Retenção na Fonte — Withholding Tax

Retenção na fonte (withholding at source) is the mechanism by which income tax is collected in advance throughout the year. Employers withhold a portion of each monthly salary payment based on AT's published withholding tables, which vary by gross income, marital status, and number of dependents. The withheld amounts are remitted to AT monthly by the employer and credited against the employee's final annual IRS liability. If too much was withheld, AT issues a refund after the Modelo 3 is processed — typically in June/July. If too little was withheld, the taxpayer owes the balance. Other payers (banks, brokers, landlords) also apply withholding to Category E and F income at 28%.