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Proposed State Budget for 2024 – what should we follow?

By 19 Outubro, 2023Novembro 9th, 2023No Comments

On October 10, 2023, the Minister of Finance presented Bill no. 109 / XV / 2nd to Parliament for the approval of next year’s State Budget. While the parliamentary process for the vote is still underway, we would like to preview the news that directly concerns labor issues. We would like to highlight the proposals with direct or indirect repercussions in the employment context, for both the private and public sectors. These include existing rules that have been amended, as well as entirely new proposals.

Young income tax

Article 140 of the Proposal

Amendment to art. 12-B, no. 5 of the Personal Income Tax Code: Category A and B income earned by taxpayers between the ages of 18 and 26 who are not considered dependents is partially exempt from personal income tax for the first five years of earning income from work after the year of completion of a course of study equal to or higher than level 4 of the National Qualifications Framework, at their option. The exemption is 100 % in the first year, 75 % in the second year, 50 % in the third and fourth years, and 25 % in the final year, with limits of 40 times the value of the IAS (social support index), 30 times the value of the IAS, 20 times the value of the IAS and 10 times the value of the IAS, respectively.


Encouraging workers to join trade unions

Article 140 of the Proposal

Amendment to articles 25(1)(c) and 53(4)(a) of the Personal Income Tax Code: trade union contributions are deducted from category A income, insofar as they do not constitute consideration for health, education, old-age support, housing, insurance or social security benefits and provided that they do not exceed, for each taxpayer, 1% of gross income in this category, plus 100%.


Professional training

Article 140 of the Proposal

Amendment to article 78-D, no. 1 of the Personal Income Tax Code: an amount corresponding to 30% of the amount incurred as training and education expenses, including professional training, by any member of the household is deductible from the personal income tax payable by taxable persons.


Workers’ housing

Article 142 of the Proposal

An exemption from personal income tax and social contributions is proposed for income from work in kind resulting from the use of permanent housing provided by the employer, for the years 2024 to 2026.

To determine the taxable income of employers, properties owned, built, acquired or converted by taxpayers for employee housing may be subject to a depreciation quota corresponding to double that resulting from the table annexed to Regulatory Decree no. 25/2009, of September 14.


Qualified workers

Article 165 of the Proposal

Amendment to article 22 of the Tax Benefits Statute: defines relevant applications as salary costs arising from the creation of jobs for staff with level 7 or level 8 qualifications on the National Qualifications Framework.

Article 166 of the Proposal

Addition of article 58. º-A to the Tax Benefits Statute: tax incentives for scientific research and innovation are granted to taxpayers who, becoming residents for tax purposes, have not been resident in Portuguese territory in any of the previous five years and who earn income from higher education and scientific research teaching careers, qualified jobs under the contractual benefits for productive investment, research and development jobs, staff with minimum qualifications of level 8 of the National Qualifications Framework, the costs of which are eligible for the system of tax incentives for research and business development. The benefit consists of IRS taxation at a special rate of 20% on net income from categories A and B earned in the context of the activities referred to in the previous paragraph, for 10 consecutive years from the year of registration as a resident in Portuguese territory.

Article 167 of the Proposal

Amendment to articles 8 and 11 of the Investment Tax Code: the possibility of granting tax benefits to investment projects in relation to workers occupying qualified jobs, as well as in relation to the estimated salary costs arising from the creation of jobs, when they concern staff with qualifications at level 7 or level 8 of the National Qualifications Framework, by virtue of the initial investment in question, calculated over a period of two years.


Wage appreciation

Article 143 of the Proposal

Without prejudice to the obligation to aggregate, the amounts paid to employees as profit-sharing are exempt from IRS up to a limit of 5 times the RMMG, paid by entities whose average nominal valuation of fixed remuneration per employee in 2024 is equal to or greater than 5%.

Article 165 of the Proposal

Amendment to article 19-B of the Tax Benefits Statute: this is a tax incentive for wage increase policies. Under this incentive, to determine the taxable profit of IRC taxpayers and IRS taxpayers with organized accounts, the costs corresponding to salary increases (provided that they are covered by a dynamic collective bargaining agreement and provided that salaries have increased by at least 5% above the guaranteed minimum monthly wage) for workers with indefinite employment contracts are considered at 150 % of the respective amount, which is recorded as a cost for the year.

Article 182 of the Proposal: defines negotiated collective bargaining instruments as dynamic and, for 2023 and 2024, the extension ordinance and the working conditions ordinance.


Residence permits

Article 137 of the Proposal: establishes rules on the simplified granting and renewal of residence permits. Until June 30, 2024, the simplified procedure for examining applications for the granting and renewal of residence permits, provided for in Article 88(2) and Article 89(2) of Law 23/2007 of July 4, will remain in force.


IRS for former residentes

Article 140 of the Proposal

Amends Article 12-A of the Personal Income Tax Code: 50% of the income from dependent work and business and professional income of taxable persons is excluded from taxation, up to the amount of the upper limit of the first bracket provided for in Article 68-A(1), for 5 years.


International double taxation

Art. 140 of the Proposal

Amends Article 81 of the IRS Code: Concerning the issue of international double taxation and without prejudice to aggregation, the exemption method applies to taxpayers who benefit from the regime provided for in Article 58-A of the Tax Benefits Statute and who obtain income from categories A, B, E, F and G abroad. In the case of taxpayers whose income is paid by entities domiciled in a country, territory or region subject to a more favorable tax regime, included in a list approved by order of the member of the Government responsible for the area of finance, they are taxed under the terms of paragraphs b) and c) of no. 17 of article 71 and no. 18 of article 72 of the IRS Code.


Health, National Health Service and INEM

Article 187 of the Proposal

Amends art. 17 of Decree-Law no. 52/2022, of August 4: concerns the exceptional hiring regime. It is the responsibility of the highest management body of the health services and establishments that are part of the state’s business sector to sign open-ended employment contracts, under the Labour Code, whenever it is necessary to recruit the workers needed to fill the jobs provided for in the approved staff map and organizational development plan.

Art. 192 of the Proposal

Amends art. 19-A of Decree-Law no. 19/2016, of April 15: concerning the limits of overtime work and respective remuneration. Upon verification of exceptional and time-limited circumstances, namely when it proves indispensable for the emergency medical assistance provided by INEM, I.P., with the authorization of the member of the Government in the area of health, the limits on the duration of overtime work provided for in the law for INEM, I.P. workers, regardless of career, may be exceeded, provided that they do not entail remuneration for overtime work over 80% of the worker’s basic remuneration.

Art. 21 of the Proposal: establishes a limit on the remuneration levels of employees of public business entities, and applies to all health professionals, regardless of the type of contract. Unless specifically authorized by the member of the Government responsible for the health area, if the contract is signed within the scope of an establishment or service of the NHS (National Health Service) with the nature of a public business entity, signed after the entry into force of this law, the remuneration levels to be applied may not be higher and are established under the same terms as those corresponding to workers with a public employment contract who are part of general or special careers. The same limitation applies to increases in remuneration due for night work, work on compulsory weekly rest days and public holidays.

Article 22 of the Proposal: concerns the hiring of retired doctors. Retired doctors, with or without recourse to legal anticipation mechanisms, who perform duties in central, regional and local administration services, public companies or any other public legal persons, maintain their retirement pension, plus 75% of the remuneration corresponding to the category and, as the case may be, step or remuneration position held on the date of retirement, as well as the respective work regime, and requests for accumulation of income submitted from the entry into force of this law are authorized under the terms of the budget execution decree-law. The regime applies to retired doctors who ensure the functioning of medical boards for assessing the incapacities of people with disabilities, as well as within the scope of the system for verifying incapacities and the system for certifying and recovering incapacities due to occupational diseases, even if not on an exclusive basis.



Art. 15 of the Proposal: mobility situations existing on the date of entry into force of this law whose maximum duration is during the year 2024 may, by agreement between the parties, exceptionally be extended until December 31, 2024. For situations of assignment in the public interest, the extension depends on a favorable opinion from the member of the Government who exercises powers of direction, superintendence or supervision over the public employer, with quarterly communication to the member of the Government responsible for the area of public administration. The services of destination must define their intentions to terminate mobility or assignment in the public interest and communicate them to the respective services of origin before preparing the budget proposal.



Article 16 of the Proposal: extends the system of subsistence allowances, overtime work, and night work provided for in Decree-Law 106/98 of April 24 and the LTFP (General Labor Law in Public Functions) to employees of public foundations under public or private law and employees of public establishments, except as provided for in collective labor regulation instruments.



Art. 29 of the Proposal: retirees or pensioners with relevant experience in the areas of rolling stock maintenance or as train drivers may work for public companies in the railway sector that provide public passenger transport, maintaining their retirement pension, plus up to 75% of the remuneration corresponding to their category and, as the case may be, step or remuneration position held at the time of retirement, as well as their work regime.


Military and police forces

Art. 30. Article 30 of the Proposal: With regard to military personnel from the GNR (National Republican Guard), personnel with police duties from the PSP (Public Security Police), the Judicial Police, the Maritime Police, other militarized personnel and Prison Guards, the transition to reserve status, pre-retirement or availability, depends on the verification of specific circumstances (in the case of duly attested health situations, in the case of having reached or exceeded the age limit or length of stay in the post or function, in the event that the legal conditions for moving to the reserve, pre-retirement or availability are met after completing 36 years of service and 55 years of age, in the event of exclusion from promotion due to failure to meet the general conditions for this purpose or for being passed over for promotion in a particular post or category, when this consequence results from the respective statutory terms, in the event of meeting the conditions applicable under the schemes applicable to CGA (Caixa Geral de Aposentações) subscribers.


Interconnection between entities

Articles 133 and 134 of the Proposal Article 134 of the Proposal: provides for the interconnection of data between public entities, services and bodies or other public institutions and the following entities: António Sérgio Cooperative for the Social Economy – Limited Liability Public Interest Cooperative, Work Compensation Fund and Work Compensation Guarantee Fund, SCML (Santa Casa da Misericórdia Lisboa), Startup Portugal – Portuguese Association for the Promotion of Entrepreneurship (SPAPPE), entities participating in the National Strategy for the Integration of People Experiencing Homelessness: Prevention, Intervention and Follow-up 2017-2023, private entities with their own or delegated responsibilities in the management of European funds or other public funds, to access information made available at the European Funds Counter. It also provides for the interconnection of data between Social Security, the Tax Administration and the Institute of Registries and Notaries.


Legislative authorization to amend the General Public Employment Law

Art. 194. Article of the Proposal: The intention is to introduce changes to the General Law on Public Employment regarding the system of intervention by medical boards in the context of sick leave for workers in public employment who are part of the convergent social protection system (specifically, by reducing the limit of consecutive days of sick leave in which the worker is unable to return to work to 30 days, from which the medical board must intervene), an increase in the maximum number of days of sick leave that the medical board can justify, for successive periods, up to 60 days, in the case of absences caused by incapacitating illnesses that require costly and/or prolonged treatment, and the attribution to the respective employers of responsibility for the costs of clinical examinations carried out by the worker and which have been deemed necessary, requested and scheduled by the medical board).

João Vilaça, Rui Rego Soares e Nuno Abranches Pinto @ DCM | Littler