Aggregation by category of income

The option for aggregation of income subject, as a general rule, to definitive or special tax rates can now be exercised by category of income, not being necessary to aggregate all the income subject to such definitive or special tax rates.

Carry-forward of losses

The net losses assessed in the different income categories as of January 1, 2015, which are only deductable against the net positive results of the same category of income, can be carried-forward as follows:

  • For 12 years for business and professional income, under the same terms foreseen by the CIT (although keeping the same term, the previous restrictions on the type of activity are revoked);
  • For 6 years for rental income (extension of 1 year, although the ability to carry- forward losses is conditioned to the real estate generating income during 36 months comprised in 5-year period subsequent to the realization of the losses); and
  • For 5 years for capital gains resulting from securities (3-year increase).

Income from previous tax periods

Income from previous tax periods is declared in the year in which it is received (or in the year in which a definitive court decision is obtained when dealing with judicial disputes), divided by the number of years to which it relates to (without a temporal limit and including the year of receipt), being possible to apply the taxation rules applicable to income related to previous tax periods.

Disabled taxpayers

Tax exemption, caped at EUR 2,500, of 10% of employment, business and professional and pension income obtained by disabled taxpayers.

Itemized deductions

  • By descendant: EUR 325;
  • By ascendant: EUR 300;
  • 35% of the household general expenses (except the ones subject to autonomous deduction), caped at EUR 250 per taxpayer;
  • 15% of the health expenses of the household, caped at EUR 1,000;
  • 30% of the training and education expenses of the household, caped at EUR 800;
  • 15% of the expenses with real estate, caped at EUR 502 (rents) or EUR 296 (interest); and
  • 25% of the expenses with homes for the elderly, caped at EUR 403.75;

Based on the overall amount of the taxable income, the itemized deductions relating to health, training and education and real estate are caped at EUR 1,000, being applicable a 5% increase of the respective limit for each dependent in households with 3 or more dependents.

Whenever the values of the itemized deductions are established by reference to the household or to ascendants or descendants, said values are reduced to half per taxpayer within the application of the general regime of separate taxation.

When dealing with foreign income in respect of which foreign taxes were paid, it is now possible to recover foreign taxes without opting for the aggregation of the income, being the recovery of the foreign taxes limited to the Portuguese tax rate applicable to such income. Any unused excess may be carry-forward for 5 years.

Foreign income benefiting from progressive exemption under the applicable double tax treaty entered into by Portugal needs to be aggregated for the purposes of determining the tax rate applicable to the remaining income.

The ability to deduct 20% of the amounts relating to child support alimony is kept, being possible to include amounts paid to legal godchildren. Where the 20% deduction is exercised, the relevant descendants may not be included in the household.

Perceived child support alimony is taxed at a special 20% rate.