Every year, thousands of Portuguese taxpayers reach the IRS season convinced that certain health expenses will count towards their deductions. They are surprised when they realise the Tax Authority rejected them.
The deduction of health expenses in the IRS is 15% of the total amount paid by the household, up to a limit of 1,000 euros. However, there is a rule most taxpayers are unaware of: expenses with VAT at 23% are only accepted by the Tax Authority if accompanied by a medical prescription. Without it, the expense is automatically excluded.
In practice, this means pharmacy products with 23% VAT, such as food supplements, vitamins or cosmetics with alleged therapeutic function, are not deductible without a medical prescription.
Establishments without an eligible business activity code
Another frequent reason for rejection relates to the lack of the correct business activity code on the part of the service provider.
If you requested an invoice at a clinic, office or health establishment that does not have the eligible business activity code for health expenses registered with the Tax Authority, that invoice does not count, even if the service provided is clearly health-related.
Children over 25 years old
There is also a situation that catches many parents off guard. Health expenses of children over 25 years old are not deductible in the parents IRS, even if the parents pay them.
The only exception applies when the child has a degree of incapacity equal to or greater than 60%. In these cases, the expenses only count for the child own tax return.
