Retirement Savings Plans and pension funds are deductible from personal income tax collections at a rate of 20% for single persons and for each married spouse not legally separated. The deduction limits are as follows:

For this purpose, the age of the taxpayer is considered as of January 1st of the year in which the investment is made.

Furthermore, the sum of the tax-deductible benefits may not exceed the limits defined for each taxable income band, as follows:

Amounts applied after the date of retirement and amounts paid by third parties are not deductible, except when made by employers in the name of and on behalf of their employees (Article 21(8) of the Portuguese Tax Benefits Statute).

Income tax

Income is taxed at the personal income tax base at the time of its availability, under the following conditions:

For payouts made in the circumstances provided for by law (including in the event of death of the insured), income is taxed at a minimum rate of 8%, if received in the form of capital, or in accordance with the rules of category H (Pensions), if received in the form of income.

For payouts made outside of the circumstances provided for by law, income is taxed at a rate of 8.6%, if payout occurs from the eighth year, or 17.2% if payment occurs between the fifth and eighth year, provided that at least 35% of the total investment was carried out in the first half of the contract. Otherwise, or if payout occurs before the fifth year, income tax is 21.5%. Income taxation depends on the date on which the sums paid out were invested, with the conditions in force at the time of the investment being applied.

In the event of partial payout, the first deposits made will be the first to be paid.

Retirement Savings Plans may only be paid out or redeemed in whole or in part at the request of the Insured Person or Participant.

Retirement Savings Plans may be paid out when the Insured Person or Participant meets at least one of the following conditions:

The Insured Person or Participant retires due to old age.

The Insured Person or Participant reaches 60 years of age.

The Insured Person or Participant, or any member of their household, is in long-term unemployment.

The Insured Person or Participant, or any member of their household, has a permanent disability that prevents them from working, regardless of cause.

The Insured Person or Participant, or any member of their household, falls seriously ill.

Use for paying loan agreement installments guaranteed by mortgage on property intended for the personal and permanent housing of the Insured Person or Participant.

Payout under these conditions can only be verified for deposits/subscriptions for which 5 years have passed since the date of payment. However, once 5 years has passed from the date of the first deposit payment, payout for the contract may only be requested if at least 35% of deposits were paid in the first half of the contract.

In situations where the Retirement Savings Plan is a shared asset under the marital property system, the personal situation of either spouse prevails, and payout shall only take place when the Spouse retires due to old age, or when the Spouse reaches the age of 60, provided that five years have lapsed since payment of the respective deposits. In situations where at least 35% of the premium sums were paid during the first half of the contract, payout may be requested after 5 years have passed since the date of the first deposit.

Other than in the situations provided for by law, stipulated above, full or partial payout of the Retirement Savings Plan is permitted. However, this carries tax implications as defined in Articles 21(4) and (5) of the Portuguese Tax Benefits Statute, which may involve the recovery of tax benefits by deduction from the amount collected, plus a penalty for each year lapsed, and the application of a withholding tax at the source on capitals gains taxed at a higher personal income base. Payout may therefore be subject to a payout or redemption fee.