Flash News NA 19/11/2024

What is expected to change in Portugal with the 2025 State Budget.

The State Budget for 2025, approved in general on October 31, 2024, introduces several significant changes in the tax field.

We now indicate the main changes introduced by the State Budget for 2025:

Personal Income Tax (IRS)

• Meal Allowance: The tax-exempt amount increases to €10.20 per day when paid in meal vouchers. Thus, only 70% of the amount exceeding the legal limit (currently €6) will be considered taxable income.

• Specific Deduction (Categories A and H): The specific deduction for employment and pension income is updated to 8.54 times the IAS, amounting to €4,349.08.

Youth IRS

The Youth IRS scheme will be extended to include income from both dependent and independent work for young individuals up to 35 years old (non-dependents), removing the requirement of having completed an education cycle. For more information, see the link below:

https://www.nominaurea.pt/pt/noticias/item/portugal-irs-jovem-orcamento-de-estado-2025.html

Self-Employed Workers

• Withholding Tax: The rate is reduced from 25% to 23% for income from specific professional activities.

• Advance Payments: The amount is reduced to 65% of the current formula (previously 76.5%).

Corporate Income Tax (IRC)

• IRC Rate: The standard rate is lowered by 1 percentage point to 20%. SMEs and Small Mid Caps will pay 16% (previously 17%) on the first €50,000 of taxable income.

• Autonomous Taxation: The acquisition cost limit for vehicles, used to apply autonomous taxation on expenses, is increased from €20,000 to €30,000, and taxation on certain vehicle-related expenses is reduced. 

OE 2024_ Brackets	Rate	Proposta OE 2025_Brackets	Rate
Below 27.500 €	8,5%	Below 37.500 €	8,0%
Equal to or above 27.500 € and below 35.000 €	25,5%	Equal to or above 37.500 € and below 45.000 €	25,0%
Equal to or above 35.000 €	32,5%	Equal to or above 45.000 €	32,0%

 The increased rate of 10 percentage points will not apply if the taxpayer obtained taxable profits in one of the previous three years and has met all reporting obligations.

Tax Benefits

• Salary Enhancement Incentive: This incentive will apply with a minimum annual base salary increase of 4.7% per worker (previously 5%). It is no longer dependent on maintaining the salary range but requires at least a 4.7% increase for workers earning up to the company’s average salary.

• Salary Costs: The surcharge increases to 200% (previously 150%), with deductions of up to €4,350 per worker (previously €1,640).

Extensions of Tax Obligations

• Valued Inventory Reporting: Taxpayers will be exempt from reporting valued inventories starting January 1, 2024. From January 1, 2025, this exemption also applies to those not required to maintain a permanent inventory.

• SAF-T Accounting: The submission of the SAF-T (PT) file to complete Annexes A and I of the IES will be mandatory starting from the 2026 period, with submission in 2027 or later.

• PDF Invoices: PDF invoices will continue to be accepted as electronic invoices for tax purposes until December 31, 2025.

At Nominaurea, we have specialized teams ready to advise you on these and other tax matters. We look forward to hearing from you.