The strengthening of the agreement on income and competitiveness concluded yesterday between the government and the social partners, but without the signatures of the CGTP and, surprisingly, the Portuguese Business Confederation (CIP), confirms the intentions already announced by the executive branch and to be recorded in the proposed 2024 state budget, as is the case with the IRS support, and continues with other measures that companies demanded, such as the reduction of autonomous tax rates for company cars and incentives for capitalization.
The CIP justified not taking it into account because it did not include proposals from the Social Pact, such as the 15th month free of taxes and contributions. Armindo Monteiro, president of CIP, said in statements to DN/Dinheiro Vivo that “the agreement does not meet what would be necessary to change the profile of the Portuguese economy”, in a scenario where it “loses its competitiveness every day”. but emphasizes that it retains its role in social dialogue: “We do not give up our responsibility as a social partner, we maintain it, we assume it, and that is why the government will continue to count on all our commitment to good governance. This is guaranteed.”
João Vieira Lopes, president of the Confederation of Trade and Services of Portugal and spokesperson for the National Council of Confederations of Employers (CNCP), an entity that unites the various confederations, stressed to DN/Dinheiro Vivo that “the agreement is possible at this time it has a series of positive measures, but is still far from major problems, such as lowering IRC rates.”
António Costa yesterday emphasized that the SMN increase of 7.9% – 60 euros – agreed for 2024 represents “the largest annual increase ever”. The Prime Minister assessed the agreement positively so far, emphasizing that according to INE, the average salary had increased by 7.5% at the end of the first half of this year, above the reference of 5.1% for 2023 agreed in October. .
Salary
The National Minimum Wage (SMN) will increase to 820 euros from January 2024, 60 euros more than the current one, and 10 euros more than what was provided for in the original agreement. The benchmark for corporate salary increases has been set at 5%, up from the previous 4.8%.
Pensions
Next year, reforms will be stepped up by applying the update formula. The Social Support Index (IAS) will be assessed in the same way. The government is committed to developing a mechanism that allows access to part-time pension, in addition to income from work, before the age of 66.
tax authorities
The government has committed to continue the phased reduction of the IRS, in line with the Stability Program, which provides for a total reduction of around 500 million euros by 2024. António Costa was more specific yesterday, talking about relief “in its different components : fees, updating levels, updating the minimum subsistence to the new value of the SMN and thus an effective reduction of the IRS”. However, the agreement document only mentions updating the levels.
Tax authorities young
The annual IRS Young benefit increases to 100% in the first year, which means that no tax has to be paid. In the second year, 75% of the income is exempt, in the third and fourth years this is 50% and in the fifth year 25%. The maximum benefit limits are also increased annually.
Cost reimbursements
It was decided to update the kilometer value for your own car to 40 cents. For travel within the national territory, a reimbursement of EUR 62.75 applies and for international travel EUR 148.91.
Income reinforcement
Next year there will be an IRS tax incentive, applicable to employee profit sharing (bonus), through companies’ balance sheet bonuses, up to a limit of one employee’s monthly basic salary and a maximum of five minimum wages. To do this, the company must give a minimum wage increase of 5% to the employees.
Housing
Companies that provide housing for employees will have their IRC reduced from 2024 due to the acceleration of the tax-relevant depreciation of real estate used for this purpose. The amounts that companies use for housing solutions for employees under the Workers’ Compensation Fund will also be exempt from taxes and contributions.
Exemption from IRS and social security contributions was also introduced in terms of income in kind related to the free or onerous provision of permanent housing to employees by the company. This exemption is limited to the amounts provided for the Affordable Rental Assistance Program. Excluded from this support are employees in the employer’s household, members of the company’s management bodies and employees who have a share in the share capital.
Business support
The agreement provides for the strengthening of the tax system for incentives for the capitalization of companies, providing for a variable payout rate, favoring the use of one’s own capital at the expense of others. Companies will also see the tax system for investment support strengthened.
To encourage the attraction and retention of highly qualified workers, the scope of eligible expenses will be expanded to cover salary costs for workers with qualifications equal to or greater than a master’s degree.
There will be a reduction in the autonomous tax on vehicles, through a reduction in the applicable rates: from 10% to 8.5%; from 27.5% to 25.5%; and from 35% to 32.5%.
With car
Source: DN
