Preferential loans

Although keeping the exclusion of taxation for preferential loans for the acquisition of private and permanent residence not exceeding EUR 180,426.40, in the cases of interest- free loans or loans with a reduced interest rate granted by the employer the difference between the interest rate borne by the employee (if any) and 70% of the minimum rate applicable to the European Central Bank’s main refinancing operations (by reference to the first working day of the relevant year), is considered to be employment income. Alternatively, the index that may be fixed as equivalent will serve as reference for taxation purposes.

Personal use of vehicles

The market value of the vehicle (and not the value of acquisition or production) becomes the reference value for the purposes of determining the income in kind subject to taxation, reported to January 1 of the relevant tax year, being the market value determined by applying the coefficients of currency devaluation to the acquisition value or production cost of the relevant vehicle.

Compensations

Clarification that compensations  paid as  result of  termination of functions of public managers, directors, managers or representatives of non-resident entities  with Portuguese permanent establishment, are only fully subject to taxation if related to the performance of such duties.

Tax exclusion, only applicable once every 3 years, of the compensations arising from the change of workplace, when it locates more than 100 km from the previous workplace, limited to lowest of 10% of the annual remuneration or EUR 4,200.00.

Subjection to taxation as employment income of compensations for the loss of income of this category and that do qualify as social benefits.

Social vouchers

Extension of the existing tax regime for infancy vouchers to school vouchers, which become potentially applicable to dependents up to 25 years of age and covering school textbooks. Within this context a statement obligation for the relevant establishments is created in order to identify deductible expenses.

Employees working abroad

Portuguese source employment income paid to Portuguese tax residents as compensation for their displacement and for the stay abroad can benefit from an exemption, up to EUR 10,000.00, non cumulatively with other similar benefits nor with the non-habitual tax resident regime.

Concepts

The employer concept will include entities with a relation of mere participation.

For the purposes of taxation of benefits or privileges granted by the employer, only people with family or kinship ties up to the 3rd degree of the collateral line with the employee will be considered. At the same time, relatives of employees under a de facto union will be considered for the same purposes.