Workers on €653 or less exempt from tax

Tax payers earning €653 per month or less will not pay income tax from next year.

The tax deductible amount will rise from €428.9. It means that those with an annual net income of up to €9,150.96 will be exempt from paying IRS compared to the current limit of €9,006.9.

Nevertheless, in order to know if a tax payer discounts taxes monthly, the savings will only be calculated when the Ministry of Finance publishes its new retention at source rates on IRS from the start of 2019.

In Portugal, on average, a private sector worker earns €1,130 per month according to the Ministry of Employment’s Office of Strategy and Planning.

This monthly gross amount includes subsidies, bonuses and variable components. In the public sector a state employee’s average gross salary is considered to be €1, 642.1 per month according to the latest data available from April 2016 compiled by the Directorate-General of Administration and Public Employment.

The minimum for subsistence is based on the principle of the contributory ability of citizens whereby the tax payer, after discounts, is not subject to a net income less than the formula 1.5×4 (value of Index of Social Support – IAS).