Personal Income Tax (PIT)

General rates

The caps of each bracket of the PIT table of general rates have been updated by 3%. The rates applicable up to the fifth bracket were also updated. Hence, the general PIT rates are now the following: 

Taxable income (EUR)
Deduction (EUR)

Up to 7,703



Exceeding 7,703 up to 11,623



Exceeding 11,623 up to 16,472



Exceeding 16,472 up to 21,321



Exceeding 21,321 up to 27,146



Exceeding 27,146 up to 39,791



Exceeding 39,791 up to 51,997



Exceeding 51,997 up to 81,199



Exceeding 81,199



“General review of the cap of each bracket and review of the PIT rates applicable up to the fifth bracket.”

Subsistence level

There is an update of the base value of the subsistence level. This aims at following the increase of the monthly minimum wage (“Remuneração Mínima Mensal Garantida” or “RMMG”).

Deduction of expenses with unions

There is an increase to 100% (formerly, 50%) of the markup of expenses with unions allowed as deductions for Categories A (employment work) and H (pensions).

“The benefits granted under the Youth PIT regime are once again reinforced through an increase of the percentages of exempt income and applicable caps.”

Youth PIT (“IRS Jovem”)

There is a new reinforcement of the tax benefits applicable to income earned by young workers (non dependants) aged 18 to 26 or up to 30 if finalizing a PhD. The applicable exemptions are the following:

  • 100% in the first year capped at 40 times the amount of the Social Support Index (“Indexante dos Apoios Sociais” or “IAS”);
  • 75% in the second year capped at 30 times the amount of the IAS;
  • 50% in the third and fourth years capped at 20 times the amount of the IAS;
  • 25% in the fifth year capped at 10 times the amount of the IAS.

Former residents (“Ex-residentes”)

The 50% relief from taxation of employment and business income under the former resident’s regime shall apply to taxpayers that become residents in the years 2024 to 2026, if they were not resident in the Portuguese territory in one of the previous five years. In addition, those taxpayers are required to have been resident in the Portuguese territory in any period preceding said five year period.

The relief is capped at EUR 250,000 and applies for five years. This cap applies only to taxpayers who become residents in 2024 or following years.

“The non habitual residents’ regime is revoked for taxpayers that become tax residents after 31 December 2023. A transitional regime applies until 31 December 2024 to taxpayers under certain conditions.”

Non habitual residents

The non habitual residents regime is revoked. It shall, however, continue to apply to the following taxpayers:

  • Who are registered as non habitual residents by 1 January 2024, and until the end of the ten year period foreseen under the regime.
  • With reference to 31 December 2023, taxpayers who were eligible for the regime, provided that the registration is made up to 31 March 2024.
  • Who become tax residents up to 31 December 2024, provided that one of the situations foreseen in the transitional rule is verified.

  • Who are members of the household of taxpayers who fulfil the conditions under the transitional regime.

Tax incentives for research and innovation or special tax regime for scientific research and innovation

A tax incentive for research and innovation is created. It will apply to taxpayers that become tax resident in Portugal and that were not resident in the Portuguese territory in any of the five previous years. Eligible income includes the one deriving from:

  • Higher education and scientific research teaching staff as well as employees and board members of entities recognized as technology and innovation centres, in accordance with the specific regime applicable.

  • Employees and board members within the scope of contractual benefits for productive investment, in accordance with specific legislation.

  • Highly qualified professions, to be defined by decree from members of the Government, developed in companies for which certain conditions are met.

  • Employees and board members of entities that carry out economic activities recognized by  the Agency for Investment and Foreign Trade (AICEP) or by the Agency for Competitiveness and Innovation (IAPMEI) as being relevant to the national economy.

  • Research and development by staff whose costs are eligible for the purposes of the R&D tax incentive (SIFIDE), in accordance with the applicable legislation.

  • Employees and board members of certified startups, in accordance with the applicable legislation; or

  • Employment or other activities carried out by taxpayers that are tax residents in the Autonomous Regions of the Azores and Madeira, in accordance with the terms to be defined by regional decree-law.

The regime provides for:

  • A special 20% rate on net employment income (category A) and business and professional income (category B) from the above activities, applicable for ten consecutive years.;

  • An exemption on foreign sourced employment income, business and professional income, investment income, real estate income and capital gains.

The regime shall not apply to taxpayers covered or that have been covered by the non habitual residents or by the former residents’ regimes.

Availability of housing by the employer

There is an exemption from PIT and social security contributions on the income in kind derived by employees resulting from the use of permanent housing in the Portuguese territory made available by the employer. This shall apply from 1 January 2024 to 31 December 2026. The exemptions are capped at the limit of the value of the rents foreseen in the Programme to Support Rental (“Programa de Apoio ao Arrendamento”).

The exemption shall not apply to taxpayers that hold directly or indirectly 10% or more of the share capital or of the voting rights of the employer.

Profit share

Profit share distributions in benefit of employees are exempt from PIT. The exemption equals the amount of one monthly fixed remuneration and is capped at five times the amount of the monthly minimum wage proposed.

This will depend on the employer implementing a nominal increase in 2024, by at least 5% of the fixed remunerations of the employees.

Such income must however be included for the purpose of assessing the rate applicable to the remainder income earned.

An exemption from PIT applies to profit share in benefit of the employees.”

Per diem and use of own car

Per diem and compensation for the use of own car at the service of the employer shall again benefit from the regime applicable to public servants. Accordingly, the exclusion from taxation shall consider the following amounts:

  • Use of own car: EUR 0.36 (formerly) →  EUR 0.40 (new amount).
  • Per diem – traveling in the national territory:
    • Employees EUR 50.20 (formerly) →  EUR 62.75 (new amount).
    • Government members and equivalent position in the private sector: EUR 69.19 (formerly) →  EUR 69.19 (new amount);
  • Per diem – travelling abroad: 
    • Employees; EUR 89.35 (formerly) → EUR 148.91 (new amount).
    • Government members and equivalent position in the private sector: EUR 100.24 (formerly) → EUR 167.07 (new amount).

Gains from share plans

The new tax regime applicable to share plans shall be amended as follows:

  • It shall be extended to apply to gains derived from plans implemented by entities recognised as start-up that meet all the respective requirements and that have created the share plan in the year of incorporation/first year of activity.
  • Removal of the limitations currently applicable in the case of board members in respect of the benefits of the regime.
  • One-off partial PIT exemption applicable to the income assessed at the moment of ceasing to be a tax resident in the Portuguese territory (exit tax). This shall be capped at 20 times the amount of the IAS. Such income must however be included for the purpose of assessing the rate applicable to the remainder income earned.
  • It is further clarified that the regime shall apply to plans in respect of shares or other rights with an equivalent nature created by other entities with whom the employer is in a domain, group, or ownership relation.

There will be specific rules for employees holding shares that have already benefited from a PIT exemption under the previous tax regime applicable to the acquisition of shares. These rules are:

  • Those employees shall be allowed to maintain the exemption provided that they hold said shares for a minimum two-year period, computed as from the exercise of the option or subscription of the plan.
  • Gains derived from the sale for a consideration of securities covered by the above-mentioned regime are taxed under Category G for its full amount. The gain assessed corresponds to the positive balance between the sales proceeds and the market value with reference to the date of the acquisition of the option or right.

Deduction of capital losses

The possibility to carry forward during a five-year period capital losses on the disposal of shares and other movable property mandatorily subject to taxation at progressive rates is reinstated.

Business income – Young farmers

First settlement awards granted to young farmers now benefit from a 0.1 coefficient under the simplified tax regime. They shall be considered only by 50% of the respective amount in the case of organized accounting.

Real estate income – Home rental prior to the Urban Lease Regime

An exemption applies to rental income obtained under home rental agreements concluded before the entry into force of the Urban Lease Regime (“Regime do Arrendamento Urbano” or “RAU”) that are subject to the regime foreseen in Articles 35 or 36 of the new RAU. Accordingly, this applies to tenants with an adjusted gross annual income of less than five national minimum annual salaries or aged 65 or above or disabled with a degree of incapacity equal to or higher than 60%. 

The exemption is granted during the period of the lease agreement.

Tax exemption applicable to gains arising from the disposal of real estate to the State

A PIT (and CIT) exemption applies to gains arising from the disposal for a consideration of building land, in favour of the State, of the Autonomous Regions, of corporate public entities based in the area of the property or local municipalities. Formerly, the exemption applied only to real estate for housing purposes.

PIT withholding – Deduction related to expenses with permanent dwelling

In 2024 there is the possibility of applying a reduction of the PIT withholding on employment income (category A). On the calculation of the portion to be deducted and corresponding to the applicable rate and family status of the taxpayer, an amount of EUR 40 will be added, provided that (i)  the taxpayer holds a lease or sublease agreement for permanent housing purposes, duly registered with the tax authority, or was granted a loan to acquire, improve or build the respective permanent dwelling and (ii) earns a monthly remuneration that does not exceed EUR 2,700.

The employee must inform the employer about its option for the increased deduction before the income is paid or placed at disposal.

Tax deductions – Education and training expenses

It is clarified that the expenses incurred with professional training shall be included in the tax deduction applicable to education and training expenses. There will not be any amendment to the overall cap applicable.

Regarding the deductible amounts related to rents borne with displaced student's residence, the maximum deduction increases to EUR 400. The overall  cap for education and training expenses of EUR 800 can be increased by EUR 300 when the difference arises from said expenses.

Tax deductions – Property expenses

The maximum amount of the tax deduction relating to the costs borne by the taxpayer with rents relating to property for personal and permanent housing increases to EUR 600 (formerly EUR 502).

Taxpayer with a taxable income is equal to or lower than the first PIT bracket (currently EUR 7,703) the deduction is increased to EUR 900 (formerly EUR 800). 

Taxpayers with a taxable income that exceeds the first PIT bracket and lower or equal to also benefit from an adjustment of the computation of the applicable tax deduction cap applica.

Tax deductions – Expenses borne with the remuneration of domestic workers

It is established that 5% of the annual expenses borne with the remuneration of domestic workers can be deducted, with a maximum cap of EUR 200. These expenses are also subject to the general cap applicable to the remaining tax deductions.

Tax deductions – Deduction based on invoices issued - Sports related expenses

It will be possible to deduct against the tax liability assessed an amount corresponding to 30% of the VAT borne by any member of the household, included in invoices issued by entities with the economic activity codes of sports and recreational education, sports club activities and gym/fitness activities.

Tax deductions – Disabled individuals 

A tax deduction ranging from 2 to 0.5 times the amount of the IAS shall apply during the four years following the review or reassessment of a disability. This applies to taxpayers that:

  • Benefit for at least five years of the tax deduction foreseen in Article 87, no. 1, of the PIT Code.

  • Following the review or reassessment of a disability, cease to have a degree of permanent disability of 60% or higher, though maintaining a disability of 20% or more.

Procedures and types of assessment

New rules will apply to taxpayers that do not file a PIT return once notified to do so. The compulsory assessment made by the tax authority shall take into account not only any tax withheld, but also the minimum subsistence level and tax deductions related with expenses of which the tax authority is aware of.

Annual PIT Declaration 

The annual PIT return shall mandatorily include information on all sources of income earned in the previous year. This includes income subject to final withholding tax rates not aggregated with other income not subject to PIT exceeding EUR 500, as well as assets held in jurisdictions subject to a clearly more favourable tax regime.

Tax incentive under the Common Agricultural Policy

Taxpayers who in 2024 receive grants or funds under the Common Agricultural Policy can opt to be taxed in that year. In case the payment of said grants or funds occurs after the deadline to file the PIT return, the taxpayers shall be granted the possibility of filing a replacement tax return.


Contact us

Rosa Areias

Rosa Areias

Tax Lead Partner | Entrepreneurial & Private Business Leader | Membro da Comissão Executiva, PwC Portugal

Tel: +351 225 433 101