Personal tax allowance and deductions in Portugal

There are a number of general income tax allowances in Portugal that residents can deduct from their taxable income or use as tax credits to reduce their income tax in Portugal.

Below are some of the tax deductions and tax credits foreigners can consider when filing a Portuguese tax return.

Allowable deductions on tax returns

A general allowance of €4,104.

150% of the amount paid in union fees (limited to 1% of employment income).

Employee social security contributions to mandatory schemes if higher than €4,104.

Maintenance and conservation expenses paid out on property yielding a rental income.

Tax credits on your income tax return

35% of general family expenses up to a limit of €250 per taxpayer

15% of health expenses, up to a limit of €1,000

30% of educational expenses, up to a limit of €800

15% of VAT on invoices issued by car repair shops, restaurants, hairdressers, and beauty salons, up to a limit of €250 per family

20% of alimony pensions arising from court decisions

15% of rent costs, up to a limit of €502

15% of interests on housing loans, up to a limit of €296

25% of donations made to accredited institutions

25% of expenses incurred with homes and institutions to support the elderly or disabled, up to a limit of €403.75

20% of premiums paid on pension contributions, up to a limit of €400 for those aged under 35, €350 for those between 35–50, and €300 for those over 50

In addition to this, certain daily expenses also are exempt from Portuguese income tax, including the following areas:

Meal allowance up to €4.77 in cash or €7.63 in lunch vouchers per day

Daily allowance for business travel up to €50.50 within Portugal or €89.35 abroad

Travel expenses, variable depending on means of transport and number of employees traveling

Self-employed tax deductions and credits in Portugal

When it comes to calculating your taxable income, you can deduct any business expenses that you’ve incurred as part of running your enterprise. For example, this can include the likes of rent costs for your office, material costs, product costs, and utility bills.

There are some limits, however. For example, expenses for travel and entertaining clients can only be deducted if they’re less than 10% of overall income. If you work from home, you can claim expenses up to a limit of 25%.

Please see the following income tax rates/brackets for Portugal: 

The expenses that can be claimed are as follows: 

- Annual medical for pilot license renewal

- Loss of license insurance

- Pilot equipment such as headsets

- ID Card

The above information is correct to our knowledge at the time of posting but may be subject to change.