Portugal's disability certificate and its tax benefits

What the certificate is

The atestado médico de incapacidade multiuso is an official document certifying a degree of permanent incapacity, assessed against Portugal's national incapacity table, the same table used for accidents at work.

It is called multi-purpose precisely because it serves every legal purpose at once. Without it each body would have to assess the incapacity by its own criteria; with it, the same document stands before the tax authority, Social Security, the health service and local councils.

The application goes to the public health officer for your area of habitual residence, at the local health centre, together with a medical report and the tests documenting the condition. The medical board that assesses incapacity reviews the file and its chair issues the certificate. The scheme was created by Decreto-Lei 202/96 and later amended by Decreto-Lei 174/97 and Decreto-Lei 291/2009.

Renewal is free where the incapacity is permanent and cannot be reversed by medical or surgical intervention. In other cases it costs five euros.

The number that matters for tax is 60%

The whole tax treatment of disability rests on a single threshold. Article 87.º, n.º 5 of the income tax code defines a person with a disability as someone with a permanent incapacity of 60% or more¹.

Below 60% none of the benefits in this guide apply, however limiting the condition is day to day. Above it, two distinct benefits open up, working at different stages of the tax. It is worth understanding the difference, because they add together.

Benefit 1: part of the income is never taxed

Article 56.º-A provides that gross income is taken into account, for income tax purposes, at only 85% in categories A and B (employment and self-employment) and at only 90% in category H, which is pensions².

Note that the reduction bites on the gross income, before the standard deduction. Only afterwards is the standard deduction taken off to reach taxable income.

But n.º 2 of the same article sets a limit that the overwhelming majority of write-ups drop:

The part of the income excluded from tax may not exceed, per income category, €2,500.

That ceiling changes everything in practice. Since 15% of €16,666.67 is exactly €2,500, above that annual income the benefit stops growing: it stays at €2,500 however high the salary. For pensions, where the exclusion is 10%, the same happens from €25,000.

This is why the common claim that "someone earning €30,000 is taxed on €25,500" is wrong. They are taxed on €27,500.

Benefit 2: the article 87.º credit against the tax

The first benefit shrinks the income the rates apply to. The second comes straight off the tax already computed, which makes it more valuable euro for euro.

Article 87.º provides for a credit against the tax of¹:

• 4 times the IAS for each taxpayer with a disability, that is €2,148.52 on 2026 income, where the IAS is €537.13⁵;
• 2.5 times the IAS for each dependant or ascendant with a disability, that is €1,342.83, with the ascendant required to live with the taxpayer and to receive no more than the minimum state pension;
• a further 4 times the IAS as accompaniment expenses for each taxpayer or dependant whose permanent invalidity is 90% or more;
• a further 1 times the IAS for a disabled member of the Armed Forces already receiving the base credit.

Paragraph 8 states expressly that these amounts are cumulative. To them are added 30% of education and rehabilitation expenses and 25% of life-insurance premiums or mutual-association contributions, although that last item cannot exceed 15% of the tax.

The figure changed, and a lot of material did not

If you search for this number online you will find €1,900 with striking frequency. It is worth understanding why, because it is the costliest error on this topic.

Article 98.º of Law 55-A/2010, the 2011 State Budget, froze the IAS at €475 for the indexations of article 87.º. Four times €475 is exactly €1,900, and for over a decade that was the figure. But the freeze carried a condition: it lasted until the IAS reached that amount. The IAS passed €475 in 2023, when it rose to €480.43, and since then the real IAS of the year the income belongs to applies⁴.

There is a second, subtler source of confusion. The return filed during 2026 concerns 2025 income and uses the 2025 IAS, which gives €2,090. The €2,148.52 figure belongs to 2026 income, declared in 2027.

An advantage that goes unnoticed

This credit sits outside the global ceiling on credits against the tax. Article 78.º, n.º 7 applies that ceiling to points c) to h), k) and m) of n.º 1, that is to health, education, property costs, maintenance payments, care homes, tax benefits and domestic work³. The disability credit is point i), which is not on that list.

In practice this means it is never squeezed by the ceiling that trims the other expenses. Its only limit is the tax itself: n.º 3 of the same article gives a right to a refund of the excess only to withholdings and payments on account, so a credit can take the tax down to zero but generates no refund of what remains.

What it is worth in practice

Take an employee with €25,000 of annual gross income and a 60% incapacity.

Since 15% of €25,000 is €3,750, above the ceiling, the excluded part settles at €2,500: the tax starts from €22,500. Taking off the standard deduction of €4,587.09, taxable income is €17,912.91, which produces a tax of €2,840.56 under the 2026 brackets. Then the article 87.º credit of €2,148.52 applies and the final tax falls to €692.04.

Without the regime the same salary would pay €3,443.06. The saving is €2,751.02 a year, and the effective tax rate falls from 13.77% to 2.77%.

Note the effect of the limit: someone earning €12,000 has a tax of only €701.61, uses just that much of the €2,148.52 and does not get the difference back. The credit takes the tax to zero and stops there.

The disability income tax calculator runs these figures on your own numbers, including dependants, ascendants, the accompaniment credit above 90% and education and rehabilitation expenses.

The certificate changes the monthly withholding too

You do not have to wait for the annual return to feel the difference. Article 99.º-B of the income tax code requires the withholding tables specific to holders with a disability to be applied to the whole of employment income or of the pensions paid each month⁴.

On self-employed income, article 101.º-D goes further: withholding applies to only 50% of the income where the holder has a permanent invalidity of 60% or more, and to only 25% for intellectual-property income covered by article 58.º of the tax benefits statute.

Beyond income tax: ISV, IUC and VAT

The certificate is not only about income tax⁴.

Vehicle tax (ISV). Articles 54.º and 55.º of the vehicle tax code exempt vehicles intended for the personal use of people with a motor disability over 18 and an incapacity of 60% or more, and of disabled members of the Armed Forces with 60% or more, whatever its nature. They also exempt, at any age, vehicles for the use of people with profound multiple disabilities and an incapacity of 90% or more, people who move exclusively in a wheelchair with 60% or more, and people with a visual disability at 95%.

Road tax (IUC). People with an incapacity of 60% or more are exempt for category B vehicles emitting up to 180 g/km of CO₂ under NEDC or 205 g/km under WLTP, or for category A and E vehicles. The exemption covers one vehicle per year per beneficiary, up to €240.

VAT. Article 15.º, n.º 8 of the VAT code exempts the purchase of tricycles, wheelchairs with or without a motor and passenger or mixed light vehicles for the personal use of people with disabilities, on the conditions set out in the vehicle tax code. Recognition depends on an application to the tax authority, made before or at the same time as the release for consumption.

Each of these exemptions has its own application and its own conditions. The certificate is what unlocks them, but none is automatic.

If the certificate arrives later

This is the point that causes the most frustration. The certificate proving a fiscally relevant disability takes effect only from its date of issue, and income tax looks at the taxpayer's personal situation on 31 December of each year⁴.

There is a way out, though. If the certificate expressly states that the incapacity relates to a date earlier than its issue, earlier income tax assessments can be challenged through a formal complaint or a judicial challenge, as long as the legal deadline is still running. It is worth asking the medical board to put that date on the document.