If a company increases salaries by at least 5% next year and decides to distribute part of the profits to workers, the “bonus” will be exempt from the IRS and the TSU as long as the value does not exceed €4,100. But, although this portion of income will be exempt from tax, the amount will be taken into account when calculating the IRS that will apply to other taxable amounts.
The 2024 state budget proposal explicitly provides for this to happen, by specifying that exempt income “is included for purposes of determining the rate applicable to other income.” This means that the final rate will be calculated on the basis of all amounts received, but later on, this same rate will be applied only to other income, i.e. the corresponding portion of income. “bonus” will be put forwardWhich guarantees exemption in respect of that part.
The incentive for workers to share in company profits was stipulated in the agreement signed last Saturday between the government and four of the six social partners, a document updating the medium-term agreement to enhance income, signed a year ago.
This measure, although not entirely consistent with the proposal launched by the Portuguese Business Confederation (CIP) to exempt the “fifteenth month” payment voluntarily allocated to workers from the tax authority and social contributions, is close to that spirit, although the wording and requirements are different. .
This coverage includes only companies that in 2024 achieve a “nominal average fixed wage estimate per employee” equal to or greater than 5%, which implies that this “bonus” is paid through workers’ participation in the employer’s profits.
This measure results from the expansion of the existing rules, since currently the Law on Contribution Systems to the Social Security System already stipulates that the amounts allocated in this way are not part of the contribution base, i.e. they are already exempt from TSO. This exemption will remain, and now the exemption is added on the personal tax side, but with this ceiling of 4,100 euros (the sum of five minimum wages in 2024, the year in which the monthly salary amounts to 820 euros in total).
The agreement stipulates that the maximum value of this exemption from the IRS may be up to “a limit of one basic monthly salary earned by the worker and a maximum of five” minimum wages, but the draft law sets only this last general ceiling, which is equivalent to 4,100 euros.
The strengthening agreement was signed by the government with the General Union of Workers (UGT), the Farmers’ Confederation of Portugal (CAP), the Confederation of Trade and Services of Portugal (CCP) and the Confederation of Tourism of Portugal (CTP). ), both the General Confederation of Portuguese Workers (CGTP) and the Portuguese Communist Party were excluded.
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