Factsheet for measure
PT-2023-16/3205
–
Updated
– measures in Portugal
0% VAT on food
IVA 0% nos alimentos
Background information
The war in Ukraine has caused inflation to occur. This inflation most significantly effects people's ability to afford essential goods, such as food. The Law 17/2023 of 14 April 2023 was created in response to the increased price of food. The measure removes the VAT on essential food items. This is a temporary measure.
Content of measure
The imports and transfers of 46 food items in the following categories are exempt from VAT:
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Cereals and derivatives, tubers
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Fresh or chilled, dried, dehydrated or frozen vegetables, whether or not pre-cooked
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Fruit in its natural state
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Pulses in dry state
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Dairy products
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Meat and edible offal, fresh or frozen
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Fresh (live or dead), chilled, frozen, dried, salted or in brine fish, excluding canned or smoked fish
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Canned tuna
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Chicken eggs, fresh, dried or preserved
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Fats and oils
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Beverages and yoghurts with a vegetable base, without milk and dairy products, produced from nuts, cereals or preparations of cereals, fruits, vegetables or horticultural products;
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Dietetic products for enteral nutrition and gluten-free products for coeliac patients.
The government estimates that this measure will cost €410 million.
Updates
The following updates to this measure have been made after it came into effect.
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31 October 2023
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According to Law 60-A/2023 published on 31 October the measure was extended until 31 December 2023. At the same time this law (article 2) added to the list of products exempted of VAT the dietary products intended for enteral nutrition and gluten-free products for
celiac patients covered by the product categories set out by Law 17/2023 of April .
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Use of measure
According to Statistics Portugal, the homologous variation rate of the Consumer Price Index (CPI) decreased to 4.0% in May 2023, which is 1.7 percentage points (p.p.) lower than in the previous month. This deceleration is partly explained by the increase in electricity, gas and food prices observed in May 2022 and the VAT exemption in a set of essential food items.
DECO - the Portuguese Consumers Association has been monitoring the prices of 41 food items since January 2023. Food oil, curly lettuce and tomatoes had prices that fell the most since the VAT exemption on a basket of essential food items came into force. As of 31 May 2023, the 41 food items with zero VAT monitored by DECO costs €130.07. This cost is lower than previous costs, for example €133,67 on 4 January and €134,11 on 19 April.
Target groups
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Workers
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Businesses
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Citizens
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Does not apply to workers
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Does not apply to businesses
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Applies to all citizens
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Actors and funding
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Actors
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Funding
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National government
Employers' organisations
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National funds
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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No involvement
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Agreed (outcome) incl. social partner initiative
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Form
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Not applicable
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Direct consultation outside a formal body
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Social partners' role in the
implementation, monitoring and assessment phase:
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Only employers' organisations
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Main level of involvement: Sectoral or branch level
Involvement
The law was published following the signing at the end of March 2023 of the Pact between the Government and representatives of Production (CAP - Confederation of Farmers of Portugal) and Distribution (APED).
Views and reactions
The CGTP-IN - General Confederation of Portuguese Workers criticized the government policy of reduction of the Value Added Tax (VAT) to 0% on some foods, arguing that this constituted a way of exempting large-scale production, distribution and agricultural companies. This would be equivalent to subsidizing large profits. In their view, the 'government shows a "class option" with its alliance with large-scale distribution and agricultural production'. In CGTP-IN's opinion, the government should instead set maximum limits for prices, combating speculation, and promote a wage policy to compensate for the inflation.
The CCP - Confederation of Portuguese Commerce and Services considers the measures to combat the crisis announced by the government to be positive overall, but calls for the participation of all operators in clarifying the products whose VAT will be reduced in order to avoid speculation.
Sectors and occupations
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This case is sector-specific (only private sector)
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Economic area
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Sector (NACE level 2)
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G - Wholesale And Retail Trade; Repair Of Motor Vehicles And Motorcycles
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G47 Retail trade, except of motor vehicles and motorcycles
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This case is not occupation-specific.
Sources
