate tables for 2018, applicable to employment income and pensions earned on the Mainland, have been published by Order number 84-A/2018, of 2 January 2018.
Madeira
The personal income tax withholding rate tables for 2018, applicable to employment income and pensions earned on the Autonomous Region of Madeira, have been published by Order number 16/2018, of 10 January 2018.
Azores
The personal income tax withholding rate tables for 2018, applicable to employment income and pensions earned on the Autonomous Region of Azores, have been published by Order number 731/2018, of 12 January 2018.
