Travel allowances in Portugal: what they are and how they are taxed

What are travel allowances?

Travel allowances (ajudas de custo) are a payment your employer makes to cover expenses, meals and lodging, when you work away from your usual place of work¹. Because the aim is to reimburse a cost, not to pay for work, the law does not treat them as salary. So they are exempt from income tax and Social Security, but only within a daily limit. You can see the exempt and the taxed part of your case in the travel allowance calculator.

Up to the legal limit, the allowance is tax-free. Above the limit, it counts as salary.

The exempt amounts in 2026

The limits are the values set for the public administration². There are two scales: one for general workers and a higher one for directors, managers and government members. The 2026 State Budget kept the 2025 values.

Most employees use the general scale. The daily limit is split, as a rule, into lunch (25%), dinner (25%) and lodging (50%).

Your own car: €0.40 per kilometre

When you use your own car for work, the per-kilometre compensation is exempt up to €0.40 per km in 2026³. If the employer pays exactly that, it is all tax-free. If it pays more, only the excess per kilometre is taxed.

For example, 200 km at €0.40/km is €80 fully exempt. If the employer paid €0.50/km, the €0.40 would stay exempt and the €0.10 difference per km (€10 in total) would be taxed.

Anything above the limit counts as salary

Whatever the employer pays above the limit stops being a travel allowance and becomes employment income (category A): it enters income tax, at your rate, and the Social Security base (11% employee, 23.75% employer). It is just like receiving more salary.

The travel allowance calculator shows that excess and deducts the 11% Social Security. The income tax depends on your bracket, so it is flagged but not computed: for the effect of income tax on salary, see the net salary calculator.

Travel allowances are not the meal allowance

It is a common mistake to mix up the two:

• The meal allowance (subsídio de refeição) is a daily amount for any working day, with its own exempt limit (see the meal allowance calculator).
• Travel allowances cover trips away from your usual place of work and have the higher limits described here.

You can receive both in the same month, but they are distinct payments with their own rules.

Rules worth knowing

• Minimum distance: you are only entitled to a travel allowance if the trip is more than 20 km from your home (daily travel) or more than 50 km (over successive days).
• Documentation: allowances must match real trips and be documented. Allowances paid systematically and with no trip can be disregarded by the tax authority and taxed in full.
• Autonomous taxation on the company: on the employer's side, travel allowances not invoiced to clients may also be subject to autonomous taxation under corporate income tax, a topic of its own.

A worked example from start to finish

Imagine a 3-day national trip, with the employer paying €80 of travel allowance a day:

• Exempt limit: €65.89/day, so €65.89 × 3 = €197.67 is tax-free.
• Excess: €14.11/day, that is €42.33 in total, which is taxed (11% Social Security, plus income tax at your rate).
• You received €240 in total, €197.67 of it tax-free.

If on that trip you had driven 200 km in your own car at €0.40/km, that would add €80 fully exempt. Work out your own case in the travel allowance calculator.