The PS parliamentary group has posed questions to Finance Minister Joaquim Miranda Sarmento regarding the timeline for implementing progressive withholding tax rates for self-employed workers by the Tax and Customs Authority. They seek clarity on when the necessary IT changes will be completed and when the new model will commence.
This inquiry comes as employees and pensioners are set to see reduced monthly IRS deductions due to new government-adjusted withholding tables. However, self-employed workers, currently subjected to a fixed IRS withholding rate of 23%, are excluded from this reduction, as the new tables apply only to employees and pensioners.
The PS seeks to determine when self-employed individuals might experience relief in monthly deductions. There is legal stipulation requiring the government to review the withholding model for these taxpayers, ensuring that deductions align with their income brackets.
In 2023, the State Budget law for 2024 mandated the government to make “necessary IT changes for the application of progressive withholding rates to self-employed workers” in 2024, before the formation of Luís Montenegro’s government. However, this change has not yet occurred, with no set implementation date.
In January, the PS proposed a resolution urging the government to review the withholding system in line with legislation, but this was rejected, with opposition from PSD, CDS-PP, and Chega.
Beyond timelines, the PS queries whether the new withholding model will ensure the same progressivity that applies to salaried workers’ incomes. They also inquire if a specific model will be developed for freelancers primarily serving one employer, formally recognized as economically dependent.
The PS further asks if the government intends to “introduce other modifications” to taxations and social contributions for economically dependent self-employed workers.
The PS notes self-employed individuals with annual earnings of 15,000 euros or less are exempt from withholding, a threshold higher than that for salaried workers and pensioners (12,180 euros annually). However, they emphasize that self-employed workers remain “penalized” in monthly income retention, especially those earning less.
“With the new withholding tables, the effective withholding rate reaches 23% only for incomes above 3,000 euros per month, whereas a self-employed individual earning 1,250 euros monthly faces the same rate,” they argue, signaling the need for a revised withholding model.
