Government proposal allows companies that want to deduct the costs of workers’ salary increases from IRC to no longer be forced to reduce the “salary range” among workers.
Parliament approved this Wednesday, in particular, an amendment to the rules of tax incentives for salary appreciation, so that companies can access the IRC deduction without having to reduce salary inequalities between workers.
At issue is a Government law proposal that amends article 19-B of the Tax Benefits Statute (EBF), which enshrines the tax incentive for salary appreciation.
In the vote held this Wednesday in the Budget, Finance and Public Administration Committee, the initiative included the votes in favor of PSD, CDS-PP and Chega. The PS abstained.
At this moment, for For companies to deduct the costs of workers’ salary increases from the IRC, they must reduce the “salary range” among workers, that is, the inequalities in salaries between the bottom 10% of best-paid professionals and the 10% worst-paid.
With the change now approved, it is no longer necessary for companies to comply with this condition. The remaining criteria already enshrined in legislation for companies to access the tax incentive remain in place.
Among the requirements required is the obligation for employers to make a minimum increase in the company’s average annual base salary and in the annual base salary of employees who earn an amount less than or equal to the company’s average annual base salary at the end of the previous year.
The exemption from reducing salary inequalities will apply from this year onwards, as the approved text provides that the law applies “to tax periods beginning on or after January 1, 2025“.
In the discussion of the diploma in the specialty, the PS presented a proposal to add to the Government’s proposal – which was rejected by the PSD, CDS-PP and Chega – so that the State has data on salary inequalities between workers.
Law no. 60/2018, which aims to promote equal pay between women and men, already requires the availability of a “balance of pay differences between women and men by company, profession and qualification levels” and what the PS intended was to use this instrument for the issue of the “salary range”.
PS remembers great salary inequalities
PS deputy Miguel Cabrita, who was Secretary of State for Labor in the António Costa governments, recalled that Portugal is one of the countries “with the highest levels of inequality in Europe” and regretted that parliament let go of a “very consolidated concern” of combating inequalities.
The mechanism that the PS proposed, he said, was based on the reporting system that the State already has, not implying “any increase in bureaucratic work or time for companies”.
Apart from the amendment to the EBF that removes the requirement to reduce inequalities between workers, the Government included in the State Budget law proposal for 2026 a change to the percentage foreseen in relation to the minimum wage increase that companies must comply with.
Instead of the EBF predicting that this minimum level will be increased by 4.7% (the forecast for this year, 2025), Luís Montenegro’s executive proposes to deputies that the minimum be, in 2026, 4.6%.
The percentage for each year is aligned with the objective of increasing the annual average salary in the country registered in the Social Concertation agreement from 2025 to 2028, signed by the Government of Luís Montenegro, on October 1, 2024, with the General Union of Workers (UGT), the Confederation of Farmers of Portugal (CAP), the Confederation of Commerce and Services of Portugal (CCP), the Business Confederation of Portugal – CIP and the Confederation of Tourism of Portugal (CTP).