The IRS Jovem provides exemptions from the IRS, for five years, for young people who start working. Find out when to apply and how much you save.
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O Young IRS allows young people to have a tax benefit in the first five years in which they earn income from dependent work (category A) or income from self-employment (category B), for the first time after completing a certain cycle of studies.
Despite the name, this scheme does not apply to all young people and, contrary to what many think, it is not a total IRS exemption either, but a discount that decreases over five years (which can be followed or interpolated).
Find out, then, if you meet the conditions to join and what to do to take advantage of this benefit.
Who can benefit from IRS Jovem?
It is intended only for young people who are not considered dependent and who meet the following criteria
- Young people between 18 and 26 years old and who have completed a level 4 or higher study cycle of the National Qualifications Framework (QNQ). Level 4 covers the 12th year with a professional internship of at least six months or secondary education with double certification. It does not apply to secondary education in general.
- Young people aged up to 30 yearswho have completed a cycle of studies equal to a doctorate (level 8 of the National Qualifications Framework).
This benefit can only be used once and cannot be accumulated with the Non-Habitual Residents regime, nor with the tax regime relating to the Regressar Programme.
Young IRS: how much is the discount?
Eligible young people can benefit from a tax exemption on:
- 50% in the first year, up to a limit of 6005 euros (12.5 x IAS, which in 2023 is 480.43 euros);
- 40% in the second year, up to a limit of 4804 euros (10 x IAS);
- 30% in the third and fourth years, up to a limit of 3603 euros (7.5 x IAS);
- 20% in the fifth year, up to a limit of 2402 euros (5 x IAS).
How to access the Young IRS?
Access to this regime is done through option when submitting the declaration of IRS. Also pay particular attention to the following: when submitting the IRS declaration, if you opt for the Automatic IRS, you will not be able to choose this option.
Another no less important detail: in the case of having income from dependent work, in Annex A of your IRS declaration, you should pay attention to filling in two boxes in particular.
At the Table 4A (Income from dependent work and/or pensions obtained in Portuguese territory – Income/Withholdings/Mandatory contributions/Union dues) must indicate the Code 417.
You must also fill in the Frame 4F. This must include the identification of the holder of the income, year of completion of the study cycle, qualification level of the QNQ and identification of the educational establishment.
For identify the level of qualification must use one of the following codes:
- Code 01: Level 4 – Secondary education obtained through dual certification courses or secondary education aimed at continuing higher education studies plus professional internship – minimum of 6 months”;
- Code 02: Level 5 – Non-higher post-secondary qualification with credits for further higher education;
- Code 03: Level 6 – Degree;
- Code 04: Level 7 – Master;
- Code 05: Level 8 – PhD.
Objectives of the Young IRS
IRS Jovem aims to “encourage the qualification of younger people and support their integration into adult life and the labor market”.
At a time when financial independence arrives later and later and when many young people stay at home with their parents until close to or after the age of 30, it is an incentive to counteract this trend.
Late entry into the labor market also ends up penalizing the State, as there are fewer contributions to the Tax Authorities and Social Security.
It should be remembered that, in tax terms, young people can be considered as dependents provided they are not over 25 years old and do not earn annually more than 14 times the value of the minimum wage.
IRS Jovem also seeks to retain in Portugal the qualified young people who in recent years have emigrated after finishing your studies.