The average wait time for tax refunds in Portugal is expected to continue decreasing, especially for automatic IRS submissions, as stated by Cláudia Reis Duarte, Secretary of State for Fiscal Affairs. Last year, for the 2024 campaign based on 2023 income, the average refund time was just under 13 days.
However, the average refund time varies based on individual declarations, being affected by each taxpayer’s specific circumstances, the complexity of their fiscal situation, or the number of attachments included in the annual tax return.
The expansion of situations covered by the automatic IRS and the increasing use of this feature by taxpayers have contributed to shortening these times.
“With more and more pre-filled declarations through the automatic IRS, the expectation is that we will gradually continue to reduce average refund times,” Cláudia Reis Duarte highlighted, as the annual IRS submission campaign approaches, which is scheduled from April 1 to June 30.
In 2024, the average refund time for approximately six million declarations processed by the Tax and Customs Authority (AT) by August 1 was 24.2 days, with the automatic IRS averaging 12.9 days.
The automatic IRS system, which has been gradually expanded, now benefits an increasing number of taxpayers. It covers individuals with income from category A (employment) and category H (pensions), and some self-employed individuals. This is described as a “much easier” method to file IRS declarations.
For the first time this year, taxpayers can benefit from a deduction for payroll expenses with domestic service workers, which is included in the automatic IRS.
The automatic system does not cover scenarios involving the IRS Young regime or taxpayers with rental income, for instance.
According to data from the General Directorate of Budget (DGO), the IRS refunds paid in 2024 amounted to 3,462.8 million euros, which is an increase of 246.8 million euros compared to the previous year.
IRS rates were reduced twice in 2024—initially as part of the State Budget and again mid-year following new legislation passed by parliament. These reductions were reflected in the withholding tax tables.
To compensate workers and pensioners for overpaid taxes between January and August, due to the second rate cut, withholding adjustments were made in September and October. Consequently, many taxpayers paid no IRS for those two months, while others paid significantly less than usual.
This will now be reflected in the annual tax assessment, potentially leading to lower refunds or even additional tax payments for some taxpayers.
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