Portugal’s Government has announced a sweeping range of fiscal measures to help businesses and families with increasing energy expenses. Antonio Costa Silva, Portugal’s Economic Minister, announced these supportive measures on 15 September. Here, we take a look at those relevent to Portuguese businesses.

Measures affecting business include:

  • No increase in corporate income taxes (IRC).
  • In a move to cushion the blow from energy price increases, companies will be able to deduct a larger portion of electricity and natural gas expenses from their taxable income in 2022. There will be an immediate 20% increase on IRC-allowable expenses for electricity, natural gas, animal feed, and fertilizers used in agricultural production (meaning the portion deductable from profit to determine taxable income is now higher).
  • Companies will be able to deduct the amount of their investment from IRC, up to a limit of €5m and under the following terms: 10% deduction of usual investment expenses and a 25% deduction of the value of additional investment (i.e. exceeding the average of the last three years).
  • The Special Payment on Account scheme (PEC) will be eliminated, putting an end to the heavy tax burden on micro and small companies.
  • Gas-intensive companies with a negative operating income and close to disruption will be able to receive up to €5 million in relief assistance.
  • A fund of up to €1.3 billion is to be created, aiming to help the solvency of commercial companies affected by the pandemic, and reinforce companies starting up or undergoing growth / consolidation.
  • A €15 million fund to provide (non-refundable) support to rail freight companies.
  • The tax regime for patents (called the patent box) will become one of the most competitive in all of Europe, by exempting 85% of royalties from IRC along with any revenue from the exploitation of intellectual property (including the sale of software).
  • The Government will continue to allow companies to pay their tax obligations (including VAT, withholding tax and IRS related to employees) in installments.

The Government also confirmed a temporary suspension of tax on petroleum and energy products (ISP) and suspension of the carbon tax on natural gas used in the production of electricity and cogeneration. The temporary reduction of ISP already in place for agri-diesel will remain until the end of the year, as will the extraordinary professional diesel programme (GPE).

If you’ve any queries on how these measures may be applied to your Portugal operations, simply get in touch with our expert team in Lisbon.

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All information contained in this publication is up to date on 2022. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.