Government gives tax incentives to employers who contribute to the Reform Certificates Fund – The Economic Journal

Government gives tax incentives to employers who contribute to the Reform Certificates Fund - The Economic Journal


The Government allocates in 2019 a tax benefit to employers that contribute to the Workers' Reform Certificates Fund.

The purpose of the Certificates of Reform Funds is to act as a mechanism to promote savings aimed at the moment when citizens become pensioners or retirees due to old age or absolute and permanent disability.

In the new version of the proposal of OE that was taken to the Council of Ministers yesterday it is foreseen that "the expenses incurred by the employers, when they respect the values ​​applied in the public regime of capitalization for the benefit of its workers, taxable income, in an amount corresponding to 120% ". This is one of the IRC-level measures to strengthen worker protection.

This tax benefit is applied only "provided that the conditions set forth in paragraphs a), b), d), e) and f) of paragraph 4 of article 43 of the IRC Code are met, in which do not exceed the limits laid down in paragraphs 2 and 3 of that Article, and without prejudice to paragraphs 5 and 6 thereof, which basically refers to the fact that benefits must be established for the general company or within the framework of collective labor regulation instrument for the professional classes where the workers are inserted; and that the benefits must be established according to an objective criterion and the same for all workers, even if they do not belong to the same professional class, except in compliance with collective labor regulation instruments; are actually paid in the form of a monthly cash benefit for at least two thirds of the benefits in the event of retirement, invalidity or survival; and that the "management and disposal of the amounts spent do not belong to the company itself, insurance contracts are entered into with insurance companies having their headquarters, effective management or permanent establishment in Portuguese territory, or with insurance companies authorized to operate in this territory in the freedom to provide services, and pension funds or similar schemes which are set up in accordance with national legislation or managed by institutions for occupational retirement provision.

It is recalled that in September of this year the Government approved in Cabinet a decree-law that changed the regulations applicable to the Public Capitalization Scheme, better known as "PPR" of the State, allowing employers to contribute to the system .

The Government announced at the time that "it was understood to introduce the novelty that employers could contribute to the Reform Certificates Fund for the benefit of the workers at their service, making the regime more attractive and meeting the proposal made by the Council IGFCSS Advisory [Instituto de Gestão de Fundos de Capitalização da Segurança Social]".

This initiative was created in 2008 and has as its main instrument the Reform Certificate Fund (FRC), for which workers can deduct part of their income, in addition to the 11% they already deliver to Social Security. Those who want to join can discount 2%, 4% or 6% of their gross monthly salary.

The Public Capitalization Scheme is a supplementary social security scheme that works as a savings to reinforce the retirement pension (for old age or for absolute disability).

While working you will be making additional discounts that will be placed in an account on your behalf. This account is part of an investment fund – the Reform Certificate Fund. Their monthly discounts are converted into Certificates of Retirement which are capitalized over time. When you retire, you can receive the accumulated amount at one time and / or in monthly payments.

The sooner you join this scheme, the greater the amount you will receive when you stop working.



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