Informational article – Bússola Digital – Accounting & Consultancy, Sole Trader (ENI)
The Tax Authority has introduced significant changes to the IRS Modelo 3 tax return, applicable to returns submitted in 2026, relating to income earned in 2025. These changes result from the reform of the IRS Jovem scheme, updates to capital gains and investment income rules, and the creation of new reporting codes.
In this article, we explain in detail what changes and present practical examples so that taxpayers, young workers, investors and companies can understand the real impact of these changes.
The IRS Jovem has been completely redesigned. It is no longer dependent on the completion of studies and now covers all young people up to the age of 35.
Main changes:
• Duration of the benefit: 10 years (previously 5).
• Eligible income limit: €28,737.50.
• Exemption percentages:
• 1st year: 100%
• 2nd to 4th year: 75%
• 5th to 7th year: 50%
• 8th to 10th year: 25%
Practical example – Employee aged 28
• Annual salary: €20,000
• Year of starting activity: 2025
• In 2026 (2nd year), benefits from 75% exemption → only €5,000 is subject to IRS.
• Result: lower withholding tax and potentially a higher tax refund.
From 2026 onwards, foreign shares will be subject to the same regime as shares traded on the national stock exchange, benefiting from a reduced tax rate depending on the holding period.
New applicable rates (domestic and foreign):
• Held for > 2 years: 25.2%
• Held for > 5 years: 22.4%
• Held for > 8 years: 19.2%
Practical example – Investor with foreign shares
• Purchase: €10,000
• Sale after 6 years: €18,000
• Capital gain: €8,000
• Applicable tax rate: 22.4% (previously 28%)
• Tax due: €1,792 (saving of €448 compared to the previous regime)
For business and professional activities with organised accounting, the acquisition cost threshold relevant for autonomous taxation increases from €20,000 to €30,000.
Practical example – Sole trader
• Vehicle purchase: €28,000
• Previously: autonomous taxation applied to €20,000
• Now: it applies to €28,000, but with a framework more closely aligned with the current market.
• Result: greater tax predictability and better alignment with real market prices.
The Tax Authority has introduced new codes to identify specific exemption situations, including:
• Permanent housing provided by the employer (2024–2026).
• Productivity bonuses, profit-sharing and non-regular bonuses.
• New column to identify who paid alimony, relevant for tax deductions.
Practical example – Employee with company-provided housing
• Annual value of the benefit: €6,000
• 2024–2026 regime: exempt income, but must be declared using the new code.
• Omission may lead to discrepancies and delays in processing.
Young workers
Gain access to a longer, more comprehensive and easier-to-apply benefit.
Investors
Now benefit from tax equality between domestic and foreign shares, with a direct impact on long-term savings.
Companies and self-employed workers
Should review vehicle acquisition policies and ensure the correct completion of the new reporting codes.
Our team monitors tax changes daily and ensures:
• Correct and optimised completion of the tax return;
• Specialist support for young taxpayers, investors and companies;
• Personalised analysis of tax framework and benefits;
• Risk reduction and prevention of filing errors.
