WAGE EARNERS have little choice when it comes to submitting a tax return. Since tax on salaries is normally withheld at source, one of the main objectives in filing is to seek out ways to obtain a refund. Before exploring deductions and credits, first it is essential to understand what constitutes taxable salary income besides your pay cheque.
In addition to my salary,
do I have to declare
any fringe benefits?
Yes. Salaried workers must declare all forms of income as well as all goods and services paid for by the employer, such as:
– Commissions, prizes
– Children’s education
– Personal use of company cars
Other than occasional tips,
is there anything else
I should declare?
The following are also considered to be taxable income in this category:
– Tips and gratuities (taxed at a flat rate of 10 per cent)
– Advances for pay or for non-reimbursed expenses
– Gains obtained from the sale of Stock Options
– Acquisition of a company vehicle at a reduced value
– Certain types of severance and redundancy payments.
How are these benefits
reported? On my pay slip?
At the end of the year?
The value of these benefits should be reported on pay statements and are subject to normal withholdings.
What about annual statements?
Employers are required to provide employees with an annual statement by January 20 which must include the following information:
– Income tax withheld
– Contributions to Social Security
– Any taxable subsidies or support
My employer gives me lunch subsidies. Are these taxable?
Employer cost supports and subsidies above the following daily limits are also taxable:
meal subsidy ¤5.55
meal subsidy voucher ¤6.29
travel within Portugal ¤56.72
travel abroad ¤134.62
travel by: (per km)
own car: ¤0.36
public transportation ¤0.12
taxis: one person ¤0.33
three or more ¤0.12/each
on foot: per km ¤0.15
Next: Self-employed – the Simplified Regime