IRS 2022: Find out if you are exempt from withholding tax

With the opening of the date of IRS delivery it is natural that many questions arise. In this article we will explain what withholding tax is and who is exempt.

Also read: IRS 2022 – What you need to know

What is the withholding tax?

Withholding at source is basically the State’s way of receiving IRS in advance. That is, this tax is levied on the income earned by employees, non-exempt self-employed workers and pensioners. The withholding is made by the employer who has the obligation to deliver monthly the withheld part of your salary to the State.

How is the withholding tax calculated?

The calculation of the amount withheld depends on the type of worker, this means that it varies according to whether you are self-employed or a pensioner. You can consult the withholding tables in the Diário da Republica (Official Gazette).

Independent workers

For non-exempt self-employed workers, the IRS withholding rate varies according to the activity, however, in most cases the rate of 25% is applied. In this case, there is no distinction as to family situation and place of residence.

Find out if you are exempt from withholding tax

The exemption will depend on the type of connection to your employer.

Employed workers

All employees and pensioners who receive the national minimum wage (which is set at 705 euros in 2022) are exempt from withholding tax.

However, it is also necessary to consider whether you are single or married and if the discounts are only yours, or if you both discount. In addition to this, you also have to consider the number of dependents.

Employed workers with no dependants

  • Non-married, single holder married, double holder married – up to 710€
  • Non-married disabled citizen or married disabled couple with two beneficiaries – up to 1.322€
  • Married disabled single holder – up to 1.665€

Employed workers with one dependant

  • Non-married – up to 710€
  • Married single holder – up to 761€
  • Married two beneficiaries – up to 710€
  • Non-married disabled citizen or married disabled couple with two beneficiaries – up to 1.427€
  • Disabled single holder – up to 1.769€

Employed workers with two dependants

  • Non-married – up to 754€
  • Married single holder – up to 802€
  • Married two beneficaries – up to 720€
  • Disabled non-married – up to 1.654€
  • Disabled single holder – up to 1.769€
  • Married disabled couple with two beneficiaries – up to 1.469€

Employed workers with three dependants

  • Non-married – up to 931€
  • Married single holder – up to 983€
  • Married with two beneficiaries – up to 754€
  • Disabled unmarried or married disabled couple – up to 1.654€
  • Disabled singler holder – up to 1.923€
  • Married disabled couple with two beneficiaries – up to 1.654 euros

Employed workers with four dependants

  • Non-married – up to 1.075€
  • Married single holder – up to 1.237€
  • Married two holders – up to 754€
  • Disabled non-married or married disabled couple – up to 1.974€
  • Married disabled single holder – up to 2.364€
  • Married disabled couple with two beneficiaries – up to 1.654 euros

Workers with five or more dependants

  • Non-married – up to 1.075€
  • Married single holder – up to 1.237€
  • Married two beneficiaries – up to 822€
  • Disabled single citizen or married couple – up to 2.098€
  • Married disabled single beneficiarie – up to 2.543€
  • Married disabled couple with two beneficiaries – up to 1.974€

Pensioers

  • Married and unmarried, with one or two beneficiaries – up to 710
  • Married and unmarried, with one or two disabled people – up to 1,423

Independent workers

Workers who, in their first year of activity, do not intend to issue green receipts (recibos verdes) for a value greater than 12,500€, which is communicated to the AT when they start their activity, are exempt from withholding tax.

However, if in the middle of the year you reach the amount of 12,500€, you must start withholding at source in the next receipt. If you are exempt from withholding at source, you must fill in the option “Exemption from withholding – art. 101.º B n.º 1, al. a) and b) of CIRS”.

Income from abroad

If you have residency in Portugal and recieve remunaration for services provided in other countries, you won’t need to withhold tax as long if you have already withheld it in the country where the service was provided.

More Information

If you want to get additional information about this or any other related subject, you can find all our contacts here