As of January 2023, there is the possibility of reducing category A withholding tax for holders of mortgage loans with income from dependent work of up to 2,700 euros per month.

In 2023, the withholding tax on IRS category A income may be reduced to the rate of the step immediately below that corresponding to the monthly remuneration.

Who is covered?

The step reduction in the IRS is a measure to mitigate the rise in monthly costs with the housing loan that will only be applied to workers who have:

  • Loan for own and permanent housing;
  • Gross monthly remuneration of up to 2,700 euros.

How to communicate?

Workers will have to communicate to the employer, before paying or making available the income, that they want to reduce the monthly withholding in the IRS based on the legislation.

This communication must be carried out through a statement accompanied by “indispensable elements for verifying the aforementioned conditions, as well as any other fiscally relevant information that occurred subsequently”, the option to reduce the withholding tax, through a statement expressly exercising that option, accompanied by the evidence that the aforementioned conditions are met, such as a document proving that they have a loan for their own permanent home.

What is intended with this measure?

The measure aims to increase the monthly net income available to face the rise in interest rates. Families with housing creditvariable ratelarge amounts and/or recently contracted are the most affected. But this measure does not correspond to support, but to anticipation. This is because the tax reduction will be compensated in the taxation adjustment that will be made in 2024, that is, those who receive refunds will receive less. And if someone paid, possibly they will pay more the following year.

count on our help.

Count on the support of DECO MADEIRA through the telephone number 968 800 489/291 146 520, email address deco.madeira@deco.pt. You can also schedule an appointment via Skype. Follow us on social media Facebook, Twitter, Instagram, Linkedin, Youtube and on our website DECO.


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