Withholding less IRS for having a mortgage is possible but little used

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Workers with mortgages can ask since the beginning of the year to withhold less IRS monthly, but the perception of the Ordem dos Contabilistas Certificados and Deco is that the measure is being little used.

“My feeling is that it’s not being used much,” said Paula Franco, the head of the Order of Certified Accountants (OCC), to Lusa, admitting that this is essentially due to the fact that it is a recent measure and little known, and also to the fear that, by paying less monthly, they may lose the refund or have to pay tax on the annual adjustment.
“Effectively there is a notion that this [lower monthly tax discount] may lead to the payment of IRS,” said Paula Franco to Lusa.

An opinion shared by Natalia Nunes, coordinator of the Financial Protection Bureau (GPF) of the association Deco: “People are already organizing your life in order to take advantage of the refund to pay annual expenses, for example, and are afraid of losing the refund [by discounting less per month] or having to pay tax in the end,” says.

In addition, people find that “the amount that they will receive extra per month is insignificant,” stresses the GPF coordinator.

Already the president of the Confederation of Trade and Services of Portugal (CCP), Vieira Lopes, told Lusa have no indication of business associations on the adhesion that the measure is or is not to raise.

The State Budget for 2023 (OE2023) allows that, during this year, the IRS withholding of dependent workers can be “reduced to the rate of the bracket immediately below the corresponding monthly remuneration and family situation applicable to the respective income holder.

For this it is necessary that they meet several conditions, namely that the credit is destined to the purchase of their own and permanent home and that their gross remuneration does not exceed 2700 euros per month.

This means, in practice (and taking into account the retention tables in force) that a person, without dependents and unmarried, who earns 1500 euros gross, can deduct 15.1% (226 euros) of IRS instead of 16.2% (243 euros), receiving 17 euros more per month.

In order for the employer to reduce the withholding tax of the employee, it is necessary that the employee, “at an earlier time” than the payment of the salary, expresses the option for the reduction of the withholding tax, “through a declaration accompanied by the indispensable elements for the verification of these conditions, as well as any other fiscally relevant information that may have occurred subsequently.

This wording has led to some people trying to clarify doubts with Deco about the necessary documentation. “We advise that in the last instance it should be a declaration issued by the bank saying that the person has this credit,” says the head of Deco.

According to the Ministry of Finance, “the taxpayer who intends to use this option should inform the employer that he intends to exercise this option, attaching the elements he deems appropriate for the purpose.

In the report accompanying the proposal of the State Budget for 2023, the government states that the potential universe of beneficiaries of this measure amounts to 1.4 million households, estimating that the cost of the measure (loss of revenue through withholding tax) could amount to 250 million euros.

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