Taxation of Financial Products

Retirement and Education Savings Plans

20% of the increases made by each taxpayer, as long as the amount of each increase is invested for a minimum period of 5 years, except in the case of death, is deductible for the IRS, with the following limits, depending on the age of the taxpayer as of 1 January:

400 euros per taxpayer under the age of 35;

350 euros per taxpayer between 35 and 50 years of age;

300 euros per taxpayer over the age of 50.

Amounts invested by the taxpayers after the date of retirement are not deductible from taxable income.

This benefit is no longer available, with the amounts deducted, increased by 10% for each year or fraction since the year in which the right to deduct was made, added to the tax return of the year in which the fact occurred, if the participants have received any income or repayment of the certificates, unless the subscriber dies or at least five years have passed since the respective increase and any of the situations in which it is legally allowed to withdraw the amounts.


In 2022, the sum of the deductions from taxable income with these insurances, added to the deductions with health expenses and with health insurances, education and training expenses, real estate expenses, alimony payments, invoice requirement and expenses with retirement homes and tax benefits, per household, and, in case of joint taxation, after applying the divisor 2, cannot exceed the following limits:

for taxpayers with a taxable income of €7.116 or less in 2022, no limit;

for taxpayers with a taxable income greater than €7.116 and less than or equal to €80.000, the limit results from the application of the following formula:

€1.000 + [€2.500 - €1.000) x [€80.000 – Taxable Income]] / €80.000 - €7116;

for taxpayers whose taxable income exceedsthan €80.000, the amount is
€1.000.

For households with three or more dependents, these limits are increased by 5% for each dependent or civil godson not subject to IRS.


The taxation of the amount repaid depends on the option made by the subscriber in respect of the repayment or redemption in question and may take one of the following forms:


  • obtain the repayment through a monthly life pension, which will be taxed by provisional withholding in accordance with the regulation established for income of Category H of the IRS at the rates applicable to the income brackets of the holder, also benefiting from the application of specific deductions;

  • receive a repayment of the total amount available, corresponding to the net increases made throughout the Plan, plus interest, in which case the income will be taxed according to the Category E of IRS, regulation, as it will be considered as capital income and will be withheld at source on the amount to be received. It covers the income in installments during a period not exceeding 10 years:
    • the taxable amount is 2/5 of the income;
    • the taxation is autonomous, at a rate of 20%.


This benefit does not apply if the repayment of the certificates doesn’t happen in these situations; in this case, the income is taxed, autonomously, at a rate of 21,5% if amount of the increases paid in the first period of the plan represents, at least, 35% of the total of those.


The balance of this plan can be used, without tax penalty, in the following situations:

  • retirement due to old age of the participant;
  • long term unemployment of the participant or any member of the household;
  • permanent incapacity to work of the participant or any member of the household, whatever the cause;
  • serious disease of the participant or any member of the household;
  • when the participant reaches the age of 60;
  • attendance or enrollment of the participant or any member of the household in a vocational or academic course, if the expense is incurred in that year;
  • use for payment of installments on Loan contracts secured by a mortgage on the participant’s own permanent residence.


Redemption without penalty of PPR until the end of 2023

The new conditions for the redemption without penalty of savings plans apply between October 1, 2022, and December 31, 2023.


The redemption without penalty applies the repayment of three types of plans:

  • Retirement Savings Plans (PPR);
  • Education Savings Plans (PPE);
  • Retirement/Education Savings Plans (PPR/E).

The redemption of the amount by the participants of these plans allows a repayment up to the monthly limit of the Social Support Index (IAS), which in 2023 is €480,43.


The amount to be repaid is determined, with the necessary adjustments, in accordance with the legislation and respective regulations applicable to savings plans and funds, depending on their nature, for such repayment, and in accordance with what is stipulated in the constitutive documents.

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