Lisbon, Oct. 1, 2024 (Lusa) - On Tuesday, the government, the four business confederations and the UGT union confederation signed the new tripartite agreement on wage rises and economic growth for 2025-2028.
Here are the main measures of this agreement:
+++ National minimum wage increase trajectory +++
The government has revised upwards the trajectory of the national minimum wage, providing for increases of €50 per year until 2028.
The government stipulates that the minimum wage will rise to €870 gross next year, an increase of 6.1 % compared to the current €820 and €15 more than the amount provided for in the previous government's income agreement (€855). It is then set to rise to €920 in 2026 (an increase of 5.7%), to €970 in 2027 (an increase of 5.4%) and to €1,020 in 2028 (+5.2%).
+++ Increase of the average wage+++
Regarding the benchmark for the overall increase in salaries (discussed in collective bargaining), the government is maintaining the values set out in the agreement signed by the previous government (4.7% in 2025 and 4.6% in 2026). For 2027 and 2028, since the idea is for the new agreement to cover the entire legislature (the current one only runs until 2026), it is 4.5% in each of these years.
+++ Corporate income tax benefit +++
Companies that make ‘a minimum increase of 4.7% in the annual basic pay of employees earning less than or equal to the average annual basic pay in the company at the end of the previous year’, that ensure ‘at least an overall increase of 4.7% in the average annual basic pay in the company, concerning the end of the previous year’ and ‘covered by a collective labour regulation instrument signed or updated less than 3 years ago’ will be able to benefit from a 4.7% increase in IRC, according to the agreement.
‘Charges are considered to be the amounts borne by the employer, by way of basic pay and social security contributions,’ the agreement also states, pointing out that the maximum amount of charges that can be increased, per worker, “is the amount corresponding to five times” the national minimum wage, ’and the charges resulting from the updating of the RMMG will not be taken into account for the increase.’
+++ Exemption on productivity bonuses +++
The agreement also stipulates that productivity, performance, profit-sharing or balance-sheet bonuses, paid voluntarily and on a non-regular basis, will be exempt from personal income tax (IRS) and social security contributions (TSU), up to an amount equal to or less than 6% of the employee's annual basic salary, but under the same conditions as those applied to the increase in corporate income tax (IRC).
+++ Youth IRS +++
There will be a ‘reduction in the Personal Income Tax (IRS) rates applied to young people up to the age of 35’.
+++ Lower company tax+++
Among the major changes compared to the initial proposal presented to the partners is the measure concerning the reduction of corporate income tax. The agreement stipulates a ‘progressive reduction’ until 2028 without stipulating figures. In the initial proposal, the government acknowledged ‘a progressive reduction in the corporate income tax rate until 2028, going from the current 21% to 19% in 2025’.
+++ Tax reduction on overtime +++
The agreement provides for ‘a 50% reduction in the autonomous income tax withholding rate on overtime work’.
+++ Income tax exemption on food allowance paid by card +++
The agreement reads that the meal allowance ‘is considered income from dependent work to the extent that it exceeds the established legal limit or exceeds it by 70% when the respective allowance is paid through meal vouchers’.
+++ Reduction in autonomous taxation +++
The agreement provides for ‘an annual reduction in the autonomous taxation applied to corporate and personal income tax over the next four years, reaching a 20% reduction in 2028’.
Thus, in the next State Budget, ‘the limits on vehicle acquisition costs are increased by €10,000 in sub-paragraphs a), b) and c) of no. 3 of article 88 of the CIRC and in sub-paragraphs a) and b) of no. 2 of article 73 of the CIRS’, ‘the values of the rates provided for in sub-paragraphs a), b) and c) of no. 3 of article 88 of the CIRC and in sub-paragraphs a) and b) of no. 2 of article 73 of the CIRS’, and ‘the values of the rates provided for in sub-paragraphs a), b) and c) of no. 3 of article 88 of the CIRC’. Article 88(3) of the CIRC is changed to 8%, 25% and 32% respectively’, “there will be no autonomous taxation on the costs incurred in offering shows” and “companies with tax losses will be subject to the autonomous taxation rates without aggravation”.
+++Health expenses +++
Expenses borne by employers in relation to health insurance for their employees and their families will be increased by 20% in terms of corporate income tax.
+++Accelerate the Economy Programme +++
The government undertakes to create ‘within 45 days, a mission structure to deepen, enhance and reinforce the government's “Accelerate the Economy” programme, in the light of the new European guidelines for increasing competitiveness, productivity and investment set out in the Draghi and Letta reports, with a view to the growth of the Portuguese economy’.
JMF/ADB // ADB.
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