Portugal HR and payroll glossary

Dedução específica Specific deduction for employment income

dedução específica

The deduction from employment income before IRS: the higher of €4,587.09 (8.54 × IAS) and the employee's social security contributions. For most salaried staff it therefore equals their 11% contribution. Source

IFICI Tax incentive for scientific research and innovation

Incentivo Fiscal à Investigação Científica e Inovação

The successor to the former NHR (non-habitual resident) regime: qualifying new residents in eligible roles such as research, innovation and certain highly qualified jobs pay a flat 20% on Portuguese employment income for a limited number of years. Source

IRS Personal income tax

Imposto sobre o Rendimento das Pessoas Singulares

Income tax with nine brackets. The 2026 rates, cut retroactively to 1 January by Decree-Law 212/2026, run from 12.2% on taxable income up to €8,342 to 48% above €86,634. The cut was reflected in withholding only from November, so the excess withheld earlier in 2026 comes back in the 2027 assessment. Source

IRS Jovem Young people's income tax relief

A partial exemption from IRS on employment income for people aged up to 35 in their first years of work, which shrinks year by year and is capped. It lowers withholding for young hires, and so their cost to reach a given net pay. Source

Participação variável Municipal share of IRS

participação variável no IRS

Each municipality may keep up to 5% of its residents' IRS and must return the rest to them as a tax deduction, so net income tax differs slightly by municipality. Source

Retenção na fonte Withholding tax

retenção na fonte

The employer withholds IRS monthly using official withholding tables based on pay and family situation, and withholds on the holiday and Christmas allowances separately. Withholding is an advance: the final tax is settled in the annual IRS return. Source

Taxa adicional de solidariedade Solidarity surcharge

taxa adicional de solidariedade

An extra income tax of 2.5% on taxable income between €80,000 and €250,000 and 5% above €250,000. For a salaried employee it starts at gross pay of about €89,900 a year. Source

TSU Single Social Tax (social security contribution)

Taxa Social Única

The social security contribution under the general regime: 11% from the employee and 23.75% from a for-profit employer (34.75% in total), on all pay including the holiday and Christmas allowances, with no ceiling. Workplace accident insurance is a separate, mandatory private policy. Source

IAS Social Support Index

Indexante dos Apoios Sociais

The reference amount to which many tax deductions and social benefits are tied: €537.13 in 2026. The specific deduction for employment income, for example, is 8.54 × IAS. Source

Subsídio de férias Holiday allowance

subsídio de férias

A statutory allowance equal to one month's pay, paid on top of the normal salary for the year's holiday (22 working days). With the Christmas allowance it is why Portuguese salaries are quoted in 14 instalments. Source

Subsídio de Natal Christmas allowance

subsídio de Natal

A statutory 13th-month payment equal to one month's pay, paid before Christmas (prorated in the first and last years). Social security applies to it as to normal pay. Source

Compensação por despedimento Dismissal compensation

compensação por despedimento

On dismissal for objective grounds the employee is owed 14 days' base pay and seniority payments per complete year of service, with monthly pay capped at 20 × the minimum wage and the total capped at 12 months' pay. Unlawful dismissal costs reinstatement or 15–45 days' pay per year (at least 3 months). Source

Justa causa Just cause (dismissal)

despedimento por justa causa

The Constitution bans dismissal without just cause. An employer can dismiss only for disciplinary just cause after a formal written procedure, or on objective grounds (collective dismissal, job extinction, unsuitability) with notice of 15–75 days by service, consultation and selection rules. A court can order reinstatement. Source

Período experimental Probation period

período experimental

For open-ended contracts: 90 days in general, 180 days for technically complex or high-responsibility roles (and for first-job seekers and the long-term unemployed), and 240 days for management and senior positions. It is shortened by prior internships or fixed-term work in the same role. Source

Revogação por mútuo acordo Termination by mutual agreement

revogação do contrato por mútuo acordo

Ending the contract by written agreement of both sides, usually with a payment above statutory compensation. Because unilateral dismissal is hard, it is the usual route for white-collar exits. Source

ACT Authority for Working Conditions

Autoridade para as Condições do Trabalho

The labour inspectorate, which enforces the Labour Code and health and safety rules, receives notifications from employers (for example on collective dismissals and working-time arrangements) and can fine employers. Source

AT Tax and Customs Authority

Autoridade Tributária e Aduaneira

The tax authority, which runs the Portal das Finanças. It issues the tax number (NIF) every employee needs, receives withheld IRS and the employer's monthly pay declaration, and assesses the annual IRS return. Source

Segurança Social Social Security Institute

Instituto da Segurança Social

The social security administration. Employers register with it, notify each new hire before work starts, file a monthly pay declaration and pay employer and employee contributions. Every employee needs a social security number (NISS). Source