Decree No. 51-B/2026/1, of January 30, was published, establishing the updated meal allowance for public administration workers, effective January 1, 2026.
During the year 2026, only taxable persons with their registered office or domicile in Portugal may benefit from the application of the special exemption regime in Portugal, provided that they:
Taxable persons with their registered office or domicile in Portugal, covered by the special exemption regime, cease to be able to benefit from this regime in Portugal (cessation of the regime) when any of the following situations occurs:
i) In the previous calendar year, they reached a turnover in national territory exceeding €15,000 (as from 01.01.2026) – Submission of a declaration of changes within 15 working days, counted from the last day of the year in which the threshold was exceeded;
ii) In the current calendar year, the exemption threshold of €15,000 is exceeded by more than 25% (from the moment €18,750 is exceeded) – Submission of a declaration of changes within 15 working days, counted from the date of issuance of the invoice that caused this threshold of €18,750 to be exceeded;
iii) From the moment they begin carrying out export operations or related activities – Submission of a declaration of changes within 15 working days, counted from the date of issuance of the invoice that evidenced the export operation or related activity;
iv) They waive the regime, by submitting a declaration of commencement or changes, as applicable, producing effects from the date of its submission (being required to remain under the standard taxation regime for a period of at least five years).
Taxable persons with headquarters, a permanent establishment, or domicile in national territory, as well as other taxable persons who are required to issue invoices under the rules established in the VAT Code, are obliged to exclusively use invoicing software programs that have been previously certified by the Portuguese Tax Authority (AT), whenever:
Included under “other taxable persons” are non-residents without a permanent establishment in Portugal, whenever they issue invoices to private individuals or have appointed a tax representative in Portugal.
However, taxable persons who do not meet any of the exclusion requirements may only issue manual invoices:
These invoices must be entered into the invoicing program immediately after it becomes operational again, using a specific series designated for this purpose.
It constitutes a tax crime of breach of trust to fail to deliver to the tax authorities (AT), in whole or in part, a tax payment exceeding €7,500, either deducted under legal terms or received and legally required to be handed over to the AT. The following taxes deducted or collected from third parties may fall under this crime:
The amount mentioned above applies per declaration submitted to the AT.
From now on, you can make Social Security payments via bank transfer to the virtual IBAN indicated on the Payment Document.
Social Security has introduced a new payment method through bank transfer, making the process simpler and more efficient. Using the virtual IBAN indicated on the Payment Document, citizens and companies can make payments quickly, conveniently, and securely.
For each issued payment document, a unique IBAN reference is generated, which is used only once to pay the specified amount. The IBAN will now appear not only on payment documents issued by citizens but also on those automatically provided by Social Security.
The autonomous taxation rates in IRC are reduced, and the acquisition value limits are increased for light commercial vehicles with 4 or 5 seats (N1), passenger vehicles, mixed vehicles, non-Plug-in hybrids, and LPG-powered vehicles, now being as follows:
Expenses incurred for entertainment events offered to clients, suppliers, or any other persons or entities are no longer subject to autonomous taxation.
The Corporate Income Tax (CIT) rates applicable to the taxable income of companies headquartered in Mainland Portugal are reduced: It decreases from 21% to 20% for entities with their headquarters or effective management in Portuguese territory, regardless of whether they primarily engage in commercial, industrial, or agricultural activities.
For taxpayers who directly and primarily carry out an economic activity of an agricultural, commercial, or industrial nature and qualify as SMEs or Small Mid Cap enterprises, the CIT rate applicable to the first €50,000 of taxable income decreases from 17% to 16%, with the 20% rate applying to the excess.
The Young IRS regime now applies to all taxpayers who are not considered dependents, up to the age of 35. It is applicable for the first 10 years—consecutive or non-consecutive—of earning income from category A (employment) or category B (self-employment).
Excluded from this regime are young individuals who:
The exemption on income, up to a limit of €28,737.50 (equivalent to 55 times the value of the IAS: IAS 2025 = €522.5 x 55 = €28,737.50), is as follows:
a) 100% in the 1st year;
b) 75% from the 2nd to the 4th year;
c) 50% from the 5th to the 7th year;
d) 25% from the 8th to the 10th year.
To benefit from this regime, taxpayers must select this option in their IRS declaration for the relevant income year, to be submitted in the following year.
This year, it is possible to benefit from a reduction in withholding tax applied to employment income. To do so, young individuals must request their employer to apply a reduced withholding tax rate under Article 99-F of the IRS Code and indicate the year they started earning income, confirming they are not a dependent.
Throughout 2024, invoices for various goods/services requested by each taxpayer using their tax identification number (NIF) have been or should have been reported to the Tax Authority (AT) based on the CAE (Economic Activity Code) of the entity that issued the invoice. However, their registration is not always properly categorized under the correct deduction item.
According to the legislation in force, these expenses can only be automatically considered deductible in the IRS if they are previously validated in the E-Fatura system, with a deadline of February 25, 2025. Therefore, you should validate and/or register these invoices through the AT portal under “Citizens – E-Fatura: Invoices/Consumer/Complement Invoice Information.” You must check whether the invoices are recorded under the correct activity and categorize those that are not assigned to any category (Other).
If you have an open self-employment activity, expenses related to the activity or those for which VAT has been deducted must be identified as belonging to the activity (selecting “Yes”), and you must also indicate whether they are fully or partially related to the activity. Expenses outside the scope of professional activity should be identified as not belonging to the activity (selecting “No”).
Note: It is possible to manually enter expenses related to professional activity, healthcare, training and education, real estate, and nursing home costs in the IRS Model 3 form to be submitted by taxpayers. This disregards the information communicated through the E-Fatura portal, without prejudice to the obligation to provide proof of these expenses.
Limits applicable to the private sector, according to Decree-Law No. 1/2025
Decree-Law No. 1/2025, of January 16, has been published, amending the remuneration base and updating the salaries and per diem allowances for Public Administration. Below are the limits applicable to the private sector.
A – Within national territory (updated by 5%)
General workers: 65.89 euros
Members of corporate bodies: 72.65 euros
B – Abroad: To be determined by Ordinance for 2025
The amounts in effect in 2024 were:
General workers: 148.91 euros
Members of corporate bodies: 167.07 euros
Tax Limits for Other Allowances in 2025
Transport (per km) in a private vehicle: 0.40 euros
– Meal allowance paid in cash: 6 euros
– Meal allowance paid in vouchers, meal tickets/cards: 10.20 euros