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IRS 2018 Expenses: An Overview

This is a weekly series of articles about the rules and changes in the IRS system which will apply to the individual income tax declarations for 2019. The respective series about IRS income can be read in The Resident and the series about IRS procedures are to be found in Portugal News.

General Expenses – an overview

To make the most of the interactive tax system, you should give your tax number (“NIF”) on invoices for any expense in order to be entitled to the following tax deductions: class=WordSection2>

  •     35% of general family expenses up to €250 maximum per taxpayer (€715 in expenses p.p.)

      15% of health expenditure (including health insurance, up to a maximum of €1,000);

  •     30% of education expenses up to a maximum of €800;  
  •     15% of the costs of housing rent, up to a maximum of €502 or  

   15% of the costs of loan interest to principal residence, up to a maximum of €296;

  •     25% of the costs of Nursing Homes, up to €403.75;       
  •     15% of the VAT paid on each invoice for the expenses for restaurant, hairdressing and

   automobile and motorcycle repairs, up to a maximum of €250.

When requesting invoices for purchases, be sure to include your tax number (“NIF”) so that shops and businesses can automatically report the transaction for a tax credit. The Portuguese Tax Authority  (“AT”) will list automatically all of your eligible expenses on your personal page on the Finanças web site, which can be consulted and approved by you online.

Where taxable income (per adult) exceeds €7.000, the sum of health, education, property, retirement home and maintenance allowances is capped at €1.250, reducing progressively to nil on incomes exceeding €80.000 (per adult). There is a 10% increase to the cap per child.

  Description Limit per person
  15% Medical Expenses and Health Insurance €1 000
Rental housing €502
Loan interest for housing €296
  20%  Retirement saving plans (PPR) €600 – €800
Public capitalization regime €350
Alimony / Child Support no limit
  25%   Nursing care €403.75
 Donations – State no limit
  Donations – other entities  up to 15% of tax due
30% Education €800

 Personal and Family Tax Credits

All taxpayers are entitled to personal credits depending on their civil status in relation to the family group (rather than specific income).

                              Credit for each Amount
  Single,  Single with Dependents, Couples replaced by General Family Tax Credit
  Each Dependent Child – earning less than the minimum wage children under age 3   € 600 € 725
  Elderly Dependents –  with income not exceeding   Basic S.S. Pension, residing with taxpayers:   Only one cohabiting elderly dependent:   € 525                          € 710
  Handicapped Dependents € 1 187.50

Next Monday: Medical expenses

Dennis Swing Greene

info at

Madeira Weekly