Every spring, thousands of residents in Portugal receive a tax refund from the government — a return of overpaid income tax (IRS). However, in 2025, many people were surprised to find that the refund amounts are significantly smaller than in previous years, and some even received notices that they owe additional tax.
What happened?
In 2024, the Portuguese government reduced IRS withholding rates. As a result, people received more money in their paychecks throughout the year. But this also means that in spring 2025, the tax authority is refunding much less than before.
The Portuguese Public Finance Council (CFP) estimates that total refunds will decrease by approximately €1.167 billion. This is a one-time effect — it is not expected to happen again in 2026.
How to avoid mistakes and unpleasant surprises?
To ensure your tax return is accurate and to avoid penalties:
- Visit the official tax portal — Portal das Finanças
- Check your information carefully:
- Make sure all your income is reported correctly
- Ensure that deductions (children, rent, insurance, education, etc.) are included
- Make sure all your income is reported correctly
- Don’t rely solely on the automatic IRS submission — it may miss important personal details and deductions
- If you need to pay additional tax, do so by August 31 to avoid fines
- Keep a copy of your tax return — it may be required when applying for residency, a mortgage, or a rental contract
We explained in detail how and when to submit your IRS declaration for 2024 in our previous article.