What is Retenção na fonte?
Retenção na fonte (withholding at source) is an advance payment of IRS: instead of paying everything at once, the employer deducts a percentage of salary every month and pays it to the State.
The percentage comes from the withholding tables, which depend on income, marital status and number of dependents. The final settlement is made in the annual IRS return.
In practice
Based on the applicable table, the employer withholds the IRS percentage corresponding to the salary and pays that amount to the State on account of the year's tax.