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A worker who earns the average salary in Portugal should not have more than a monthly profit of about two euros with the reduction in withholding tax promised by the Government. Based on information provided by Expresso over the weekend, Finance will reduce retention rates by an average of 2% for employees.
In the simulations prepared by the EY consulting firm, we assume this average value at all levels of monthly income in the current retention tables. The consulting firm acknowledges that “so far it is not known to what extent the reduction will occur, that is, if it will be introduced with some progressivity and if the reduction will actually correspond to 2% or will assume a different amount”, admitting that the impact on monthly net income “may be different”.
Assuming that the average value is 2%, at a salary of 925 euros, for a single taxpayer, the profit will not exceed two euros. In the case of a couple with two owners and two children, with a gross monthly income of 1,500 euros, the increase in the monthly rent will be about five euros per month.
As the income level increases, the monthly profit also increases with this measure. In simulations carried out by EY, the change can reach 80 euros per month.
Workers only
The Report that accompanies the State Budgets 2021 (OE2021) establishes that “the Government will adjust the rates of withholding at source at the source, in order to continue with the actions taken, gradually and progressively during the last years, to blur the difference between the withholdings at source made by dependent workers and the final amount of the tax payable. “
As for the effects on public accounts, “it is a neutral measure from the budgetary point of view, but with a great impact on the disposable income of households, which is around 200 million euros.”
Set in 2022
The Executive therefore assumes that this amount will be settled later with the payment of the tax and at that time, taxpayers will receive a lower refund than in recent years or, at the limit, they will even be able to pay and will not have an impact on the balance . .
Inspectors interviewed by DN / Dinheiro Vivo warn that this “relief” is only temporary.
“This is only a financial effect, since, despite increasing the monthly net profit, this measure has no impact on the final tax to be paid, which remains exactly the same,” says Anabela Silva, from EY.
“If no other changes to the OE2021 bill are anticipated that will result in an effective IRS decrease, updating the withholding tables may, in fact, result in a lower refund, or even payment, in the final tax settlement “, warns the inspector.
