This tax incentive is designed to encourage companies to implement permanent and effective salary increases. To qualify for the additional 100% deduction on qualifying wage expenses, companies must satisfy key conditions:
- The average annual base salary of the company must increase by at least 4.6% compared with the previous year.
- The annual base salary of employees earning at or below the company’s average must likewise increase by at least 4.6%.
- Salary increases must be properly documented and reflected in accounting records in line with fiscal requirements.
- Employers must comply with all tax and social security obligations without significant irregularities.
This incentive is scheduled to remain in force until 31 December 2026.
Conclusion
The tax incentive for salary enhancement in 2026 enables firms to combine strategic wage improvements with tax efficiency. By ensuring a minimum average increase of 4.6% and meeting the eligibility criteria, businesses can benefit from a 100% uplift in deductible salary costs under corporate tax rules, boosting both competitiveness and workforce stability.
Nominaurea with offices in Lisboa and Oporto can assist companies in determining eligibility, documenting and calculating the tax benefit, and ensuring full compliance with accounting and tax requirements throughout the process. Consult our team of chartered accountants and payroll specialists.
