he time of filing the income tax (IRS) return in Portugal, usually between the months of April and June, is also the time when one hears about income tax consignment and the appeal of several institutions to have the income tax consigned to them. But what is IRS consignment anyway and how can you do it in 2023? We explain everything in this article.
What is IRS consignment?
The IRS consignment consists in the donation of 0.5% of the tax owed to the State, by the taxpayers, to an institution. The institutions to whom the IRS can be consigned are:
- Environmental NGOs, according to Law n.º35/98, changed by Law n.º 36/2021;
- Legal persons of public utility developing activities of cultural nature and interest, according to article 152.º of the Portuguese Personal Income Tax Code (CIRS);
- Religious institutions, according to article 32.º of Law n.º16/2001;
- Private Social Solidarity Institutions (IPSS) or legal persons of public utility, also according to article 32.º of Law n.º16/2001.
The list of entities that are able to benefit from the tax consignment is published by the Portuguese Tax Office [Autoridade Tributária e Aduaneira (AT)] until the starting day of the period for filing the tax return, and you can check it here.
How can you consign your IRS?
You can carry out your IRS consignment before the beginning of the period for filing your tax return (until March 31st), or after that, in the moment of filing it.
- For the manual filing of the tax return, you can carry out the consignment in box 11 of the cover of the IRS Model 3 declaration;
- For the automatic tax return, the consignment is made in the "Pre-liquidation" section.
Why consign the IRS?
Contrary to what one might think, consigning the IRS does not affect the amount the taxpayer has to receive (tax refund) or pay. The amount donated to the institution is deducted from the net amount collected, i.e. the total amount of tax collected by the State.
Consigning the IRS does not affect the amount the taxpayer has to receive (tax refund) or pay. The amount donated to the institution is deducted from the net amount collected, i.e. the total amount of tax collected by the State.
For example, if a taxpayer who has a total net income of €2,000 and is owed €150 of tax refund decides to donate 0.5% to an institution, they will still receive the €150 refund. The difference is for the State, which, instead of collecting €2000, will keep €1990 and donate €10 (0.5%) to the chosen institution.
This is, therefore, an opportunity for everyone to show more solidarity and help those in need. In this case, helping actually doesn't cost a thing.