Tax Alert - Tax updates in Portugal for 2024

The year 2024 brought several new tax updates:

1. Increase in the Minimum Wage

The Guaranteed Minimum Monthly Wage for 2024 has already been approved, both in mainland Portugal and in the Autonomous Regions of Madeira and the Azores. These figures apply retroactively to 1 January 2024 and are as follows:

  • Mainland Portugal: €820
  • Madeira: 850 €
  • Azores: €861

2. Municipal surcharge rates

The municipal surcharge rates to be levied by municipalities on IRC taxable income obtained in the 2023 tax period have been updated for collection in 2024.

There has been a slight increase in the number of municipalities choosing to levy municipal surcharges on companies established in their municipality: there are currently 212, out of a total of 308.

The municipal surcharge, when levied, can amount to 1.5 per cent and is added to the standard corporate income tax rate (i.e. 21 per cent in mainland Portugal, 14.7 per cent in Madeira and the Azores).

In Madeira, all local councils maintain the total exemption from the municipal surcharge, with the exception of the municipalities of Santa Cruz and Porto Santo, which translates into effective tax savings for most companies based in Madeira. See the full list and respective rates here.

3. Personal Income Tax brackets - New rates

The Personal Income Tax (IRS) rates to be applied in mainland Portugal in 2024 can be found here.

The personal income tax rates to be applied in 2024 in Madeira and the Azores have not yet been confirmed, and the rates in force in 2023 will apply for the time being.

4. Simplified accounting system: exemption from VAT and IRS withholding tax

Taxpayers who are under the simplified accounting regime and who have not reached a turnover of more than €14,500 in 2023 will now be exempt from VAT. Previously, this limit was €13,500.

Taxpayers whose turnover does not exceed €14,500 can also be exempt from withholding tax.

For more information, speak to one of our tax specialists.

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