Taxable persons

PIT is levied on income obtained by individuals, under six different categories, and its taxation will depend on the individual’s tax status.

Taxable person Taxation
Residents Liable to PIT on worldwide income (Portugal and abroad)
Former tax residents Not liable to PIT 50% of the employment income and business and professional income
Non Habitual Residents Liable to PIT on the net employment and self-employment income from "high value-added activities" at a flat rate of 20%. Foreign-source income may be exempt, under certain conditions
Non residents Liable to PIT only on the Portuguese source of income 

Income categories

Category Type of income
Category A Employment income
Category B Business and professional income
Category E Investment income
Category F Rental income
Category G Capital gains
Category H Pensions

Salaries, subventions and allowances

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 2019 (Indexante dos Apoios Sociais - IAS) – € 435,76.
(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 2019, the Portuguese monthly minimum wage is increased to Eur 600.


Rates

Taxable income
(in euros)
Mainland-Portugal Madeira Azores
Rate (%) Deductible Amount Rate (%) Deductible Amount Rate(%) Deductible Amount
Up to 7,091 14.5 11.60 10.15
+ 7,091 up to 10,700 23 602.74 20.70 645.28 17.25 503.46
+ 10,700 up to 20,261 28.5 1,191.24 26.50 1,265.88 21.38 944.84
+ 20,261 up to 25,000 35 2,508.20 33.75 2,734.80 28 2,287.13
+ 25,000 up to 36,856 37 3,008.20 35.87 3,264.80 29.6 2,687.13
+ 36,856 up to 80,640 45 5,956.68 44.95 6,611.33 36 5,045.91
+ 80,640 48 8,375.88 48.00 9,070.85 38 6,981.27

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 (1)

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 (1)

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 (2)


25


FTW

Equipment lease E

16,5

WTA (2)

25

FTW

Dividends E

28

FTW (2) (3) (4) (5) (6)

28

FTW (4)

Interest from bank deposits E

28

FTW (2) (4) (5)

28

FTW (4) (7)

Interest from shareholder loans E

28

FTW (2) (4) (5)

28

FTW (4) (7)

Interest from debt securities E

28

FTW (2) (4) (5)

28

FTW (4) (7)

Other investment income E

16,5

WTA (2)

28

FTW

Rental income F

25

WTA (7) (8)

25

FTW(8)



Capital gains:
capital gains on shares G


28


(7) (8) (11)

 


28


(11)

capital gains arising the disposal of real estate G



14,5 up to 48



(9) (10) (11) (12)



28



(13) (14)

Pensions H

0 up to 40

WTA

25

FTW

FWT: Final Withholding tax
WTA: Withholding Tax on Account of the final tax payment


(1) The employment and self-employment income  paid to non-resident individuals as a result of services provided to a single entity is not liable to withholding taxes up to the amount corresponding to the monthly minimum wage. For that purpose, the individual should communicate to the said entity, through a written statement, that no similar income was/is received from other resident entities or from permanent establishments of non-resident entities in Portugal.
(2) Taxed autonomously at a rate of 28% if paid by non-resident entities and not subject to withholding tax.
(3) 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%.
(4) 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.
(5) 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%.
(6) 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.
(7) The taxpayer can opt to include this income in the annual income tax return.
(8) Subject to taxation at an autonomous/final rate of 28%. As for the rental income, the tax rate will depend on the duration of the rental contracts for permanent residence, as follows:
Duration equal to or greater than 2 years and less than 5 years: reduction of two percentage points of the autonomous rate, i.e. the rate is reduced to 26%; for each renewal with an equal duration, an additional reduction of two percentage points, up to a limit of fourteen percentage points;
Duration equal to or greater than 5 years and less than 10 years: reduction of five percentage points of the autonomous rate, i.e. the rate is reduced to 23%; for each renewal with an equal duration, an additional reduction of five percentage points, up to a limit of fourteen percentage points;
Duration equal to or greater than 10 years and less than 20 years: reduction of fourteen percentage points of the autonomous rate, i.e. the rate is reduced to 14%;
Duration equal or more than 20 years: reduction of eighteen percentage points of the autonomous rate, i.e. the rate is reduced to 10%.
The referred tax reductions enter into force on 1 October, 2019.
(9)  The capital gains obtained by tax residents on the sale of real estate are only considered in 50%.
(10) May be excluded from taxation, provided that the sale value is reinvested in the acquisition of a primary private residence, in certain conditions.
(11) Extension of the exclusion (total or partial) from taxation of real estate capital gains, if there is reinvestment of the sale value in the acquisition of an insurance contract, individual subscription of an open pension fund or contribution to the public capitalisation regime, under certain conditions.
(12) Taxation of 100% of capital gain (without the possibility of applying the reinvestment regime) when taxpayers have benefited from support from the State or other Public entities (for the acquisition, construction, reconstruction or execution of conservation works), under certain conditions.
(13) The capital gains obtained by non-resident entities without permanent establishment in Portugal, who are domiciled in jurisdictions with more favourable tax regimes, is subject to a tax rate of 35%.
(14) Final rates. Not subject to withholding tax.


Taxation of company car in Category A

Private use of company car Acquisition of company car:

Benefit in kind

  • Not subject to tax withholdings- Taxed at the marginal rates of PIT
     

Benefit in kind

  • Not subject to tax withholdings
  • Taxed at the marginal rates of PIT
     
Taxable Income:
= 0.75% of the vehicle's market (production) value x months of use in a year
market value = acquisition price - (acquisition price x depreciation factor)
Taxable Income:
= Market price - (annual amount already taxed as benefit in kind on the employee for use of the car + acquisition price paid by the employee)market value = acquisition price - (acquisition price x depreciation factor) 

Depreciation Factor

Car's Age Annual Depreciation Accumulated Depreciation
0 0.0 0.0
1 0.20 0.20
2 0.15 0.35
3 0.10 0.45
4 0.10 0.55
5 0.10 0.65
6 0.05 0.70
7 0.05 0.75
8 0.05 0.80
9 0.05 0.85
10 or more 0.05 0.90

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:

Income Taxable bases
a) Sales of goods and products, as well as provisions of services in the hospitality, restaurant and beverage sector, with the exception of those relating to local accommodation establishments in the form of apartments/houses 0.15
b) Listed service-rendering activities (article 151.º of PIT Code) 0.75
c) Services not expressly foreseen above  0.35
d) Royalties, Know how and other income (investment income, capital gains, rental income) 0.95

e) Non business-related subsidies

0.30
f) Business related subsidies and remaining income of category B 0.10 
g) Income arising from services rendered by a partner to a company subject to the “tax transparency regime” 1.00
h) Income arising from services rendered to an entity in which, for more than 183 days of the tax year:
- the taxpayer holds, directly or indirectly, at least 5% of the respective share capital or voting rights;
- the taxpayer, the spouse or the “de facto”spouse and their ancendents and descendants, as a whole, directly or indirectly hold at least 25% of the respective share capital or voting rights.
1.00

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:

Gross Income

€ 40,000

Coefficient applicable

75%

Taxable income

€ 30,000

     Validation of the application of the coefficient:
15% of Gross Income

€ 6,000

(-)

Deduction

€ 4,104

(-)

Deductible expenses effectively incurred

€ 1,896

(=)

Difference between 15% of gross income and the amount of deductible expenses

€ 0

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 former tax residents

It is established a new tax regime to encourage the return of emigrants to Portugal.

Taxation

The regime establishes a 50% relief from taxation on employment or self-employment income received after their return to Portugal. This tax relief is applicable to income earned in the first year of residency after the return to Portugal and in the following four years, expiring after this period. 

While the regime applies, entities required to withhold tax on the income covered by this regime shall apply the withholding taxes only to half of the income paid or made available.

Conditions

The regime will apply to individuals who become Portuguese tax residents under Portuguese domestic law in 2019 or 2020, provided that they:

  • did not qualify as tax residents during the prior three years;
  • qualified as tax residents in Portugal prior to 31 December 2015;
  • have their tax situation regularized;
  • did not apply for the non-habitual residents regime.

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

  • Severance payments paid by the employee when he or she terminates the labour contract without timely notice;
  • Trade union fees of up to 1% of the gross income, increased by 50%
B
  • Simplified regime: depends on the activity exercised - please refer to above explanation
  • Organized standard accounting system: expenses related to the activities carried out, with some limitations
F
  • All the expenses effectively incurred and paid by the taxpayers in order to obtain or assure such income, excluding the financial costs, furniture, households appliances, decoration and comfort accessories, as well as the additional to the Municipal Property Tax (“AIMI")
G

Consideration of 50% of the positive or negative balance arising from disposals made by tax residents:

  • Sale of real estate (except those arising from the sale of real state which benefited from non-refundable support from the State or other Public entities)
  • Sale of intellectual or industrial property, or know-how when obtained by the non-original author
  • Assignment of position in contracts regarding immovable property
H
  • Deduction of € 4,104 for each taxpayer
  • Trade union fees, up to 1% of the gross income, increased by 50%
  • Mandatory contributions to social protection systems and legal health coverage sub-systems, in the part that exceeds € 4,104

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
Age-related retirement contributions 130 65
Disability expenses for each taxpayer and each dependant, which level of permanent disability is ≥ 90% 1,900 1,900
Health Expenses 
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)(3) 800 (2)(3)
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 (4)
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 (5) 502 (5)
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

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

taxable income higher than € 7,091 and up to € 30,000

Retirement Savings Funds and Retirement Savings Plans (6)
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 (7)

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 (8) 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 (9)  
Limits to aggregate computed tax deductions
  • taxable income up to € 7,091
No limit
taxable income higher than € 7,091 and up to € 80,000;
  • taxable income higher than € 7,091 and up to € 80,000
  • taxable income higher than € 80,640

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) The amount of the education and training expenses incurred by students attending education institutions located in inland regions ( as identified in Ministerial Order 208/2017 of 13 July), shall be increased by 10 percentage points. In addition, the overall cap of the tax deduction for education and training expenses shall be increased from € 800 to € 1,000, if the difference relates to the said expenses. For that purpose, the taxpayer must identify in the tax authorities’ website the members of the household who attend these educational establishments and the total value of the respective expenses incurred.
(4) Should the expenses be made outside of Portuguese territory, the taxpayer may report them using the Portuguese Tax Authorities' website.
(5) This limit is raised to € 1,000 for 3 years (the first year of the contract being concluded), if these expenses derive from the transfer of permanent residence to an inland territory (as defined in Administrative Rule no. 208/2017 of 13 July). For this purpose, taxpayers must identify in the tax authorities’ website the invoices or other documents that are related with the rental expenses incurred as a result of transferring the permanent residence to an inland territory.
(6) Amounts invested after the retirement date are not deductible.
(7) This benefits also apply to the contributions made by the employers, in favor of the employees, to Public Capitalisation regime.
(8) 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.

(9) 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 / entities in forest resources

Capital gains derived from the sale of participation units/shares 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;
  • the compensations paid as result of non-professional duties to referees and 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)

Other

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.

PIT Calculation

  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
Income of each category
Cat A   Salaries 19,000.00
(-) Deductions against the gross income  
  Specific deduction x 2 - 8,208.00
(=) Net income 10,792.00
Cat B   Services rendered 13.000.00
(x) Simplified regime - coefficient 75%  0.75
(=) Net income 9,750.00
(assuming that the amount of effective expenses incurred that allows the total application of the coefficient is met)
Cat E   Dividends (by option to be taxed at progressive rates) 750.00
(-) Amount of the income not subject to taxation: 50% - 375.00
(=) Net income 375.00
Cat F   Rental - own real estate (by option to be taxed at progressive rates) 8,000.00
(-) Deductions  
  Maintenance and repair expenses - 300.00
(=) Net income 7,700.00
Cat G   Capital gains on the sale of the rented real estate 10,000.00
(-) Amount of the income not subject to taxation: 50% - 5,000.00
(=) Net income 5,000
Sum of net income of the categories = Taxable income 33,617
  (÷) Family quotient ÷ 2
      16,808.50
  (x) Tax rate 28.5%
      4,790.42
  (-) Deduction -992.74
  (x) Family quotient x 2
  (=) Subtotal 7,198.38
    Health expenses 180.00
    Mortgage loans 296.00
    Family general expenses
500.00
    20% payments to retirement saving plans (x2) 800.00
  (=) Tax liability
5,422.38
  (-) Withholding tax 4,769.00
  (=) Final underpayment ÷ (reimbursement) 653.38

Income of each category
Cat A   Salaries 19,000.00
(-) Deductions against the gross income  
  Specific deduction x 2 - 8,208.00
(=) Net income 10,792.00
Cat B   Services rendered 13.000.00
(x) Simplified regime - coefficient 75%  0.75
(=) Net income 9,750.00
(assuming that the amount of effective expenses incurred that allows the total application of the coefficient is met)
Cat E   Dividends (by option to be taxed at progressive rates) 750.00
(-) Amount of the income not subject to taxation: 50% - 375.00
(=) Net income 375.00
Cat F   Rental - own real estate (by option to be taxed at progressive rates) 8,000.00
(-) Deductions  
  Maintenance and repair expenses - 300.00
(=) Net income 7,700.00
Cat G   Capital gains on the sale of the rented real estate 10,000.00
(-) Amount of the income not subject to taxation: 50% - 5,000.00
(=) Net income 5,000
Sum of net income of the categories = Taxable income 33,617
  (÷) Family quotient ÷ 2
      16,808.50
  (x) Tax rate 28.5%
      4,790.42
  (-) Deduction -992.74
  (x) Family quotient x 2
  (=) Subtotal 7,198.38
    Health expenses 180.00
    Mortgage loans 296.00
    Family general expenses
500.00
    20% payments to retirement saving plans (x2) 800.00
  (=) Tax liability
5,422.38
  (-) Withholding tax 4,769.00
  (=) Final underpayment ÷ (reimbursement) 653.38

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
  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)

Withholding tax

Mainland

The personal income tax withholding rate tables for 2019, applicable to employment income and pensions earned on the Mainland, have been published by Order nr. 791-A/2019, of 16 January.

Madeira

The personal income tax withholding rate tables for 2019, applicable to employment income and pensions earned on the Autonomous Region of Madeira, have been published by Order nr. 37/2019, of 31 January.

Azores

The personal income tax withholding rate tables for 2019, applicable to employment income and pensions earned on the Autonomous Region of Azores, have been published by Order nr. 1056/2019, of 25 January.

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