Flash News NA 24/09/2025
Wage Valorisation Incentive in Portugal: A Fiscal Opportunity with Practical Challenges
Portugal’s Wage Valorisation Incentive, under Article 19-B of the Tax Benefits Code, is designed to promote sustainable wage growth through tax relief. Yet, the 2025 amendments introduce new challenges that demand precise planning from businesses.
Improving wages has become a key element of public policy in Portugal, and the tax incentive on salary costs is intended to encourage businesses to play an active role in this process. The purpose is clear: to stimulate genuine wage growth while also reducing internal disparities.
The 2025 rules now introduce a dual requirement: the company’s average salary must increase by at least 4.7%, and all employees earning below that average must also receive a minimum 4.7% raise. While this structure may promote fairness, it can put additional pressure on companies operating with tight margins or with highly diverse pay scales.
Another sensitive issue is the obligation to maintain or reduce the “wage spread”, even after the legal definition was repealed. This creates interpretative uncertainty and the risk of uneven application. Furthermore, the scheme is only available to companies covered by a Collective Labour Regulation Instrument, leaving out a significant portion of the economy, particularly innovative and highly qualified sectors such as technology.
It is therefore vital for companies to anticipate these requirements, aligning HR and financial strategies early on to avoid compliance issues at year-end, when verification may come too late.
Conclusion:
The Wage Valorisation Incentive is a positive step towards strengthening workers’ income and rewarding companies committed to fair pay policies.
However, its success depends on careful planning, technical expertise, and continuous monitoring.
At Nominaurea, we support businesses in assessing eligibility, structuring wage strategies, and ensuring proper tax application of this incentive, turning a complex obligation into a sustainable growth opportunity.
