IRS Jovem: Tax Benefits for Young Professionals in Portugal

As of 2025, the regime has been significantly expanded, granting a partial or total exemption from personal income tax (IRS) for the first 10 years of professional activity to help young professionals increase their net income and financial stability.

How the IRS Jovem Tax Benefit Works

The IRS Jovem exemption applies for a maximum period of 10 years (consecutive or non-consecutive), until the taxpayer reaches the age of 35.

The exemption percentages on earned income are:

• Year 1: 100% exemption
• Years 2 to 4: 75% exemption
• Years 5 to 7: 50% exemption
• Years 8 to 10: 25% exemption

These exemptions are subject to an annual maximum limit (ceiling) defined by law, based on the Indexante dos Apoios Sociais (IAS). For 2025, the maximum exempt income is 55 times the IAS (approximately €28,737.50 per year).

Who Can Benefit?

To qualify for the new IRS Jovem regime, individuals must:

• Age: Be up to 35 years old (inclusive).
• Residency: Be a tax resident in Portugal.
• Income: Earn eligible income from employment or self-employment in Portugal.
• Previous Years: Not have exceeded the 10-year benefit limit or the age limit.

Unlike previous versions of the law, the 2025 regime no longer strictly requires the completion of a specific cycle of studies (Secondary, Master’s, or PhD) to access the benefit, the primary criteria are now age and income type.

What Income Qualifies?

The benefit now covers the two main types of professional income:

• Category A: Employment income (salaried employees).
• Category B: Self-employment income (freelancers/independent contractors).

The following do not qualify: Rental income (Category F), capital gains (Category G), or investment income (Category E).

How to Apply

The benefit can be claimed in two ways:

• Monthly (Retention at Source): You can request your employer to apply the exemption directly to your monthly paycheck, resulting in a higher net salary every month.
• Annually (Tax Return): You can claim the benefit when filing your annual IRS Return (Modelo 3) between April and June.

Note: If you choose to apply the benefit monthly, your final tax refund at the end of the year may be lower, as you have already received the benefit throughout the year.

Why IRS Jovem Matters

• Drastic Tax Reduction: Up to 100% tax relief in the first year.
• Long-term Support: A decade of tax benefits to support career growth.
• Talent Retention: Encourages young professionals to stay in or move to Portugal.
• Inclusivity: Now includes freelancers and independent professionals up to age 35.

How E-Golden Can Help

Navigating the transition between the old and new IRS Jovem rules can be complex. E-Golden supports young professionals with:

• Eligibility Verification: Confirming if you qualify for the 10-year cycle.
• Tax Residency Registration: Essential for foreign professionals moving to Portugal.
• Monthly Optimization: Guidance on whether to apply the exemption at the source or during the annual filing.
• Compliance: Ensuring your IRS Model 3 is filed correctly to maximize your refund.

‍