How does the meal allowance work?

18 de July, 2025

The meal allowance, or food allowance, is a supplement to the salary that aims to support workers in their expenses with meals and food during the working day.

Although it is not mandatory in the private sector, most employers choose to grant this extra salary benefit to their employees. In this way, they are helping to maximize their purchasing power in food expenses and, consequently, promoting their quality of life and well-being.

But how does the food allowance work in practice in Portugal? Come and find out with us.

Does the food allowance have a minimum or maximum limit?

In the case of public administration workers, the value of the food allowance has been set at €6.00/day since 2023 (Order no. 107-A/2023 of April 18).

In the private sector, however, payment of the allowance is not mandatory under the Labor Code. It is only paid if it is included in an individual or collective employment contract.

Therefore, as there is no obligation to do so, companies that grant this benefit to their employees are free to set the amount allocated.

How the food allowance works

The food allowance is a supplement to remuneration which is not obligatory under the Labor Code. As such, in the case of private companies, they can choose whether or not to grant this benefit to their employees.

The food allowance is only payable if it is provided for in the individual contract or collective bargaining agreement.

When it is paid, it is paid for each day actually worked. In other words, payment is not required on days when the employee does not work: on vacation days, in cases of illness (sick leave), during parental leave or marriage leave, in the event of unjustified absence or when exercising the right to strike, for example.

In terms of how it is awarded, the food allowance can be granted:

• Cash: in cash, together with the monthly salary;
• Meal ticket: meal card (loaded by the company with the stipulated amount of the allowance).

These allocation formats, as well as the amount granted, dictate the tax benefits that both the company and the employee can have associated with the food allowance.

Food allowance in cash

In these cases, the allowance is paid to the employee together with their monthly salary. Up to a maximum daily amount of €6.00, the company is fully exempt from TSU and the employee is fully exempt from TSU and IRS.

If the food allowance is paid in cash and exceeds this amount, the remaining amount is considered employment income for IRS and Social Security purposes, and the respective taxation applies.

Food allowance card

As an alternative to paying in cash, companies can provide the food allowance via social voucher or card. In the case of the meal card, the exemption limit is now €10.20/day.

Up to this amount, the company is fully exempt from TSU and the employee is fully exempt from TSU and IRS. From this amount onwards, the respective social security contribution and withholding tax also apply.

Since the maximum amount exempt from taxation on meal cards is 70% more than cash payments, this format allows employers to maximize employee liquidity while maintaining tax efficiency.

The food allowance card is an increasingly popular option for companies in Portugal, as the associated tax benefits help to increase employees’ disposable income without increasing the employer’s tax burden.

Read also: 9 questions you may have about the meal allowance