| Personal Income Tax Rates – Employment Income |
Progressive personal income tax rates from 14,5% – 48% Additional solidarity rate (income above EUR 80,000): 2,5%-5% |
| Tax rate |
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| Tax period |
Calendar year |
| Tax residency / Domicile according to domestic law |
Persons are deemed to be tax residents in Portugal for tax purposes if: • they have been in Portugal for 183 days or more, continuously or not, in a 12-month period; • having been in Portugal for less than 183 days in a 12 months period, they maintain a residency fit for permanent living; • on December 31st they are crew to a ship or airship currently in service of an entity settled or domiciled in Portugal; • they are employed abroad in service of the Portuguese Government. A person will be regarded as resident in Portugal if any of the above conditions is met. |
| Tax registration |
The registration with the Portuguese Tax Authorities is mandatory for tax residents and optional for non-residents, being the tax ID issued immediately. |
| Employment income definition |
The definition of employment income is quite broad, including the following: • Any form of remuneration in cash or in kind for services rendered under an employment agreement, whether or not a contract exists; • Any form of remuneration for public service or position; • Pre-retirement subsidies. All of the above can take any form (salaries, bonuses, rewards, commissions, etc.) |
| Examples of tax exemption |
The majority of income sourced to employees is subject to Personal Income Tax, nonetheless, a few exemptions apply: 1. Meal allowances, as defined by the labour legislation, are exempted up to the legal threshold; 2. Daily allowances for costs incurred when working outside of the office area; 3. Health insurances. |
| Specific expatriate concession |
A special income tax regime for non-habitual residents is available, for a 10 year period, if certain requirements are met. Within this regime, in general terms, are exempt from taxation income sourced abroad (with the exception of income arising from tax havens, which is taxed at a rate of 35% and pensions, which are taxed at a rate of 10%. Employment income from “high-value activities” is at a flat rate of 20%. Former tax residents in Portugal may benefit from a 50% Personal Income Tax reduction regarding employment income during a 5-year period. This benefit should only be applicable to individuals who return to Portugal in 2019 and 2020. |
| Income of board members |
The income of statutory directors is broadly taxed in the same way as employees. Director’s duties can never be ‘merely incidental’ (and therefore not taxable). |
| Tax returns |
In general, an individual must file an online return in which the income regarding the tax year is reported. This return must be filed after year-end, between April and June. Notwithstanding, such period may be extended to December when there is income subject to taxation abroad and such taxation was not assessed until the end of June. Late filings and late payment are subject to penalties. |
| Tax payments |
In general terms, income is subject to withholding tax at source. The difference to the PIT yearly assessment must be paid (if tax is due) until August 31st. |
| Tax on real estate property |
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| Social contribution (CSS) to be paid with tax |
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