You are not wrong, except it's not usually a big loan. The witholding rates are chosen so that in most cases what is withheld is close to your final tax bill.

You are not wrong, except it's not usually a big loan. The witholding rates are chosen so that in most cases what is withheld is close to your final tax bill. In all countries I know of, tax withholding is not a perfect match to final tax bill, and that could amount to a no-interest loan to government like you say. Not sure if in practice that loan is unusually large in Portugal, could be.