The IRS Jovem scheme was implemented to offer tax benefits to young workers in Portugal, partially exempting their income from dependent or independent work in the first years of activity. However, recent clarifications indicate that self-employed workers, known as “recibos verdes”, cannot benefit from this exemption through reduced withholding tax.
Clarifications from the Tax Authority
The Tax Authority (AT) clarified that although “recibos verdes” workers are eligible for IRS Jovem, the exemption does not apply to withholding tax. This means that during the fiscal year, these professionals will continue to withhold tax on their full income, with no immediate reduction. The IRS Jovem exemption will only be applied at the time of the annual tax settlement, resulting in a refund equivalent to the exempt amount.
Implications for Self-Employed Workers
This guidance implies that young self-employed professionals will not benefit from an immediate increase in their monthly net income through reduced withholding. Instead, the tax benefit will be realized later, in the form of a refund after submitting the annual IRS declaration. It is essential that these workers are aware of this dynamic to properly plan their financial management throughout the year.
Final Considerations
Although IRS Jovem represents a significant incentive for young professionals, its practical application differs depending on the type of employment relationship. For “recibos verdes” workers, the tax benefit only materializes at the time of the annual IRS settlement, not affecting monthly withholdings. These professionals are advised to consult a certified accountant or access the Tax Portal for detailed and updated information on the application of this tax regime.
Did you like this article? Share it with friends and family so everyone can benefit from this scheme in Portugal!