Tax Guide 2023 – Social Security

ᐅ Last reviewed 17 October 2023

Liability and exclusions

Persons liable for Social Security contributions
Social security contributions (either predetermined by law or agreed upon by conventions) are due on the remunerations obtained by:

• employees;

• board members;

• self-employed workers.

Excluded income

• Daily allowances (capped at the amount determined for PIT purposes).

• Supplementary retirement pensions.

• Supplementary sickness benefits.

• Transportation expenses. ⁽¹⁾

• Profit distributions.

• Compensation for unused holidays or days off.

• Compensation for the termination of the labour contract. ⁽²⁾

• Lunch allowance (capped at the amounts determined for PIT purposes) and cost of meals made available at the employer’s canteens.

• Vacation, Christmas and other similar allowances in the part covered by collective agreements.

• Occasional subsidies granted to employees and respective relatives for medical assistance/medicines.

• Subsidy for the employees’ family expenses namely kindergarten, pre-school, educational facilities, retirement homes and other social support services or facilites.so

• Discounts granted to employees for the acquisition of shareholdings in the employer company or in group companies.

^{(1) In case the company makes available transportation to its employees that does not exceed the value of the social pass, or, in its absence, the amount that would result from using public transportation. In all these cases this benefit should have a general character.
(2) The exemption is applicable in the following situations:
     i) following a declaration of illegal termination of employment issued by a court;
     ii) following a collective dismissal; elimination of the job concerned; inability of the employee to perform the work; lack of prior notice for termination; expiration of the work contract and termination by the employee;
     iii) following the termination of the labour contract prior to the end date, in case of labour contracts with a term.}

Liability for Social Security

^{(1)  Social Support Index for 2023: € 480.43.
(2) The benefit from the private use of a company car is only subject to taxation in case of stipulation per written agreement, subject to conditions.
(3)  Profit distributions to employees are subject to Social Security contributions. However, liability to Social Security will only arise once further regulations are published.
(4)  In case of entitlement to unemployment allowances. Managers, board members, directors of companies, public managers or representatives of permanent establishments in Portugal of non-resident entities: no liability to make contributions arises regarding  the compensation for termination of employment contracts, for redundancies. ; the inability of employees  of performing  the work; for lack of prior notice for termination; expiration of the work contract, termination by the employee and termination of the labour contract prior to the end date, in case of labour contract with a term.
(5) It is not included in the basis for computation of social security contributions the amounts corresponding to the discount granted to employees on the acquisition of own shares of the employer or other group companies.}