Portugal: New codes in the DMR form for IRS Jovem and tax-exempt bonuses in 2025

These changes were implemented Ordinance no. 289/2025/1, of 1 September, which have already been clarified by the AT through Circular Letter no. 20282, 9 September 2025.

Regarding the bonuses, it is important to note that the State Budget Law for 2025 establishes that productivity, performance and profit-sharing bonuses paid or made available to workers or members of statutory bodies in 2025, voluntarily and without regular nature, are partially exempt from Personal Income Tax (IRS), up to a limit of 6% of the worker's annual base salary.

However, this exemption is dependent on the employer having made an “eligible salary increase” in 2025 for the purposes of Article 19-B of the Tax Benefits Code.

Until now, there was no specific procedure for reporting this type of income in the DMR. Following these changes, the AT finally defined guidelines in this regard:

• At the time of payment, the relevant amounts must be reported with code A (employment income subject to PIT), subject to withholding tax under general rules, but in separate from the other employment income.
• After the end of 2025, and provided that the aforementioned “eligible salary increase” is verified, the employer must replace the first DMR, identifying the exempt portion with code A41, limited to 6% of the employee's annual base remuneration as mentioned above. The excess part that remains subject to taxation must continue to be reported with code A. This replacement is not subject to any penalty.
• The employer must expressly confirm whether the aforementioned “eligible salary increase” was met in the annual statement certifying the income earned in 2025, to be delivered to employees by 20 January 2026.
• The employment income exempt from taxation under the so-called IRS Jovem regime must be reported in the DMR with code A68.