Payroll in Portugal 2026: Social Security, IRS and 14 salaries

In Portugal the employer withholds IRS income tax under the monthly withholding tables and the employee's 11% Social Security contribution from each salary, paid 14 times a year. On top of gross pay it pays 23.75% Social Security and mandatory work-accident insurance, and it reports pay every month to the Tax Authority and to Social Security.

Payroll in Portugal at a glance

Social Security contributions (TSU)

The Contributory Regimes Code sets a global rate of 34.75% for the general scheme of employees, the taxa social única (TSU):

• What counts as pay. The base includes base pay, seniority payments, commissions and bonuses, regular productivity awards, overtime and night work, holiday pay and the holiday and Christmas subsidies.
• Other rates. The law fixes different rates for some categories of workers and specific situations, and some hires qualify for an exemption or reduction; the rate applies as communicated when the worker is registered.
• Compensation funds. Contributions to the Fundo de Compensação do Trabalho (FCT) ended for good on 1 January 2024 (Decree-Law 115/2023). Contributions to the Fundo de Garantia de Compensação do Trabalho (FGCT) are suspended while the medium-term agreement on incomes, wages and competitiveness is in force.
• Work-accident insurance. Every employer must transfer its liability for work accidents to an authorised insurer (Law 98/2009, article 79), so the premium is a cost on top of the contributions.

IRS withholding on salaries

The employer withholds IRS on every payment, using the tables approved by Despacho 233-A/2026 for residents of the mainland. Employees resident in the Azores or Madeira are taxed with the regional tables published on the Portal das Finanças. The formula is: monthly pay × marginal rate − amount to deduct − (additional amount per dependant × number of dependants).

Table I, for an employee who is single without dependants or married with both spouses earning, 2026:

With dependants, Table I deducts a further €21.43 per dependant, and Table II (single with dependants) €34.29.

• Subsidies and overtime. The holiday and Christmas subsidies are always withheld separately, never added to the month's salary. Overtime is withheld at 50% of the effective rate of that month's salary.
• November 2026. Despacho 12523-A/2026 halves the withholding on salaries and pensions paid to mainland residents between 1 and 30 November 2026, including a Christmas subsidy paid in that month. It does not apply where monthly pay exceeds the upper limit of the penultimate band (€20,221 in Table I). From 1 December the normal tables apply again.
• The annual return. Withholding is an advance: the year's tax is settled in the IRS return. The 2026 brackets of article 68 of the IRS Code run from 12.5% up to €8,342 of taxable income to 48% above €86,634, plus a solidarity surcharge of 2.5% from €80,000 to €250,000 and 5% above. Employment income is reduced by a specific deduction of 8.54 times the IAS, or by the employee's mandatory contributions if higher. The minimum existence threshold is €12,880 in 2026. Parliament has authorised the Government to cut the rates of the first six brackets for 2026 income, the reason for the November adjustment.

Minimum wage, working time and mandatory pay

• Minimum wage. The retribuição mínima mensal garantida rose from €870 to €920 a month in 2026. With 14 payments that is €12,880 a year.
• Christmas subsidy. One month's pay, due by 15 December; proportional in the year of hiring or termination.
• Holiday subsidy. Base pay plus other payments linked to how the work is performed, for the minimum holiday period, paid before the holiday starts unless agreed otherwise in writing.
• Holidays. At least 22 working days a year; in the year of hiring, 2 working days per month of contract, up to 20.
• Working time. Normal working time may not exceed 8 hours a day and 40 hours a week, and the employer must keep a record of working time.
• Overtime. Up to 100 hours a year: plus 25% for the first hour and 37.5% for each further hour on a working day, and plus 50% per hour on a rest day or public holiday. Above 100 hours a year: plus 50%, 75% and 100%.

Monthly payroll calendar and filings

1. 1Hiring: a company is registered with Social Security automatically when it starts trading. Communicate each new worker's admission to Social Security in the 15 days before work starts (within 24 hours of the start for very short contracts and shift work).
2. 2By the 10th of the following month: send the Declaração Mensal de Remunerações (DMR) to the AT with pay, IRS withheld, mandatory contributions and union dues. Communicate any termination or suspension of a contract to Social Security by the same day.
3. 3By the 20th: pay the IRS withheld to the State.
4. 4Social Security: under the previous model you submit the pay declaration (DR) between the 1st and the 10th. Under the new model (Simplificação do Ciclo Contributivo, SCC) Social Security calculates the month's contributions and you confirm or correct them by the 20th; silence counts as acceptance. Contributions are paid between the 1st and the 25th of the following month.
5. 5SCC from 2027: joining is optional during 2026 and mandatory for all employers from 1 January 2027.
6. 6By 20 January: give each employee a statement of the previous year's income, IRS withheld and deductions.

Payslip (recibo de vencimento). By the time of payment, the employer must give the employee a document showing the employer's identification, the employee's full name, Social Security number and job category, base pay and other payments, the period they relate to, the deductions and the net amount.

Worked example: €1,500 a month on the mainland

An employee resident on the mainland, single, no dependants (Table I), paid €1,500 gross a month, 14 times a year:

The effective withholding rate is 11.21%. The holiday and Christmas subsidies of €1,500 each are withheld separately with the same table, so each also carries €165.00 of Social Security and €168.17 of IRS. Over the year: €21,000.00 gross, €2,310.00 employee Social Security, €2,354.38 IRS withheld, €16,335.62 net, €4,987.50 employer Social Security and €25,987.50 employer cost before insurance. Payments made in November 2026 withhold only half of the table amount.

Common mistakes

1. 1Adding a subsidy to the month's salary before applying the table, instead of withholding it separately.
2. 2Using the mainland tables for an employee resident in the Azores or Madeira.
3. 3Missing the November 2026 adjustment, or not correcting it by the end of December.
4. 4Registering a new worker late: the admission is communicated before work starts.
5. 5Missing the DMR on the 10th or the IRS payment on the 20th.
6. 6Leaving the switch to SCC to the last minute: check workers' contracts and base pay before January 2027.
7. 7Paying overtime at the lower rates after the first 100 hours of the year.
8. 8Forgetting work-accident insurance in the cost of a hire.

How Clientlly helps

Clientlly ships a built-in payroll profile for Portugal: the income-tax bands and allowance as modelled, the employee and employer contribution rates and the minimum wage, checked against official sources on 1 October 2026. It calculates gross to net and the employer contributions, produces payslips, and supports recurring payroll adjustments and imports of employees and payroll data; an administrator can adjust the rates in the payroll tax settings.

The profile models one employee in a primary job, single, without dependants, resident on the mainland, so the Azores and Madeira tables, dependants and personal circumstances must be checked. Its IRS calculation approximates the official withholding table and should be checked against the tables on the Portal das Finanças, in particular for the subsidies and the November 2026 adjustment.

Alongside payroll, the human resources module handles leave requests and approvals with a leave calendar and HR documents, and attendance and time tracking records working hours and overtime. To close the books after the payroll run, see our month-end close checklist.