IRS
On February 28, 2025, Order No. 72-B/2025/1 was published, approving the printed forms and respective instructions for completing and submitting the Modelo 3 (IRS).
This order can be found here: Portaria n.º 72-B/2025/1 | DR and takes effect from January 1, 2025.
One of the main changes in the scope of the Personal Income Tax (IRS) is the value of the specific deductions:
Specific deductions represent an amount subtracted from the gross income to calculate the net income, which will be used in the calculation of the IRS. They function like any other expense considered for IRS purposes, reducing the gross income and, consequently, lowering the taxable income. The specific deduction is an amount established by law that can be deducted from the taxpayer’s gross income before determining the tax rates to be applied.
The specific deduction for the year 2025 has been increased, now being 8.54 times the Social Support Index (IAS), with the IAS value also being raised to €522.50. Therefore, after the calculation, the specific deduction for 2025 is now €4,462.15, compared to the previous €4,104.00.
IRC
For the year 2025, a reduction in IRC has also been approved: The standard IRC rate has been changed from the previous 21% to 20%, resulting in a decrease of one percentage point. Additionally, there was also a one percentage point reduction in the rate applied to the first €50,000 of taxable income for all Small and Medium-Sized Enterprises (SMEs) and Small Mid Cap companies.
This reduction will only take effect on the results obtained by companies in the present and following years. The tax assessment will occur in 2026, as IRC is calculated at that time, during the submission of the Modelo 22 tax return.
