With the start of the IRS campaign, many taxpayers interrogate themselves if they are entitled to any kind of return by the municipality where they reside. The answer may depend on the participation rate in IRS that each City Council applies – and this value varies greatly from county to county.
Discount or not: depends on the decision of the municipality
Portuguese municipalities have the possibility of retaining up to 5% of the IRS charged to their citizens.
This percentage is defined annually by municipal assemblies and communicated to the Tax Authority.
While some cameras choose to be all the rate (5%), others prefer to apply a discount, returning part of the taxpayers – and, in certain cases, returning even all.
Who gives more and who gives less
According to Deco Proteste, this year, 200 of the 308 Portuguese municipalities decided to return at least one part of the value of their participation in the IRS to residents.
In 43 of these cases, the return is total – that is, taxpayers of these municipalities will not pay any amount related to municipal participation.
In practice, a rate of 0% represents a complete return, while the 5% mean that the municipality gets all over its part.
Concrete examples: Lisbon and Porto with different approaches
In the city of Lisbon, the municipality decided to give up its percentage of participation in the IRS, establishing a rate of 0% for its citizens. This means that the Lisbon benefits from a total return of the amount that would be retained by the House.
The municipality of Porto applies a rate of 3%, choosing to get part of the revenue.
On the other hand, municipalities like Cascais maintain the maximum rate allowed by law – 5% – not offering any type of return.
More chambers increased the discount this year
According to Deco Proteste, 45 cameras decided to increase the value of the return over the previous year, which reveals a trend of greater concern with tax relief to resident families.
This relief can represent a relevant savings for many aggregates, especially in a year marked by economic pressures and widespread prices.
How to know what the rate applied to your county
To consult the municipal participation fee in the IRS of your county, you can access the list annually by the Tax Authority or directly consult the portal of your City Council.
The Finance Portal also provides this information in yours.
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Algarve: a regional portrait
In the Algarve, significant differences between municipalities are also registered:
-Heveira, Alcoutim, Aljezur, Monchique, Olhão, São Brás de Alportel, Silves, Tavira and Vila do Bispo decided to apply a rate of 0%, returning all revenue to local taxpayers;
-Faro, Lagoa, Loulé, Lakes, Castro Marim, Portimão and Vila Real de Santo António maintain a rate between 3% and 5%, which means partial or total retention of IRS revenue.
These decisions reflect different fiscal management strategies and investment priorities by the region’s municipalities.
Real impact on taxpayers’ portfolio
Although the varied value between municipalities may seem residual, in aggregates with higher income, or in lower rates at lower rates, the difference can reach a few hundred euros per year.
Why do municipalities receive part of the IRS?
This IRS revenue sharing between the state and municipalities is provided for in the local finance law and aims to allow municipalities to be a greater degree of financial autonomy.
Retrained values can be used for investments in public services, urban maintenance or social projects, each being free to decide whether or not to give up this money.
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