Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.
Factsheet for measure PT-2022-43/3048 – Updated – measures in Portugal
Country | Portugal , applies nationwide |
Time period | Temporary, 22 October 2022 – 31 December 2024 |
Context | War in Ukraine |
Type | Legislations or other statutory regulations |
Category |
Promoting the economic, labour market and social recovery into a green future
– Support for energy bills |
Author | Heloísa Perista, Maria da Paz Campos Lima, Paula Carrilho, Ana Brázia (CESIS) and Eurofound |
Measure added | 14 February 2023 (updated 25 April 2024) |
The Government approved a set of exceptional measures to support family income, with a view to mitigating the effects of inflation and the consequent increase in prices: the "Families First" package of measures.
Related measures include Freezing of public transport prices and Adherence to the regulated tariff for the sale of natural gas .
The reduction of VAT on electricity supply is a measure included in this package. It was established by Law 19/2022 of 21 October.
Article 4 of Law 19/2022 of 21 October transitorily reduces the value-added tax rate applicable to electricity supplies. Thus, the intermediate VAT rate on electricity consumption will be reduced from 13% to 6% from October 2022 until December 2023.
This 6% VAT decree will apply to the first 100 kWh consumed each month or 150 kWh per month in the case of large families (households consisting of five or more people), provided that the contracted power does not exceed 6.9 kVA. With the new measure:
The measure has an estimated annual cost of €90 million. In 2022, it will cost up to around €22.5 million.
The following updates to this measure have been made after it came into effect.
01 January 2024 |
The 2024 State Budget extends the application of the reduced tax rate, until 31 December 2024, applicable to supplies of electricity for consumption, excluding its fixed components, in relation to a contracted power not exceeding 6.90 kVA, in the part that does not exceed:
|
All families with power up to 6.9 kVA will benefit from this reduction in the VAT on electricity, covering 87% of consumers (in low voltage), totalling 5.3 million beneficiaries.
Workers | Businesses | Citizens |
---|---|---|
Does not apply to workers | Does not apply to businesses | Applies to all citizens |
Actors | Funding |
---|---|
National government
|
National funds
|
Social partners' role in designing the measure and form of involvement:
Trade unions | Employers' organisations | |
---|---|---|
Role | Informed | Informed |
Form | Not applicable | Not applicable |
Social partners' role in the implementation, monitoring and assessment phase:
Social partners´ involvement took place in the context of the tripartite Permanent Commission of Social Concertation (CPCS), which includes: government representatives; representatives of employer confederations, i.e., the Entrepreneurial Confederation of Portugal (CIP), the Confederation of Commerce and Services of Portugal (CCP), the Confederation of Farmers of Portugal (CAP), and the Confederation of Portuguese Tourism (CTP); and the representatives of trade union confederations, i.e., the General Confederation of Portuguese Workers (CGTP) and the General Union of Workers (UGT).
CGTP considers that the Families First package of measures presented by the government do not guarantee the necessary response to the growing difficulties of workers and their families. The "price increase response plan" does not solve the day-to-day difficulties that workers and pensioners are facing.
UGT also expressed some criticism. Families First is an essential and welcome package of measures, even if it can only be considered late and clearly insufficient, something that is all the more evident when we analyse the sets of measures that were gradually taken by other countries, which were earlier and more intense in their intervention.
Citation
Eurofound (2023), Reduction of VAT on electricity supply, measure PT-2022-43/3048 (measures in Portugal), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/PT-2022-43_3048.html
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