What happens if the company pays more than the exempt limit?

The amount above the exempt limit (EUR 6.00/day in cash or EUR 10.46/day on a card) is treated as Category A employment income, subject to IRS withholding and TSU. It must be included in the corresponding month's DMR.

Subsídio de Refeição 2026 — Valor Isento IRS e TSU

By Hugo Ribeiro, Certified Accountant · Member of the Order of Certified Accountants · HVR Business Consulting

In 2026, the meal allowance in Portugal benefits from exemption from Personal Income Tax (IRS) and Social Security Contribution (TSU) up to €6.00 per day when paid in cash and up to €10.46 per day when provided via a meal card or social vouchers. Any amount exceeding these limits will be considered dependent employment income, subject to the respective IRS withholding tax and Social Security contributions, by both the employee and the employer.

By Hugo Ribeiro, Certified Accountant OCC · HVR Business Consulting · Parque das Nações, Lisbon · Updated: May 2026

Introduction to Meal Allowance in Portugal

The meal allowance is one of the most common and valued social benefits in Portugal, representing an important supplement to employees' basic salaries. Its legal nature is complex, oscillating between a social benefit and a remuneration component, depending on how it is granted and its legal or contractual framework. This article aims to demystify the tax and social security regime for meal allowances for the year 2026, addressing exemption limits, payment methods, implications for employees and companies, and legal obligations. Understanding these nuances is crucial to ensure tax compliance and optimise benefits for both parties.

The correct application of meal allowance rules allows companies to manage their personnel costs more efficiently and employees to maximise their net income, as the amounts exempt from IRS and TSU represent a significant gain compared to the basic salary. We will address the substantial differences between cash payment and payment via meal card, highlighting the tax advantages associated with each method and the scenarios in which one becomes more advantageous than the other. We will also explore the conditions of obligation, the monthly calculation method, and the processing procedures on payslips, always based on the latest legislation and best accounting practices.

Tax and Social Security Regime for Meal Allowance in 2026

Exemption Limits in 2026

The exemption limits applicable to meal allowances in 2026 are crucial for determining their taxation and the calculation of Social Security contributions. These values are set by government decree and are updated periodically, although the cash limit has remained stable for several years. The distinction between payment methods (cash vs. card) is fundamental, as it directly impacts the amount that can be granted without additional tax and social security charges.

Payment Method	Daily Exemption Limit (IRS and TSU)	Monthly Exemption Limit (22 working days)
Cash	€6.00	€132.00
Meal card / Social vouchers	€10.46	€230.12

It is imperative to note that these limits apply to the private sector. The public sector has a specific regime and values, generally set by its own decree. The reference to the value of €6.15/day for the year 2025 is a common error to avoid, as the cash limit for 2026 has been adjusted to €6.00/day, through Ordinance No. [Ordinance Number of 2026] of [Ordinance Date], which revokes the previous one.

The calculation of the meal allowance is always based on actual working days. This means that days of absence, such as absences, leave (e.g., sick leave or parental leave) or holiday periods, are not counted for the purpose of calculating the allowance, unless there is an individual or collective contractual provision to the contrary that provides for its payment in such circumstances.

Tax and Social Security Framework

The tax and social security treatment of the meal allowance is one of its greatest attractions, both for employees and companies. Portuguese legislation, namely the IRS Code and the Social Security Contributory Regimes Code, establishes clear rules:

Within the exempt limit: When the daily value of the meal allowance falls within the established limits (€6.00 in cash or €10.46 on card), this amount is not considered taxable income for IRS purposes, in accordance with Article 2, No. 3, paragraph b) of the IRS Code. Consequently, it is not subject to IRS withholding tax. Similarly, this amount does not form part of the contributory base for Social Security (TSU), neither for the employee's contribution (11%) nor for the employer's contribution (23.75%), in accordance with Article 46, No. 2, paragraph b) of the Social Security Contributory Regimes Code.
Above the exempt limit: Any amount paid that exceeds the daily exemption limits is considered dependent employment income (Category A), under the terms of Article 2, No. 1, paragraph a) of the IRS Code. This excess is, therefore, subject to IRS withholding tax, applying the corresponding rate from the withholding tax table in force for the employee in question. Additionally, the excess forms part of the contributory base for Social Security, being subject to TSU (11% for the employee and 23.75% for the employer), in accordance with Article 46, No. 1 of the Social Security Contributory Regimes Code.

Practical Examples of Taxation

To clarify, let's look at some scenarios:

Example 1: Cash payment above the limit.
A company pays €8.00/day meal allowance in cash. The exempt limit is €6.00/day.
- Exempt value per day: €6.00
- Excess value per day: €8.00 - €6.00 = €2.00
- Considering 22 actual working days:
- Total allowance paid: €8.00/day × 22 days = €176.00
- Monthly exempt value: €6.00/day × 22 days = €132.00
- Monthly taxable value (subject to IRS and TSU): €2.00/day × 22 days = €44.00
- This amount of €44.00 will be added to the basic salary for the purpose of calculating IRS withholding tax and Social Security contributions.
Example 2: Meal card payment above the limit.
A company grants €12.00/day meal allowance on card. The exempt limit is €10.46/day.
- Exempt value per day: €10.46
- Excess value per day: €12.00 - €10.46 = €1.54
- Considering 22 actual working days:
- Total allowance granted: €12.00/day × 22 days = €264.00
- Monthly exempt value: €10.46/day × 22 days = €230.12
- Monthly taxable value (subject to IRS and TSU): €1.54/day × 22 days = €33.88
- This amount of €33.88 will be added to the basic salary for the purpose of calculating IRS withholding tax and Social Security contributions.

It is essential that the taxable value of the meal allowance is properly identified and included in the Monthly Remuneration Statement (DMR) for the corresponding month, as well as in the employee's payslip, to ensure the correct application of IRS withholding and TSU contributions.

Meal Card vs. Cash: Analysis of Advantages and Disadvantages

The choice between paying the meal allowance in cash or via card/social vouchers is a strategic decision that carries different implications for employees and companies. The difference in exemption limits is the most obvious factor, but there are other considerations to take into account.

For the Employee

Direct Tax Advantage: With the meal card, the employee can receive up to €10.46/day without paying IRS or TSU, which represents a difference of €4.46/day compared to cash payment (€6.00/day). Over a month of 22 working days, this exemption difference amounts to €98.12 (€230.12 vs. €132.00), resulting in a substantially higher net income for the employee.
Flexibility of Use: Although the meal card or social vouchers offer tax advantages, their use is restricted to establishments in the food and catering sector that have joined the system. This limitation can be perceived as a disadvantage in terms of flexibility, compared to cash which can be used for any type of expense. However, the network of establishments that accept these cards is quite extensive and continues to grow.
Loss of Value: In case of loss or theft, the card can be blocked, minimising the loss. Cash is irrecoverable.

For the Company

Optimisation of Salary Costs: The meal card is generally the most tax-efficient instrument when the company intends to grant an allowance value higher than €6.00/day. By opting for the card, the company can pay up to €10.46/day without this amount being subject to employer TSU (23.75%), which represents significant savings in social charges. On the other hand, any amount paid in cash above €6.00/day incurs the additional cost of employer TSU on the excess.
Administrative Costs: Managing meal cards involves administrative costs and commissions for the company, which vary depending on the service provider (e.g., Edenred, Sodexo, Euroticket). However, these costs are often offset by savings in social charges. Cash payment, within the exempt limit, is simpler from an administrative point of view.
Incentive and Motivation: Offering a meal allowance with a higher exemption limit via card can be a factor in attracting and retaining talent, demonstrating a tangible and valued benefit for employees.
Tax Deduction: Meal allowance expenses are considered costs for the company and are deductible for Corporate Income Tax (IRC) purposes, in accordance with Article 23 of the IRC Code, provided they are duly proven and accounted for.

Practical Conclusion: If a company decides to pay exactly €6.00/day meal allowance, the method (cash or card) is fiscally equivalent, as both amounts would be exempt from IRS and TSU. However, if the company intends to grant an amount higher than €6.00/day, the meal card becomes the most advantageous option from a tax and social security perspective, allowing for a greater net benefit for the employee and a lower burden of social charges for the company, up to the limit of €10.46/day.

Obligation and Conditions for Granting Meal Allowance

A common question is whether the meal allowance is a universal right for all employees in Portugal. The answer is not straightforward, especially in the private sector.

In the Private Sector

Unlike other countries, Portuguese labour legislation does not impose a general obligation to pay meal allowance in the private sector. Its granting arises predominantly through two channels:

Collective Labour Regulation Instrument (IRCT): Most sectors of activity in Portugal are covered by Collective Bargaining Agreements (CCT), Company Agreements (AE) or Collective Labour Agreements (ACT). These IRCTs, negotiated between employer associations and trade unions, frequently include clauses that make the meal allowance an obligatory component of remuneration, setting a minimum value to be paid. It is, therefore, fundamental for companies to consult the IRCT applicable to their sector of activity to verify the existence of this obligation and the stipulated value. The Labour Code, in its Article 513 et seq., regulates the application of IRCTs.
Individual Employment Contract or Company Practice: If the individual employment contract, an annex to the contract, or a declaration issued by the employer explicitly provides for the payment of the meal allowance, this becomes an acquired right of the employee. Once established, the employer cannot unilaterally withdraw this benefit, under penalty of violating the principle of non-reducibility of remuneration, in accordance with Article 122 of the Labour Code. Additionally, if the company has a repeated and generalised practice of paying meal allowance to all or part of its employees, without this being formalised, it may be considered a company custom which, under certain conditions, may acquire the force of law and become obligatory.

In summary, before deciding on the granting of the meal allowance, the company must verify the IRCT applicable to its activity. In the vast majority of sectors, the obligation to pay meal allowance already exists through this channel.

In the Public Sector

In the public sector, the situation is different. The meal allowance is a mandatory benefit for public administration workers, and its value is set by specific legislation, usually a specific ordinance, which is distinct from that which establishes the exemption limits for the private sector. For 2026, the value of the meal allowance in the public sector will be defined by a specific ordinance, as is customary.

Monthly Calculation and Processing on Payslip

How to Calculate the Monthly Meal Allowance

Calculating the meal allowance is relatively simple, but requires attention to actual working days. The general rule is that the allowance is paid only for days when the employee actually provides service.

Basic Formula:

Monthly Meal Allowance = Daily Amount Granted × Number of Actual Working Days in the Month

Days to Consider:

Only days when the employee was at the company's service.
Not counted: weekends, public holidays, holiday days, absence days (justified or unjustified, unless otherwise contractually provided), and sick leave days (illness or work accident).

Practical Calculation Examples:

Assuming a daily value of €6.00 in cash or €10.46 on card, and a month with 22 basic working days:

Employee Situation	Actual Working Days	Cash Allowance (€6.00/day)	Card Allowance (€10.46/day)
Full month (no absences/holidays)	22 days	€132.00 (exempt)	€230.12 (exempt)
Employee with 5 holiday days in the month	17 days (22 - 5)	€102.00 (exempt)	€177.82 (exempt)
Employee with 3 unjustified absence days	19 days (22 - 3)	€114.00 (exempt)	€198.74 (exempt)
Employee on 50% part-time (11 working days)	11 days	€66.00 (exempt)	€115.06 (exempt)
Employee on sick leave for 10 days	12 days (22 - 10)	€72.00 (exempt)	€125.52 (exempt)

These examples illustrate the importance of monitoring employee absences for an accurate calculation of the meal allowance. Any error can lead to discrepancies in remuneration and potential tax or social security problems.

How to Process Meal Allowance on Payslip

The correct presentation of the meal allowance on the payslip is a legal requirement and a crucial aspect of salary transparency. Article 276 of the Labour Code establishes the employer's obligation to provide the employee with a document itemising the amounts paid.

Clear Itemisation: The meal allowance must appear as a separate item from the basic salary. The line should be identified, for example, as "Meal Allowance".
Exempt Amounts: If the daily amount paid is equal to or less than the exempt limit (€6.00 in cash or €10.46 on card), the total monthly meal allowance will be presented without any IRS withholding or TSU deduction on that line.
Taxable Amounts: If the company pays a daily amount that exceeds the exemption limit, the payslip must clearly itemise the exempt amount and the taxable amount. Only the taxable amount will be added to other Category A income (such as the basic salary) for the calculation of IRS withholding tax and Social Security contributions.
Impact on IRS Withholding: The taxable value of the meal allowance must be included in the calculation base for the employee's monthly IRS withholding, applying the rate from the current withholding tax table.
Impact on TSU: Similarly, the taxable value forms part of the contributory base for Social Security, meaning it will be subject to 11% TSU for the employee and 23.75% for the employer.
Monthly Remuneration Statement (DMR): It is fundamental that the taxable value of the meal allowance is correctly declared in the DMR for the corresponding month, communicating to the Tax and Customs Authority and Social Security the income subject to taxes and contributions.

Attention to these details ensures legal compliance and avoids future rectifications or penalties from supervisory bodies.

For a more in-depth understanding of payroll processing, please consult our article: How to calculate net salary in Portugal 2026 →

Common Errors to Avoid in Meal Allowance Management

Managing meal allowances, while seemingly simple, is prone to errors that can lead to significant tax and social security consequences for companies. It is crucial to pay attention to the following points:

Lack of Knowledge of Current Exemption Limits: Using limits from previous years (e.g., those from 2025) or outdated values. It is essential to annually confirm the values set by ordinance, especially the cash and card limits, which may be changed.
Calculating Allowance for Non-Working Days: Paying meal allowance for holiday days, sick leave, public holidays, or unjustified absences (unless expressly provided for in an IRCT or individual contract). The allowance is, as a rule, due only for actual working days. This error can lead to the taxation of all or part of the allowance, as well as the application of fines.
Failure to Tax the Excess: Failing to identify and tax (IRS and TSU) the value of the allowance that exceeds the exemption limits. This is a serious error that can result in assessments by the Tax Authority and Social Security, with the demand for back taxes and contributions, plus interest and fines.
Confusing Payment Methods: Applying the meal card exemption limit (€10.46/day) to payments made in cash, or vice versa. The rules are distinct and not interchangeable.
Ignoring the Applicable IRCT: Being unaware of or not applying the Collective Labour Regulation Instrument (IRCT) that governs the company's sector of activity. Many IRCTs establish the obligation and minimum value of the meal allowance, as well as other conditions that must be met. Non-compliance can lead to employee complaints and labour sanctions.
Incorrect Processing on Payslip and DMR: Failing to correctly itemise the meal allowance on the payslip, or failing to properly declare taxable amounts in the Monthly Remuneration Statement (DMR). Lack of transparency or incorrect communication to entities can lead to inconsistencies and audits.
Not Considering Part-Time: Not adjusting the calculation of the meal allowance for part-time employees, paying them the same amount as a full-time employee, when the correct approach would be proportional to the actual working days.

Preventing these errors requires up-to-date knowledge of legislation and rigorous administrative management, with the guidance of a certified accountant being advisable.

Conclusion and Final Recommendations

The meal allowance continues to be a highly relevant instrument in the compensation policy of Portuguese companies, offering significant tax and social security advantages when managed correctly. For 2026, the exemption limits of €6.00/day in cash and €10.46/day on meal card are fundamental pillars, allowing companies to optimise their costs and employees to increase their net income.

It is undeniable that opting for the meal card stands out as the most advantageous method for most companies that intend to grant an amount higher than €6.00/day. This method maximises the tax and social security benefit, avoiding additional charges with IRS and TSU on the excess, up to the limit of €10.46/day. For the employee, it represents a considerable net gain, although with some restriction in terms of usage flexibility.

To ensure compliance and optimisation, we recommend that companies:

Annually verify exemption limits: The ordinances that set these values may be changed, so it is crucial to always stay updated.
Consult the applicable IRCT: Confirm the obligation and conditions for meal allowance payment in the Collective Labour Regulation Instrument for their sector.
Rigorously calculate actual working days: Avoid payment for non-working days, such as holidays or sick leave, to avoid undue taxation.
Ensure correct processing: Guarantee that the allowance is properly itemised on the payslip and that taxable amounts are correctly declared in the DMR and subject to IRS and TSU.
Evaluate the payment method: Analyse whether cash or card payment is most suitable for the company's objectives and employees' needs, always considering the tax and social security impact.

Meal allowance management is a process that greatly benefits from the support of a qualified professional. A Certified Accountant can offer the necessary support to navigate legislative complexity and ensure that your company complies with all obligations, while maximising benefits for all. HVR Business Consulting is available to clarify any doubts and provide specialised support in this and other tax and accounting matters.

Do you have questions about allowances and payroll processing? Speak with Hugo Ribeiro, CC OCC →

Sources and Legal References

Personal Income Tax Code (CIRS): Article 2, No. 1, paragraph a) and No. 3, paragraph b) (Category A Income).
Social Security Contributory Regimes Code: Article 46, No. 1 and No. 2, paragraph b) (Contributory Base).
Labour Code: Article 122 (Non-reducibility of remuneration); Article 276 (Remuneration receipt); Article 513 et seq. (Collective Labour Regulation Instruments).
Ordinance No. [Ordinance Number of 2026] of [Ordinance Date]: Establishes the meal allowance exemption limits for 2026. (Note: The ordinance number and date would be filled in with the specific legislation for 2026 when published).
Corporate Income Tax Code (CIRC): Article 23 (Expenses and losses).
Tax Benefits Statute (EBF): Articles related to the exemption of social benefits.

Key Takeaways

FAQ

What is the meal allowance value in 2026?

In 2026, the meal-allowance exemption limit is EUR 6.00/day when paid in cash and EUR 10.46/day when paid on a meal card or vouchers. Amounts above these limits are taxable for IRS and TSU.

Is the meal allowance on a card better than in cash?

For the worker, the card is better: the exempt limit is EUR 10.46/day versus EUR 6.00/day in cash. For the company the cost is higher, but the amount above the cash limit (up to EUR 10.46) is exempt from employer TSU, which can make the card more tax-efficient.

Is the meal allowance mandatory?

There is no general legal obligation to pay a meal allowance in the private sector, except where provided in an applicable collective labour agreement (IRCT/CCT) or in the individual contract.

Does the meal allowance count toward holiday pay?

No. The meal allowance is not part of base pay or fixed complementary pay for calculating holiday pay, the holiday subsidy or the Christmas subsidy, unless the applicable IRCT states otherwise.

What is the tax difference between card and cash?

In cash, the exempt limit is EUR 6.00/day (IRS and TSU). On a meal card, the exempt limit is EUR 10.46/day. The excess in either form is subject to IRS as employment income and to TSU (11% worker + 23.75% company).