Per Diem

In Portugal, per diem allowances (ajudas de custo) are provided to employees for business-related travel expenses. The per diem rates vary based on domestic or international travel:

• Domestic Travel:
  • Meals and accommodation: Up to €50.20 per day (if staying overnight).
  • Meals only: €22.30 per day.
  • Accommodation only: €27.70 per day.
• International Travel:
  • Meals and accommodation: €89.35 per day.
  • Meals only: €37.19 per day.
  • Accommodation only: €52.16 per day.

These allowances are tax-exempt as long as they do not exceed these limits. Any amount above these thresholds is subject to Personal Income Tax (IRS) and Social Security contributions.

Portugal’s per diem compliance rules include:

• Domestic Per Diems:
  • Full day allowance: approximately €50-€70 per day (varies for public vs. private sector)
  • Partial day allowance: typically 25% for breakfast, 25% for dinner, 50% for lunch
  • Not subject to income tax or social security if within statutory limits
• International Per Diems:
  • Higher rates apply for international travel
  • Rates vary by destination country
  • Set by ministerial decree for public sector employees
  • Private sector typically uses government rates as reference

Mileage

For 2025, Portugal’s tax-exempt mileage allowance for business travel remains at €0.40 per kilometer when using a personal vehicle for work-related purposes. This rate is set by the Portuguese Tax and Customs Authority.

Additionally, per diem allowances for business travel in Portugal are:

• €62.75 per day for travel within Portugal.
• €148.91 per day for travel outside of Portugal.
• Per diems are only applicable if the employee stays overnight; same-day travel does not qualify for reimbursement​ bezala.com

Paperless

In Portugal, businesses must comply with new digital record-keeping and e-invoicing rules starting in 2025. Here are the key requirements:

1. Mandatory Qualified Electronic Signatures: From January 1, 2025, all PDF invoices must include a Qualified Electronic Signature (QES), a Qualified Electronic Seal, or be processed via Electronic Data Interchange (EDI) to be legally valid. This requirement enhances invoice security and prevents tampering.
2. SAF-T Billing & Accounting:
   • SAF-T Billing reporting for foreign businesses VAT-registered in Portugal continues in 2025.
   • The SAF-T Accounting implementation has been postponed to 2025, meaning businesses will need to comply with structured digital tax reporting.
3. QR Codes & ATCUD: Businesses must include a QR Code and ATCUD code on all invoices, ensuring tax authorities can efficiently track transactions.
4. Electronic Invoicing Framework: Decree-Law No. 28/2019 defines that e-invoices are valid only with recipient consent and must ensure authenticity through one of the approved methods: QES, EDI, or a qualified seal.

Until December 31, 2024, businesses can still issue invoices as PDFs without a QES, but after that, compliance with these digital measures will be mandatory.

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Meals, Benefits & Allowances

For 2025, Portugal’s compliance rules for meals, benefits, and allowances include the following key updates:

Meal Allowance

• The tax-exempt limit for meal allowances paid in cash remains at €6.00.
• If provided through a meal card or voucher, the tax-free amount increases to €10.20
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Bonuses & Performance Incentives

• Productivity and performance bonuses, profit-sharing, and balance sheet gratuities are exempt from Personal Income Tax (IRS) up to 6% of an employee’s annual base salary, provided the employer has made eligible salary increases
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• These bonuses are also exempt from social security contributions
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Health Insurance & Benefits

• Employer-paid health or illness insurance for employees, retirees, or their families is considered 120% deductible when calculating corporate taxable profits
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Company Vehicles & Allowances

• The autonomous tax rates on expenses related to company vehicles (including cars, motorcycles, and mopeds) have been reduced
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Overtime Pay Taxation

• The withholding tax rate on overtime pay is now 50% of the regular rate, applied from the first hour of overtime, unlike previous rules where the reduced rate started from the 101st hour
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These regulations are part of Portugal’s 2025 State Budget Law, which introduces various fiscal incentives to support salary increases and employee benefits

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Sales tax rates

Portugal has a Value-Added Tax (VAT) system with three main rates:

• Mainland Portugal:
  • Standard VAT rate: 23%
  • Intermediate VAT rate: 13% (e.g., some foodstuffs, restaurant meals, cultural events, wine)
  • Reduced VAT rate: 6% (e.g., basic foodstuffs, books, medical equipment, hotels)
• Autonomous Region of Madeira:
  • Standard VAT rate: 22%
  • Intermediate VAT rate: 12%
  • Reduced VAT rate: 5%
• Autonomous Region of the Azores:
  • Standard VAT rate: 18%
  • Intermediate VAT rate: 9%
  • Reduced VAT rate: 4%

Some transactions, such as exports and intra-community supplies, are zero-rated. VAT compliance requires businesses to file monthly or quarterly returns, depending on turnover, and penalties apply for non-compliance​. taxually.com world.salestaxhandbook.com taxsummaries.pwc.com.