To the specific deductionswhich can be lump sums or percentages, are subtracted from your gross income for IRS calculation purposes.
But unlike collection deductions, which depend on the type of expenses the taxpayer made throughout the year, specific deductions vary depending on the type of income obtained.
Specific deductions by income category
Specific deductions correspond to an amount that is taken from gross income to arrive at net income (the one that Finance uses to calculate your IRS).
Which means that, when the IRS rates corresponding to your income bracket are applied, this value is no longer taken into account. They function as a kind of prior discount to which the taxpayer is entitled for the charges he had to bear to guarantee those incomes.
This is what happens, for example, with contributions to Social Security made by dependent workers or with the costs of works that landlords have had to rent a house.
As we will see below, each category of income corresponds to certain specific deductions.
Income from dependent work
Employees can deduct from their gross income (article 25 of the CIRS) mandatory contributions to Social Security, as well as to Caixa Geral de Aposentação, ADSE or SAMS, for example.
These deductions normally have the fixed amount of 4,104 euros.
The fixed amount can be increased to 4,275 euros if the difference results from the payment of fees for professional orders with mandatory registration, as happens for example with doctors or lawyers.
But these professionals can only deduct the additional 171 euros if the activity is carried out exclusively on behalf of others. That is, if a doctor or lawyer performs a liberal activity, he can no longer take advantage of this additional deduction.
If the value of mandatory contributions to social protection schemes and legal health subsystems exceeds any of the above limitsthe taxpayer can deduct the total amount of these contributions.
Indemnities that the worker has to pay to the employer may also be deducted when he takes the initiative to unilaterally terminate the employment contract without prior notice.
If you are a union member, the amount corresponding to the fee paid by the worker may also be deducted, up to the amount of 1% of the category’s gross income. The amount to be deducted corresponds to 150% of the amount paid.
Professional and business income
In the case of the simplified regime, the specific deductions are the same as those for employees, that is, 4,104 euros or, when higher, the amounts demonstrably supported with mandatory contributions to social protection schemes (in the part that does not exceed 10% of gross income). Workers covered by the simplified regime must have an annual gross income of up to 200,000 euros.
In the organized accounting regime, as a rule, expenses inherent to the activity are accepted, with some limitations.
Similar to what happens with dependent workers, for self-employed workers who demonstrate that they have deducted more than the minimum amount for Social Security, the amount of specific deduction may also be higher.
As provided for in article 40º-A of the CIRSonly 50% of profits or dividends paid by a legal person resident in Portugal or in the EU or EEA, when included, are considered.
Landlords can deduct expenses incurred with rural and urban buildings they have leased (article 41 of the CIRS). Thus, from the amount of income received, the following can be subtracted:
- Expenses related to the conservation and maintenance of the building (for example, with elevators, porters, cleaning, lighting, repair and painting);
- Condominium expenses;
- Stamp Duty and Municipal Property Tax (IMI), paid in the year, when they relate to a building or part of a building whose income is subject to taxation in that year.
All these expenses have to be documented, effectively supported and paid. It is essential that the invoices and documents used in the deductions identify the properties for which they are intended.
Expenses borne and paid in the 24 months prior to the start of the lease, documented and related to conservation and maintenance work on the building, also constitute a specific deduction, provided that the property has not been used for another purpose in the meantime. This deduction is only applicable for expenses incurred after January 1, 2015.
Outside the specific deductions in category F are expenditures of a financial nature, depreciation, furniture, appliances, decoration and comfort items, as well as the Additional IMI.
In this category it is possible to deduct the expenses incurred, either in the purchase or in the sale of goods or rights.
Thus, in calculating capital gains, charges and expenses with:
- Valuation of real estate (proven to have been carried out in the last 12 years);
- Buy and selling of properties;
- Assignment of contractual position in contracts relating to real estate;
- Purchase and sale of shares and other securities;
- Purchase and sale of intellectual or industrial property rights or experience acquired in the commercial, industrial or scientific sector, when the transferor is not the original holder.
According to article 53 of the CIRSpensioners can deduct from the value of their pensions a fixed amount of 4,104 euros per holder or the total mandatory contributions to social protection schemes and legal health subsystems (if the amount is greater than 4,104 euros).
They can also deduct union dues, with a limit of 1% of gross income.
And what about fast-wearing professions?
In the case of professions with rapid wear and tear, specific deductions may also be considered (article 27 of the CIRS) expenses with contracting sickness, personal accident and life insurance that exclusively guarantee the risks of death, disability or old-age retirement, in the latter case only if the benefit is guaranteed after the age of 55. In either case, the specific deduction limit is the equivalent of 5 times the Social Support Index.
However, for the right to deduct, insurance cannot guarantee the payment, nor can redemption or advances be requested, of any amount owed during the first 5 years.
Specific deductions and collection deductions: what distinguishes them?
Both are deducted from the taxpayer’s income for IRS calculation purposes, but while the specific deductions vary depending on the type of income, the tax deductions vary depending on the expenses incurred.
When consulting your IRS settlement note, you will find the amount referring to specific deductions right on the first lines.
These are automatically calculated upon delivery of the IRS and are customized in relation to the situation of each taxpayer.
Deductions from collection require the declaration of the expenses that gave rise to them and the respective validation on the e-Fatura Portal so that they are considered by the Tax Authority.
In this case, we are dealing with a set of tax benefits, which allow you to deduct from tax a percentage of your expenses throughout the year, up to a maximum limit per category.
Among the expenses that can be deducted from the IRS collection are general and family expenses, expenses with health, housing, education, homes and even the VAT deduction for demanding invoices in restaurants and accommodation, car and motorcycle repair services, hairdressers, veterinarians, public transport passes and gyms.
Article originally published March 2020. Last updated March 2023.