Understanding deductions for ascendants
Within the Portuguese tax system, ascendants (parents, grandparents or others in the direct line) may be included in the household for IRS purposes, provided certain legal criteria are met.
The main tax benefit does not arise directly from expense deductions, but rather from a fixed tax credit associated with each ascendant.
To qualify for this deduction:
- The ascendant must live in the same household as the taxpayer;
- Their income must not exceed the minimum state pension threshold.
What is the deduction amount?
The deduction depends on the number of ascendants in the household:
- €635 – where there is one ascendant
- €525 per ascendant – where there are two or more
This is a direct reduction of the tax due, meaning it has a real impact on the final IRS payable.
Are expenses for parents or grandparents deductible?
This is a commonly misunderstood area.
Expenses related to ascendants are not directly deductible as a standalone category, unlike those for dependants. However, they may be considered indirectly, if the ascendant is part of the household.
Expenses that may be indirectly relevant:
If the ascendant is included in the household, the following may be taken into account:
- Healthcare expenses (consultations, medication, treatments)
- Care home costs (residential care facilities)
- General household expenses (utilities, groceries, etc.)
These are deductible within their respective categories and legal limits.
Care home expenses: a key aspect
One of the most relevant elements is the deduction of care home or home support costs:
- These expenses are deductible up to legally defined limits;
- They apply both to the taxpayer and to ascendants included in the household.
This can have a significant tax impact for families with high elderly care costs.
Key requirements to consider
To ensure eligibility:
- Same tax address
The ascendant must be registered at the same address. - Income threshold respected
Income must not exceed the minimum pension level. - Validation in e-Fatura
Expenses must be correctly classified. - Accurate IRS reporting
The ascendant must be properly declared.
Common mistakes to avoid
- Assuming all expenses with parents are automatically deductible
- Failing to update the household composition
- Not validating expenses in e-Fatura
- Ignoring legal limits
Conclusion
Expenses with ascendants in IRS in Portugal require careful attention. Although there is no direct deduction for all expenses, the system allows for:
- A relevant fixed tax credit;
- The integration of expenses within the household, generating indirect tax benefits.
Proper tax planning can result in significant savings.
How Nominaurea can help
Nominaurea supports individuals and businesses in optimising their tax position, ensuring that no deductions are missed.
We can help you to:
- Review your household structure
- Identify all applicable tax deductions
- Validate expenses in e-Fatura
- Prepare and submit your IRS return
- Maximise your tax efficiency
