Garnishment of Wages: In What Cases Does It Happen and How Is It Calculated

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.

IMT Exemption on Real Estate Resale – Deadline Extension

Law No. 56/2023, dated October 6, introduced several changes regarding the Municipal Tax on Onerous Property Transfers (IMT), among which we highlight the exemption from this tax for properties purchased for resale when the buyer is engaged in the business of buying for resale.

To benefit from the IMT exemption on the purchase of properties for resale, the property must be resold within one year (previously three years). If the properties acquired for resale are put to a different use or are not resold within the one-year period, or if they are resold again for the purpose of resale, the IMT exemption is forfeited.

The Tax Authority has now clarified, through binding information related to Cases No. 25744, 25651, and 25694, that this change in the deadline represents a significant modification in one of the essential assumptions of the regime for purchasing properties for resale, significantly limiting it. Therefore, it constitutes a substantive rule of a material nature. Since substantive rules that imply changes in the regime have an innovative character, determining that their scope of application applies to situations arising after their entry into force, the Tax Authority correctly concluded that this change to a shorter resale period is to be applied prospectively. It only applies to purchases for resale made from October 7, 2023, onwards.

Additionally, to benefit from the exemption on the acquisition of properties, beyond the requirement for the buyer to prove that they are habitually engaged in the resale of properties through a certificate issued by the Tax Authority showing that, in each of the two previous years, they resold properties purchased for that purpose, the property in question cannot be resold for further resale nor can it undergo any construction, improvement works, or other alterations that could change its Taxable Asset Value.

In cases where IMT was paid upon the acquisition of the property due to the legal conditions for exemption not being met, if the property has been resold, not for further resale, within one year, the tax is annulled by the head of the tax office upon the request of the interested party, accompanied by a document proving the transaction.

Incentive for Business Capitalization – ICE

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.

Extension of the Submission Deadline – Model 22 Declaration | Corporate Income Tax (CIT)

Order No. 176/2024-XXIII, dated March 14, by the Secretary of State for Tax Affairs, extends the deadline for the submission of the Model 22 Corporate Income Tax (CIT) declaration for the tax period of 2023, as well as the deadline for the payment of the tax assessed therein, until July 15, 2024.

Cash payments/receipts

Payments made by a corporate income taxpayer (IRC), as well as individual income taxpayers (IRS) who have or are required to have organized accounting, related to invoices or equivalent documents of a value equal to or greater than € 1000, or its equivalent in foreign currency, must be made through a payment method that allows for the identification of the respective recipient, namely bank transfer, named check, or direct debit (LGT article 63-E).

If it is an individual, it is prohibited to pay or receive in cash in transactions of any nature involving amounts equal to or greater than € 3000, or its equivalent in foreign currency. This limit is € 10,000, or its equivalent in foreign currency, whenever the payment is made by individual persons not residing in Portuguese territory and provided that they do not act as entrepreneurs or traders.

Sick leave: how many days are allowed for the death of a family member?

“Sick leave” is the term used to refer to the days of justified absence that the worker is entitled to for mourning the death of a family member.

The number of bereavement days to which the worker is entitled.

According to the current wording of Article 251 of the Labor Code (in force since May 1, 2023), the number of justified absences varies with the degree of kinship between the worker and the deceased person.

  1. Up to 20 consecutive days for the death of the spouse, not legally separated, or equivalent, children, or stepchildren (1st-degree relatives).
  2. Up to 5 consecutive days for the death of parents, stepparents, in-laws, sons-in-law, and daughters-in-law (other 1st-degree relatives or relatives by marriage).
  3. Up to 20 consecutive days in the event of the death of a person who lives in a de facto union or common economy with the worker.
  4. Up to 2 consecutive days for the death of siblings, brothers-in-law, grandparents, great-grandparents, grandchildren, and great-grandchildren (2nd-degree relatives or relatives by marriage).
  5. Up to 3 consecutive days for gestational mourning.

No caso de primos, tios e sobrinhos a lei não atribui dias de nojo, ou seja, a possibilidade de falta justificada. No entanto, para comparecer ao funeral, com uma declaração comprovativa (da agência funerária, por exemplo) essa falta estará justificada.

Entitlement to psychological support in the event of the death of children and other close family members.

In cases of the death of descendants or first-degree relatives in the direct line, both parents have the right to request psychological support from the attending physician of the National Health Service (SNS). This support should commence within five days after the death.

This right, in effect since January 2022, also applies in cases of the death of close family members, namely spouse and ascendants.

From which day do the bereavement days begin to count?

The counting of bereavement days starts on the day of the death, unless a different time is agreed upon with the employer or established by collective labor regulation.

If the death occurs after the worker has completed their normal daily work period, the counting starts on the following day.

Does the counting of vacation days suspend?

The death of a family member postpones or suspends the enjoyment of vacation days, as it does not depend on the worker’s will and prevents the enjoyment of the right to vacation, which aims at rest and physical recovery. When the bereavement days end, the vacation resumes.

Are justified absences paid?

When the mourning days provided by law are fulfilled, the absences taken by the worker are justified and do not imply loss of remuneration (Article 249, paragraph 2, subparagraph b) and Article 255, paragraph 1 of the Labor Code).

Notification to the employer and justification of the absence

As a rule, absences should be communicated with a 5-day notice. However, in this case, as the event is unforeseeable, the law only requires that the notification of the death of the family member to the employer be made as soon as possible.

Within 15 days following the notification of the absence, the employer may require the worker to provide proof of the invoked fact for justification, i.e., proof of the death of the family member (Article 253, paragraph 2, and Article 254, paragraph 1 of the Labor Code).

That proof could be a statement of attendance at the funeral issued by the funeral agency, which also states the worker’s relationship to the deceased person.

Obrigatory Bank Account

The taxable entities subject to Corporate Income Tax (IRC), as well as those subject to Individual Income Tax (IRS) who have or are required to have organized accounting, are obliged to possess at least one bank account through which all payments and receipts related to the conducted business activity must be exclusively handled (LGT article 63.º-C).

All movements relating to supplies, other forms of loans and advances from partners, as well as any other movements by or in favor of taxpayers, must also be made through the account or accounts referred to.

Work Compensation Fund and Guarantee

The Decree-Law No. 115/2023, dated December 15, was published, coming into effect on January 1, 2024, amending the legal frameworks of the work compensation fund and the work compensation guarantee fund.

Due to this decree, it became mandatory only to identify the FGCT (Work Compensation Guarantee Fund) and no longer the FCT (Work Compensation Fund). However, the obligations related to FCT were suspended during the validity of the medium-term agreement for the improvement of income, salaries, and competitiveness. Consequently, the obligation to make monthly payments to the FGCT remains in effect.

The FGCT remains a mechanism designed to ensure workers’ rights to receive half of the compensation amount due upon termination of the employment contract, calculated in accordance with Article 366 of the Labor Code.

With the entry into force of the changes to the mentioned regime, it is expected that the FCT will be converted into an accounting closed fund, consisting of the overall accounts of employers to be used by them for the following purposes:

a) Support the costs and investments related to housing for workers;

b) Support other investments made by mutual agreement between employers and representative structures of workers;

c) Finance the qualification and certified training of workers;

d) Ensure workers’ rights to receive half of the compensation amount due upon termination of the employment contract, calculated in accordance with Article 366 of the Labor Code, in cases where employers have contributed to the FCT.

The balance of the FCT can be utilized by the employer from the last quarter of 2023 until December 31, 2026.

The State Budget for 2024


The article 236 of the State Budget Law for 2024 repealed the non-habitual resident regime.

However, transitional rules were approved that still allow access to the regime for taxpayers who become tax residents in 2024.

Application of the regime for individuals who become residents in 2023 or already hold the status.

The regime will continue to apply to taxpayers who:

  • are registered as non-habitual residents upon the entry into force of the law (January 1, 2024) and until the ten-year period stipulated in the regime expires;
  • as of December 31, 2023, meet the conditions for registration as non-habitual residents, i.e., holders of a valid residence permit as of that date, and must complete their registration by March 31, 2024.

Application of the regime for taxpayers who become tax residents in 2024.

The regime will continue to apply to taxpayers who become tax residents for fiscal purposes until December 31, 2024, and declare, for the purpose of their registration as non-habitual residents, that they have one of the following elements:

  • Promise or employment contract, promise or secondment agreement concluded until December 31, 2023, whose job duties are to be carried out in national territory;
  • Lease agreement or other contract granting the use or possession of real estate in Portuguese territory concluded until October 10, 2023;
  • Reservation contract or promise-to-purchase contract for the acquisition of a real right over property in Portuguese territory concluded until October 10, 2023;
  • Enrollment or registration for dependents in an educational institution domiciled in Portuguese territory, completed until October 10, 2023;
  • Valid residence visa or residence permit until December 31, 2023;
  • Procedure initiated until December 31, 2023, for the issuance of a residence visa or residence permit, with the competent authorities, in accordance with the current immigration legislation, namely through the scheduling request or effective scheduling for the submission of the residence visa or residence permit application, or through the submission of the application for the issuance of the residence visa or residence permit;
  • Or if they are a member of the household of the taxpayers referred to in the previous paragraphs.

Procedures for obtaining the status.

The taxpayer must request registration as a non-habitual resident electronically through the Tax Portal, subsequent to the act of registration as a resident in Portuguese territory, in accordance with the provisions of paragraph 10 of article 16 of the IRS Code, in the version prior to the amendment introduced by this law, with reference to the year in which they became a resident in that territory.

In cases where registration is made outside the deadline, taxation as a non-habitual resident takes effect from the year of registration, for the remaining period, until the end of the period provided for in paragraph 9 of article 16 of the IRS Code, in the version prior to the amendment introduced by the State Budget Law, counted from the year in which the individual became a resident in that territory.

Note that this wording contradicts the understanding that has been followed by the Tax Authority in the evaluation of requests submitted outside the deadline (usually rejected), and changes to this position are expected.

Abílio Sousa

Tax consultant and CEO of IVOJOMA.

Guest professor at Porto Business School.

Update of Per Diem and Compensation for the Use of Own Vehicle (Kilometers)

The State Budget for 2024 updates the daily rates for Per Diem, as well as the amounts paid per kilometer for the use of a personal vehicle, according to the table below:

Expense Allowance Daily Per Diem Limit Daily Per Diem Limit

Domestic Daily Per Diem Limit
2023 2024
Public Sector Workers 50,20 € 62,75 €
Administrators, Managers, Government Officials, and Senior Executives 69,19 € 69,19 €

Public Sector Workers 89,35 € 148,91 €
Administrators, Managers, Government Officials, and Senior Executives 100,24 € 167,07 €


Kms Rate per Kilometer Rate per Kilometer
  2023 2024
Reimbursement for Transportation by Own Car 0,36 € 0,40 €
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