Garnishment Rules and Regulations in Portugal Under Scrutiny

The Portuguese Tax Authority has recently announced new procedures for issuing garnishments on its online portal, aiming to address reported constraints in the process. This move is expected to streamline the issuance of wage garnishments and improve communication between employers, employees, and creditors.

What is Garnishment?

Garnishment, a form of coercive collection, is implemented when an employee fails to honor a financial obligation to a public or private entity. The procedure involves seizing a portion of the employee’s wages to reclaim the creditor’s right.

Key Players in the Garnishment Process

• Employers: Upon receiving notification, employers must respond within the specified timeframe and deduct the garnished amount from the employee’s wages on a monthly basis, provided conditions permit. Employers are also responsible for making payments to the creditor.
• Employees: Employees may have their wages garnished if they fail to honor a financial obligation to a public or private entity.

Rules Governing Wage Garnishments

The Civil Procedure Code sets specific rules governing wage garnishments, including:

Key Regulations

• Garnishment based on net wage: Garnishment is based on an employee’s net wage, i.e., earnings after mandatory deductions.
• Garnishable portion: The garnishable portion is specified in the notification, typically one-third or one-sixth of the net wage.
• Non-garnishable portion: During the process, the non-garnishable portion may be two-thirds or five-sixths of the debtor’s salary.
• Employer responsibilities: Employers must ensure that employees receive at least the guaranteed minimum monthly wage (€820.00).
• Garnishable amount limit: The garnishable amount has a maximum limit equivalent to three times the guaranteed minimum wage (€2,460.00).

Example of Garnishment Process

To illustrate this process, consider an employee with a net wage of €1,000.00:

Calculation

• Garnishable portion: €180.00 (one-sixth of the net wage)
• Non-garnishable portion: €820.00 (two-thirds of the debtor’s salary)

New Procedures for Issuing Garnishments on the Tax Authority Portal

The new procedures aim to simplify the process for employers and creditors:

Steps to Access or Consult Garnishments

1. Access the Company area
2. Select “Services”
3. Search for “Response to requests”
4. Choose “Other Assets and Rights”

Expert Assistance at Nominaurea

At Nominaurea, we have specialized teams available to advise and assist you in navigating these complex matters.