Are always required to appoint a Statutory Auditor (ROC) to perform the legal review of accounts, all of the following:

• Permanent representations and branches established in Portugal of companies headquartered abroad (non-residents with a permanent establishment in Portugal);
• Public limited companies (sociedades anónimas);
• Non-profit entities that present consolidated accounts;
• Private limited companies (sociedades por quotas) and non-profit entities that do not present consolidated accounts, whenever, for two consecutive years, two out of the following three thresholds are exceeded:

1. Total assets: 1,500,000 euros;
2. Total net sales and other income: 3,000,000 euros;
3. Average number of employees during the fiscal year: 50.

The appointment of a Statutory Auditor (ROC) is no longer required if the company establishes a supervisory board or if two of the three previously mentioned criteria are not met for two consecutive years.

Regarding private social solidarity institutions and similar entities covered by the Cooperation Protocol signed by the National Confederation of Solidarity Institutions, the Union of Portuguese Misericórdias, and the Union of Portuguese Mutualities with the Ministry of Solidarity and Social Security, the above-mentioned thresholds are multiplied by a factor of 1.70.

The provisions of the previous paragraph also apply to humanitarian firefighter associations.

Legal basis: Article 262 of the CSC; Circular No. 18/2024 of the OROC; Article 12 of Decree-Law No. 36-A/2011, of March 9.

A single-member limited liability company is formed by a sole shareholder, either an individual or a legal entity, who holds the entire share capital. The company’s name must include the term “single-member company” or the word “single-member” before “limited” or its abbreviation “Ltd.”. Effects of Sole Proprietorship:

• An individual may only be a shareholder in one single-member limited liability company.
• A limited liability company cannot have a single-member limited liability company as its sole shareholder.
• In the event of a violation of these rules, any interested party may request the administrative dissolution of the companies.
• The competent registration authority may grant a 30-day period to rectify the situation, which can be extended up to 90 days upon request by the interested parties.

New guideline coming into effect in January 2025.

Starting January 1, 2025, companies in Portugal must transition from the Portuguese Classification of Economic Activities (CAE) Rev. 3 to the new Rev. 4 version, as stipulated by the European Commission Delegated Regulation (EU) 2023/137, published on October 10, 2022.

The reclassification of primary and secondary economic activities will become mandatory, with this process being coordinated between the Tax and Customs Authority (AT) and the National Statistics Institute (INE). Companies must remain attentive to this change to ensure a smooth transition.

To support companies in this process, the INE has launched the Economic Activities Reclassification Survey (IRCAE). The survey aims to allow business owners to review their current codes and select those that best reflect their activities. The deadline for completing the IRCAE is the end of November 2024. Access is available via the INE Portal or the WEBINQ Portal, using the taxpayer’s Identification Number (NIF/NIPC) and the password from the Tax Authority Portal.

It is essential for companies to carefully select the codes that best describe their activities, as the update will be automatically applied to the official records of the Tax Authority, the Institute of Registries and Notaries, and the INE.

If you need support during this transition, the GONTI team will be available to assist with completing the survey and supporting you throughout this process.

Do you know what a wage garnishment is? Debts can happen to anyone, even if life has been very well planned with good family budget management.

Unforeseen events can happen: layoffs, miscalculations in investments, illnesses, car breakdowns that can cause a dent in finances. Regardless of the reason that leads to this measure, it is certain that it is common for people to be subject to wage garnishment for not being able to pay their debts.

Learn everything you need to know about this measure.

What is a wage garnishment?

Wage garnishment consists of a judicial seizure of the debtor’s salary, a measure aimed at ensuring the creditor’s right to payment.

Therefore, it is extremely important to understand how wage garnishment can be carried out and to identify the limits set by law (Article 738 of the Code of Civil Procedure).

This measure can be triggered in the context of a tax enforcement process for debts to the Tax Authorities, Social Security, or another state body. Wage garnishment can also be initiated as part of an enforcement action filed by a private creditor. Wage garnishment occurs when practically all forms of agreement have been exhausted.

Wage Garnishment: How Is It Done?

First, a notification is sent to the employer to deduct the amount corresponding to the wage garnishment from the employee’s salary. Then, the deducted amount is deposited into a bank account designated by the enforcement agent. This amount must remain deposited until the deadline for contesting the garnishment expires.

At the end of this period, if there is no objection, the enforcement agent hands over the amount to the creditor and notifies the paying entity to deliver future payments directly to the creditor.

This debt collection process occurs monthly. Every month, a portion of the debtor’s salary is allocated to the creditor. However, it’s important to consider that there are limits to this coercive debt collection.

Rules of Wage Garnishment

Wage garnishment follows several rules. As one of the last resorts for debt collection, this measure can be avoided by resorting to payment agreements or measures such as deed in lieu of foreclosure, for example.

However, in some scenarios, it can arise. In this context, it’s important to know what to expect when you’re subjected to wage garnishment.

• However, in some scenarios, it can arise. In this context, it’s important to know what to expect when you’re subjected to wage garnishment;
• Only one-third of the salary is garnishable, and the worker must retain an amount equivalent to the national minimum wage, which in 2024 corresponds to 820 euros;
• If subjected to wage garnishment, you also cannot retain more than the amount equivalent to three times the minimum wage (in 2024, this calculation amounts to 2,460 euros);
• Wage garnishment applies to the salary received. It also includes bonuses, meal subsidies, vacation pay, and Christmas bonuses;
• The amount considered for this measure corresponds to the net salary. Therefore, it is the amount received after deductions for income tax (IRS) and Social Security contributions;
• The debtor can file an opposition to the wage garnishment to defend themselves if there is an excess of garnishment, meaning if the garnishment exceeds what is allowed by law.

A debt for alimony payments is an exception to these rules.

However, there is an exception to the limits of non-attachability that should be taken into consideration.

When it comes to a debt for alimony payments, only the amount equivalent to the entire social pension of the non-contributory regime is non-attachable. In 2024, this amount is 245.79 euros.

Other exceptions to consider

There are certain situations in which someone in default cannot be subjected to a wage garnishment process. Here are some of these exceptions:

• If the person in question earns the minimum wage or a lower amount, they are exempt, as the garnishment percentage applies only to the amount exceeding the national minimum wage;
• If the debtor works part-time, they are not garnished, and the process ends due to the impossibility of collection;
• If the debtor is unemployed, the same applies. They are not garnished, and the process ends due to the impossibility of collection (since there is no income);
• If there is a declaration of insolvency;
• If the person in debt emigrates and has no income in Portugal, then it’s not possible to pursue collection abroad.

How to calculate the salary attachment?

Wage garnishment is calculated based on net income, which is the salary after mandatory deductions by law. It’s necessary to consider all components of the salary to determine the wage base from which the garnishment amount will be calculated.

Calculation formula

1. First, calculate the net income.
2. Then, multiply the net income by 1/3 to obtain the garnishable amount.
3. Then, multiply the net income by 2/3 to obtain the non-garnishable amount.
4. Thus, you can confirm that the non-garnishable amount is equal to or greater than the national minimum wage and less than or equal to three times the national minimum wage.

After calculating the wage garnishment amount, that sum should be deducted monthly until the debt is fully paid off.

How to act in the event of a salary attachment

In the event of salary attachment, there are measures that can be taken.

1. Reduction of the attachment from 1/3 to 1/6 of the salary

The law provides that the debtor may submit a request to the court, on an exceptional basis, seeking to reduce the garnishment from 1/3 to 1/6 of the income.

This reduction effect is maintained for a reasonable period of time, and may even completely exempt the proceeds from seizure for a period never exceeding one year.

The judge grants or rejects the request (this is a discretionary power), after considering the amount and nature of the credit being enforced, in addition to evaluating the needs of the debtor and his/her family.

2. Opposition to salary attachment

Filing an objection to the garnishment is allowed, based on excessive garnishment, meaning in situations where more than what is allowed by law may be garnished.

As we have already had the opportunity to verify, there is a limit to the amount that corresponds to the national minimum wage. In this way, the debtor can oppose the seizure when this limit is exceeded (which happens more often than it should).

3. Opposition to execution

After being served with notice that an enforcement proceeding has been initiated, the individuals involved have 20 days to file an opposition to the execution. This procedural mechanism allows the debtor to challenge the entire enforcement process and potentially halt the garnishment through this avenue.

4. Insolvency or PEAP (Extrajudicial Payment Agreement Procedure): lifting of all garnishments

If the debtor is in a difficult situation, facing an inability to pay all debts, i.e., insolvency, the most appropriate solution is to file for personal bankruptcy, with a request for discharge of the remaining liabilities.

One of the consequences of a bankruptcy declaration is the immediate suspension and lifting of:

• All enforcement proceedings (private creditors);
• Tax execution proceedings;
• Pending garnishments against the insolvent debtor aimed at seizing assets integrated into the insolvent estate.

In the case where an individual debtor is in a financially delicate and difficult situation but still potentially recoverable, the initiation of the Special Procedure for Payment Agreement (PEAP) has the same effect of suspending and lifting all garnishments.

The PEAP (Special Procedure for Payment Agreement) consists of a proposal to restructure the debtor’s liabilities, which includes extending repayment terms, reducing interest rates, providing guarantees, and forgiving part of the principal amount.

However, this plan must be negotiated with creditors to safeguard their interests, as it is subject to approval by a judge.

Thus, typically, the wage garnishment amount corresponds to one-third of the monthly net salary. However, there may be situations where this amount varies.

State Budget 2024 – Tax Benefits

The Incentive for Business Capitalization (ICE) is a tax benefit provided for in Article 43-D of the EBF Code for companies with their head office or effective management in Portuguese territory. The legal form or size of the company is not relevant for enjoying this benefit, as long as they meet the legal requirements listed in paragraph 7 of the same regulation. In the 2024 State Budget, the government changes the application of a fixed rate of 4.5% or 5% for SMEs, Micro, and Small and Medium Capitalization companies, in effect in the 2023 State Budget, to a variable rate indexed to the 12-month Euribor.

What does the benefit in the 2024 State Budget consist of?

1. The benefit consists of a deduction from the corporate tax base (IRC) up to an annual limit of 4 million euros or 30% of EBITDA (Article 67 of the CIRC). The portion of the deduction that exceeds the 30% EBITDA limit is deductible in determining the taxable profit for one or more of the subsequent five tax periods, applying a variable rate indexed to the 12-month Euribor, with an added spread of 1.5% and 2% for SMEs, Micro, and Small and Medium Capitalization companies.
2. Increase, in the first year of application, of the benefit by: – 50% in 2024; – 30% in 2025; – 20% in 2026;
3. Adjustment of the reference period from 10 years to 7 years;
4. Change to the eligibility of capital increases, with cash injections when financed by the Public Sector (SP) or other entities with special relationships.