The IRS Jovem is a scheme created by the government to help young people at the beginning of their adult life, in their first job. How? Paying less taxes during their first years of tax-paying careers. From now one the rules are different from previous years.. For young people who benefit from IRS Jovem, the changes introduced by the Government in the State Budget for 2023 can translate into a large reduction in the tax to be paid.
One of the big changes has to do with the recipients of this scheme. If previously only young people working for others (category A) could benefit from this aid, now young self-employed workers (category B) can also benefit from this right.
Requirements
- Be between 18 and 26 years old (or 30 years old in the case of a PhD)
- Having completed a cycle of studies equal to or greater than level 4 in the National Qualifications Framework, that is:
- 4th Level – secondary or vocational education with a professional internship of at least 6 months;
- 5th Level: Non-higher post-secondary qualification with credits for continuing higher education;
- 6th Level: Degree;
- 7th Level: Master’s;
- 8th Level: Doctorate.
- Have category A or B income, that is to be employed or self-employed, respectively.
- The young person cannot be included in the parents’ income tax return, that is, he cannot be considered a dependent, having to fill out his income tax return separately.
It is important to bear in mind that all these access conditions are cumulative, which means that it is enough not to comply with one of them to be excluded from IRS Jovem.
To what extent is the IRS Jovem a tax benefit?
It is a tax benefit from the moment there is partial exemption from the IRS.
This benefit applies for 5 years, consecutive or interpolated, but be careful, the discounts change over time. The tax discount is highest in the first year and decreases in subsequent years, as follows:
- 50% in the first year, with a limit of 12.5 times the IAS;
- 40% in the second year, up to a maximum of 10 times the IAS;
- 30% in the third and fourth years, with a limit of 7.5 times the IAS;
- 20% in the fifth year, with a cap of 5 times the IAS.
Each youth can only use this benefit once. However, the five years of IRS discount do not have to be consecutive.
Access to or choice of this regime is made at the time of delivery of the IRS declaration, that is, between April 1st and June 30th of each year.
Pay attention to the following point: in order for the withholding tax to be applied to you with the IRS Jovem discount, you must inform the employer that you wish to use this benefit.
How is the declaration filled in?
It is important to point out that the IRS Jovem is not automatic, being optional. If you opt for automatic IRS, you cannot benefit from IRS Jovem. To opt for the IRS Jovem, tables 4A and 4F of Annex A must be completed.
Table 4A
(Income from Dependent Work and/or Pensions Obtained in Portuguese Territory)
- If the fields are not already pre-populated, click on “Add line”.
- In the “TIN of the paying entity” field, indicate the tax identification number (NIF) of the entity that paid you the income.
- In the “Income Code” field, where you choose the Young IRS, you must select the option “417 – income from dependent work, including holiday and Christmas allowances, including the exempt part thereof – Regime provided for in article 2. º-Bdo IRS Code – years 2020 and following”.
- Under “Holder”, select your tax identification number and under “Income” indicate the income received in the last year.
- In the field “Withholding tax” you must indicate the IRS withholdings made by the paying entity.
- Under “Contributions”, enter contributions to Social Security.
If applicable, in the “Union Dues” field, indicate the amounts paid to unions.
Table 4F
(Option for the Tax Regime of Art.º 2.º-B of CIRS – IRS Jovem)
- If the fields are not already pre-populated, click on “Add line” again.
- In the “Holder” field, select your tax identification number (NIF).
- In “Year of completion of the cycle of studies”, enter the year in which you completed the cycle of studies.
- In the “QNQ qualification level” field, select the QNQ qualification level corresponding to the study cycle you completed.
Finally, under “Educational establishment / Country where the cycle of studies was completed”, indicate the name of the educational establishment where the cycle of studies was completed. If you finished your study cycle outside the national territory, enter the code for that country.
Even after all this explanation, we understand that this process can continue to be confusing for many young people, after all it is a taking on of new responsibilities that until now were unknown. If you have questions about how to benefit from this regime, we are at your disposal to help you on this journey.
