Municipal Surcharge — Derrama Municipal

Portugal's 308 municipalities each vote annually on their IRS participation rate (participação no IRS). Under Lei 73/2013, residents are entitled to a credit against their IRS equal to (5% - retainedRate) × IRS base. Municipalities that retain the full 5% (the maximum allowed by law) give residents no credit — effectively adding 0% back. Those that retain nothing give residents a credit of 5% of their IRS base, worth up to 1.5% of taxable income. The national data is published annually by AT. In practice, the difference in IRS between living in a municipality with a 0% retention rate (maximum credit) vs. a 5% retention rate (zero credit) can reach €1,000+ per year for higher earners. Lisbon and Porto retain the full 5%, giving residents no credit. Many smaller inland municipalities retain nothing, maximizing the resident credit.