Young people up to 35 years of age have access to important tax benefits that help them save on Personal Income Tax (IRPF). These measures are part of public policies that aim to facilitate the transition to adulthood, promote financial independence and encourage young people to settle in Portugal. If you are under 35, it is essential to know about these opportunities to optimize your financial management.
What are the Income Tax Benefits for Young People?
The main tax incentive for young people is the reduced IRS rate, applicable to income obtained through dependent work (Category A) or independent work (Category B). This special regime allows a significant reduction in the tax payable during the first years of a career.
Main Features:
Eligible age: Young people between 18 and 35 years old.
Application: Income from dependent work (salaries) or independent work (green receipts).
Application period: Up to 5 years (non-consecutive).
IRS Tax Rate Reduction:
30% in the first year of application.
20% in the second year.
10% in the third year.
For example, if a young person’s annual income is €20,000, applying the benefit could represent savings of hundreds of euros in IRS, depending on the usual withholding rate.
What are the requirements to join?
To benefit from this reduction in IRS, it is necessary to meet some criteria:
Tax residence in Portugal: The young person must be registered as a tax resident in the country.
Age within limits: The reduction is only valid up to 35 years of age.
Eligible income: Only income from employment (dependent or independent) is covered.
Maximum term of 5 years: This benefit can be used in non-consecutive years, as long as it does not exceed the 5-year limit.
Furthermore, it is essential that young people are registered on the Finance Portal and that they correctly submit their annual Income Tax return.
How to Join the Benefit?
The process to benefit from the IR reduction is relatively simple. Here are the main steps:
Update Data on the Tax Portal: Confirms that your age and tax residence are correctly registered.
Submit Income Tax Return: When filling out form 3, report income that falls into the category of dependent or self-employed work.
Benefits Monitoring: After submitting the declaration, you check whether the benefit was applied correctly in the final calculation.
If you have any questions, you can always consult a certified accountant or contact the Tax Authority’s taxpayer support service.
Other Additional Benefits for Young People
In addition to the IRS reduction, young people can take advantage of other financial and tax incentives, such as:
Discounts on IMT (Municipal Transfer Tax): for the purchase of a permanent home.
Social Security Benefits: Exemptions or reductions for self-employed workers starting out.
Youth Rental Support Programs: Like Porta 65.
These additional supports can help further reduce the costs associated with starting independent living.
Why Take Advantage of This Benefit?
The IRS tax benefit for young people is an excellent opportunity to increase savings and, at the same time, improve quality of life. In a challenging economic context, every euro saved can make a difference.
If you are under 35 and just starting your career, now is the perfect time to take advantage of these reductions. Plan your finances, ensure compliance with all requirements and make the most of what Portuguese legislation has to offer.
Conclusion:
Portugal offers attractive tax incentives for young people up to 35 years old, with the Income Tax benefit being one of the most impactful measures. This regime not only alleviates the tax burden on young people but also promotes their financial stability. Get informed, plan and ensure you take advantage of all available support.
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