Payroll in Portugal: components, payments and deductions

How to read the recibo de vencimento

The monthly payslip distinguishes two blocks: income, with the vencimento base, the meal allowance, supplements and overtime, and deductions, with the IRS withholding and Social Security. The result is the net amount that reaches the account.

The vencimento base is the agreed monthly remuneration, which cannot be below the national minimum wage of 920 euros gross in 2026. Supplements and deductions are calculated on that base, just as in the Spanish payslip.

14 payments: holiday and Christmas allowance

Portugal pays 12 monthly instalments plus two full extra payments: the subsidio de férias, paid before the summer holidays, and the subsidio de Natal, before Christmas. They are mandatory by law and do not depend on the collective agreement.

The annual cost of an employee is therefore the monthly gross multiplied by 14. With the minimum wage, the annual floor is 12,880 euros. There is the option of paying in twelfths, prorating the two extra payments across the 12 monthly instalments, if employer and worker agree.

Deductions: IRS and Social Security

The worker contributes 11% of gross to Social Security (TSU); the company pays 23.75%. The total of 34.75% is the contribution cost on every euro of salary, and the company's share is a deductible expense for IRC purposes.

The IRS withholding is applied month by month using the tablas de retenção na fonte published by the tax authority: it rises with salary and falls with the number of children and family situation. At the minimum wage the withholding is zero or almost zero; at high incomes it approaches the maximum rate of the tax, which in the IRS reaches 48%.

Meal allowance: the exempt part

Almost all Portuguese companies pay a meal allowance, the equivalent of meal vouchers or a meal per diem. In 2026, the part exempt from IRS and Social Security is 6.15 euros per day in cash and around 10.45 euros if paid by card or meal voucher.

Anything above those limits is taxed and contributes as salary. Many collective agreements set the amount, so the meal allowance is a real cost to budget from the first contract, not a free decision of the company.

From gross to net with an example

With the minimum wage of 920 euros in 14 payments, the worker bears 11% Social Security, about 101 euros, and the IRS withholding is negligible. The monthly net is around 815-820 euros, plus the meal allowance if the company pays it.

For average incomes the scheme is the same: gross minus 11% Social Security minus IRS withholding. The withholding is adjusted downwards with dependent children, so two workers with the same gross can have different nets.

What to watch when hiring in Portugal

The most expensive mistake when hiring in Portugal is projecting a cost that is paid in 14 payments onto 12. Budget from the start with the full annual gross and you will have the labour cost under control.