Find out which types of income to list in your IRS declaration, as they dictate the completion of Model 3 and its respective annexes.
The Personal Income Tax (IRS) is levied on practically all citizens’ income, with the exception of certain exceptions provided for by law. Overall, there are 6 types of income subject to this tax, which dictate the completion of the Model 3 declaration and its respective annexes.
IRS 2023: types of income to declare
Category A income relates to income from dependent work. In other words, the taxation of this category concerns remuneration arising from work for others, such as salaries, bonuses, commissions, subsidies or bonuses, indemnities, pre-retirement or pre-retirement, among others.
This type of income may result from an employment contract or legally equivalent contracts, and must be declared in Appendix A of the IRS.
Included in this category are the business and professional income. Therefore, agricultural, commercial, industrial, livestock or forestry activities are included in category B income. Income earned by self-employed workers (the so-called “green receipts”) is also included in category B.
This type of income must be declared in Annex B (for those who are in the simplified regime or who have passed an isolated act) or in Annex C (for professional and business income under an organized accounting regime).
This category encompasses income from capital, including interest on demand or time deposits and other financial applications, income from intellectual property, or profits from company partners. This income is declared in Annex E of the IRS.
Income in category F refers to property income. These are, basically, rents received for the use of a building or part of it. This could be, for example, income from renting a house, but also from providing space for advertising.
This category also covers income from the operation of local accommodation, provided that this is not related to a business activity. All these incomes must be declared in Annex F of the IRS.
Here are the equity increments that are not considered in the other income categories. This is the case, for example, of capital gains resulting from the sale of shares or real estate, compensation, or sums earned as a result of the assumption of non-competition obligations. Category G earnings are declared in Annexes G and G1.
Category H income refers to pensions (food, old age, retirement, disability or survival), to temporary rents or lifetime and still at indemnities aimed at compensating for income losses in this category. All of them must be declared in Annex A.
Income earned abroad
Income obtained abroad by citizens with tax residence in Portugal must be declared in Annex J and broken down according to their nature. It is also necessary to identify the country where the income was obtained and, if tax has been paid abroad, the respective amount must be indicated.
This income may include pensions, interest on financial investments or bank accounts in other countries, as well as any other income that would normally be included in the six IRS categories, if obtained in national territory.
To find out which IRS-exempt incomeread our article on the subject:
Article originally published in July 2019. Last updated in March 2023.