Portugal property investment immigration guide to living in Portugal: Starting from Sunday (March 1st), Portugal has begun the filing process for 2014 personal income tax. Employees and pensioners are the first group required to file. This year's personal income tax deduction items are the same as last year's, and the deduction categories are also similar. Specifically, they include:
1. Medical Expenses (maximum deduction of 838.44 Euros)
For medical expenses, taxpayers can enjoy a 10% tax deduction, with a maximum deductible amount of 838.44 Euros. It should be noted that this deduction only applies to medical expenses with a 6% VAT rate. If the invoice shows a standard VAT rate of 23%, you must provide a doctor's prescription as proof to qualify for the personal income tax deduction; however, the deduction is limited to a maximum of 2.5% of the total medical expenses, with a maximum deductible amount of only 65 Euros.
2. Property Expenses (maximum deduction of 296 Euros)
Taxpayers who signed contracts and took out mortgages for home purchases in December 2011 can receive a 15% tax relief on their mortgage interest payments, with a maximum tax deduction of 296 Euros. Taxpayers who took out mortgages for home purchases after December 2011 are not eligible for this deduction policy.
For rental of a permanent residence, taxpayers can enjoy a 15% tax deduction, with a maximum tax deduction of 502 Euros.
3. Education Expenses
For expenses related to education and vocational training for the taxpayer and their children, taxpayers can enjoy a 30% tax deduction, with a maximum tax deduction of 760 Euros.
For families with three or more children, if the parents have paid corresponding tuition fees for each child, families with three children can enjoy a maximum tax deduction of 902.50 Euros. Following this logic, for each additional child, the maximum deductible tax amount increases by 142.50 Euros.
4. Elderly Care Expenses (maximum deduction of 403.75 Euros)
In cases where taxpayers file personal income tax jointly with direct or collateral ancestors within three generations, the taxpayer can receive a 25% tax relief on expenses incurred for the elderly, with a maximum deductible amount of 403.75 Euros.
5. Alimony
Taxpayers with an obligation to pay alimony can enjoy a 20% tax deduction. If the beneficiary of the alimony is an entity, the monthly tax deduction enjoyed by the taxpayer shall not exceed 419.22 Euros.
6. Retirement Savings Plan (PPR) Expenses
Expenses incurred by taxpayers on Retirement Savings Plan (PPR) insurance and retirement certificates can receive a 20% tax relief. For taxpayers with an annual income of up to 7,000 Euros, the maximum relief amount is 100 Euros.
For taxpayers with an annual income exceeding 7,000 Euros, the higher the taxpayer's income, the lower the relief amount received.
7. Donation Expenses
Donations made by taxpayers to the state can enjoy a 25% tax relief. If the donation is made to other entities or institutions, the tax relief amount is slightly lower.
8. Partial Refund of Paid Personal Income Tax by Municipalities
Municipalities should refund citizens up to 5% of their personal income tax. For example, the Lisbon Municipality refunds 2.5% of tax to citizens; taxpayers do not need to specify this when filing their personal income tax.
9. Exemption from Filing
Taxpayers with an annual income not exceeding 4,104 Euros, which means a monthly income not exceeding 342 Euros, are not required to file personal income tax.
10. Retention of Documents
Taxpayers must retain income certificates and invoices that can prove their consumption status for four years.
