Christmas allowance in Portugal (subsídio de Natal): Social Security and IRS (2026)
The Christmas allowance (subsídio de Natal) is a legal right under the Labour Code: one month's pay, paid by 15 December. It carries 11% Social Security, and IRS is withheld separately from the month's salary. In November 2026, IRS withholding is cut in half.
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A legal right
Article 263 of the Labour Code (Código do Trabalho) entitles you to a Christmas allowance equal to one month's pay, paid by 15 December each year. Unless your collective agreement says otherwise, it is based on your base salary plus seniority supplements (diuturnidades), not other allowances. It is pro-rated to time worked in the year you start, the year the contract ends, and when the contract is suspended for a reason on your side. If you leave, the pro-rated share goes into your final pay.
Twelfths (duodécimos)
The allowance can be paid in one go, usually in November or December, or partly spread over the year in twelfths (duodécimos) if you and your employer agree or your collective agreement provides for it. Twelfths do not change the gross amount or the year's IRS, only when you receive the money. If you are paid in twelfths, check that December only pays the part still due.
Social Security and IRS
The allowance carries 11% Social Security, like your salary. IRS is withheld separately (retenção autónoma, article 99-C of the IRS Code): the allowance is not added to the month's salary, and the rate is the 2026 table rate for an amount equal to the allowance, as if it were a separate month's pay. So in the month it is paid, the IRS line is roughly double the usual, but the rate does not go up. In twelfths, each payment carries a proportional share of the tax worked out on the full allowance.
November 2026: withholding at 50%
Despacho 12523-A/2026 passes on the 2026 IRS rate cut: on salaries and pensions paid between 1 and 30 November 2026, only 50% of the table amount is withheld, including a Christmas allowance paid that month. It applies to residents of mainland Portugal: the Azores and Madeira are outside this order (the Azores have their own). Monthly pay above the upper limit of the table's second-to-last bracket is excluded. From 1 December the normal tables apply again. The final tax is settled in the 2027 IRS return.
A worked example and what to check
Roughly: on a base salary of 1,500 EUR, the Christmas allowance is 1,500 EUR and carries 165 EUR of Social Security. The IRS withheld is the same as on a normal 1,500 EUR month; paid in November 2026 on the mainland, it is half that. Check that the amount is a full month or the right pro-rated share, that it includes diuturnidades, that IRS was not worked out on salary and allowance added together, that the November cut was applied, and, if you get twelfths, that nothing is paid twice. Payslop checks this for free.
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Questions people ask
When must the Christmas allowance be paid?
By 15 December, apart from any part already paid in twelfths during the year. Many employers pay it with the November salary.
Why was so much IRS taken in the month of the allowance?
That month has two withholdings: one on the salary and one on the allowance, each worked out as a separate month. The rate is your usual one; the amount doubles because you receive double.
I was on sick leave. Do I get the full allowance?
Long sick leave suspends the contract and the employer may pay only the share for time worked. Social Security pays a compensatory benefit for the Christmas allowance to people on sick leave who meet the conditions; apply for it if that is you.
Related guides
Indicative rules as of October 2026. Not tax or legal advice.