TAG Tax

Tax Circular No. 20257, of 21 June 2023, clarified the doubts regarding the understanding of the Tax Authority on the tax treatment, in terms of IRS and IRC, of expenses incurred by the employee with parking and tolls for the use of own vehicle at the service of the employer, i.e. whether such expenses may or may not be included in the transport allowance provided for in Decree-Law 106/98 of 24 April.

The conclusion is that the intended purpose of the award of a transport subsidy is to compensate the worker for the presumed expenses incurred in travelling in his own vehicle at the service of the employer, due to the employer's inability to provide him with an official vehicle, not including in those expenses the concretely identified and effective costs of travel relating to tolls and parking.