Tax Return Income of Individuals
IRS
The IRS is a tax levied on the income of individuals, which is divided in the following categories:
- Category A – Employees
- Category B - Professional income /Self employment
- Category E – Capital income
- Category F – Rental income
- Category G – Capital gains
- Category H – Pensions
There are two types of fiscal individuals: residents and non-residents
- Residents – Are taxable on all income received (in Portugal and abroad)
- Non-residents – Are taxable on the income they receive in Portugal (according to the IRS income categories)
Taxes brackets applicable for IRS in 2009 are as follows:
| Taxable income in euros | Rates in percentages | |
|---|---|---|
| Normal (A) | Medium (B) | |
| Up to 4755 | 10 | 10,5000 |
| More than 4755 to 7192 | 13 | 11,4371 |
| More than 7 192 to 17 836 | 23,5 | 18,5996 |
| More than 17 836 to 41 021 | 34 | 27,3039 |
| More than 41 021 to 59 450 | 36,5 | 30,1546 |
| More than 59 450 to 64 110 | 40 | 30,8702 |
| More than 64 110 | 42 | - |
Concerning married couples who are not legally separated or who have been living together for at least two years, the applicable rates are the ones that correspond to the taxable income; divided by two. Then taxation corresponds to the amount that results from the application of the table multiplied by two.
IRS: Taxation at source
| Type of income | Residents | Non-residents |
|---|---|---|
| Employees income | 10,5% to 42% | 20% |
| Boardmanager income | 10,5 to 42% | 20% |
| Commissions | 20% | 15% |
| Services providing | 10% / 20% | 15% / 20% |
| Equipment rental / technical assistance | 15% | 15% |
| Dividends | 20% | 20% |
| Deposit interests / bond debt interests | 20% | 20% |
| Mortgage interests | 15% | 20% |
| Royalties | 15% | 15% |
| Other capital income | 15% | 20% |
| Rental income | 15% | 15% |
| Capital gain from social parts | 10% | 10% |
| Building capital gain | 10,5% to 42% | 25% |
| Lottery and bingo prizes | 25% | 25% |
| Raffle, national lottery, competition and draw prizes | 35% | 35% |
| Pensions | 10,5% to 42% | 20% |
IRS: Car taxation in Category A
The private use of a car, as well as the purchase of a car that represents a charge for the employer for a lower price than the market value are assumed as employee’s income, which taxation is done as follows:
| Private use of the company’s car | Purchase of the company’s car |
|---|---|
| There is no taxation at source Inclusion and taxation at the final IRS rates |
There is no taxation at source Inclusion and taxation at the final IRS rates |
| Calculation of the income= 0,75% buying cost (or production) of the car x number of months of use |
Market value – (Income taxed for the use + Purchase price paid by the worker); Market value =Purchase price – (Purchase price x Coefficient of Devaluation) |
IRS: Simplified regime of Class B
| Maximum income | Taxation |
|---|---|
| Sales volume up to € 149.739,37 | Sales x 0,20 |
| Service income up to € 99.759,58 | Billings for Services x 0,70 Minimum value for taxation is € 2.982,00 |
It is possible to choose General System Accounting (Profit + Loss system) |
|
IRS Fiscal Benefits
| Pension Retirement Savings plans (PSP): amount given yearly to a saving pension plan | Not married / married Up to 35 years: 20% up to € 400 |
|---|---|
| Intellectual property | Author’s rights received by the original holder resident in the Portuguese territory, are included in 50% of their amount, the rest being excluded from taxation, with a limit of €30.000. When the income is more than €60.000, there are special rules to determine the IRS tax rate. |
| Non-resident capital gains | The following transmissions are exempted: Exceptions
|
| Employer’s contributions for the social security regime | An IRS exemption is possible for employer’s contributions concerning pension funds (or other complementary social security regime) at the time they are made, as long as certain conditions are respected. |
Saving pension account |
Interests for which the balance is of €10.500,00 or more are exempted |
| Investment funds | Income from participation units in fixed assets investment funds, real estate and funds of funds are exempted from IRS |
Social Security
| Regime | Rates | |
|---|---|---|
| Beneficiary | Employer | |
| Employees | ||
| General regime | 11% | 23,75% |
| Members of board | 10% | 21,25% |
| Self-employed | ||
| Mandatory regime | 25,4% | |
| Extended regime | 32% | |