Background information

The current geopolitical and economic context requires policies that respond to economic disruption and the effects of rising energy costs and mitigate the effects of inflation.

Thus the State Budget for 2023 (Law 24-D/2022 of 30 December) establishes an extraordinary support regime for expenses incurred with electricity and gas by companies.

Content of measure

Article 231 of Law 24-D/2022 of 30 December (State Budget for 2023) defines an extraordinary support regime for expenses incurred with electricity and gas.

According to this regime, the costs and losses borne regarding electricity and natural gas consumption by resident Corporate Income Tax (IRC) taxpayers who are principally engaged in a commercial, industrial or agricultural activity, non-resident IRC taxpayers with a permanent establishment and Personal Income Tax (IRS) taxpayers with organised accounts (category B may be increased by 20%.

This increase shall apply to the tax period beginning on or after 1 January 2022. In the case of taxpayers who commence activity during the tax period beginning on or after 1 January 2021 the expenses and losses incurred to be considered for the purposes of the previous numbers should be proportional to the taxpayer's period of activity in that year.

Taxpayers who carry out economic activities that generate at least 50% of the turnover in the field of: Production, transmission, distribution and trading of electricity or gas; or Manufacture of petroleum products, refined or from waste, and of agglomerated fuels, are excluded from this extraordinary support regime.

Use of measure

No information is available on the use of measure.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government	No special funding required

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Consulted	Consulted
Form	Consultation through tripartite or bipartite social dialogue bodies	Consultation through tripartite or bipartite social dialogue bodies

Social partners' role in the implementation, monitoring and assessment phase:

• Social partners jointly
• Main level of involvement: Peak or cross-sectoral level

Involvement

The employer and trade union confederations were involved in the discussion and the drafting of the Opinion of the Economic and Social Council on the Draft State Budget for 2023.

Views and reactions

According to the Opinion of the Economic and Social Council (Conselho Económico e Social – CES) on the Draft State Budget for 2023, the government has adopted a cautious stance. The CES points out, however, that excessive budgetary prudence will have obvious repercussions in terms of the availability of internal support for the different economic agents to deal with the most serious consequences of the crisis and also in terms of greater investment in stimulating the transformations that the country needs.

The CES notes that the State Budget proposal incorporates the commitments made in the recent Medium-Term Agreement for Improving Income, Wages and Competitiveness , signed by the four employer confederations and the UGT, with effects in areas such as taxation, and which have a direct or indirect impact on the income enhancement objectives, of mitigating price increases or the reduction of context costs and the creation of a more favourable environment for competitiveness, which may contribute to greater efficiency in government action and in mitigating the impact of the deterioration of the economic situation on families and companies.

The measures foreseen in the framework of the energy and climate transition are part of the government's commitment to achieve carbon neutrality by 2050. It is important to rethink the entire strategy in this area, in line with the European guidelines.

In general terms, the proposed State Budget for 2023 is, according to the CES, timid in its support measures for the ongoing and expected economic and social effects of the war in Ukraine; it is cautious with regard to European developments in response to the crisis, starting with monetary policy; but it has room for manoeuvre to deal with the domestic repercussions of any worsening of the international situation. The CES considers that the government should adopt a flexible and dynamic stance in budgetary execution, responding promptly to the most unforeseen situations, particularly in terms of increased support for families and businesses. Explanations of Vote:

In the opinion of the Confederation of Trade and Services Portugal, the opinion of the CES should take a clearer and more incisive stance, for which reason, even though it agreed with a large part of the content of the opinion, this Confederation voted to abstain in the final overall vote.

According to the CGTP-IN, the Opinion of the CES comprises a value judgement of the Medium-Term Agreement for Improving Income, Wages and Competitiveness , the contents of which will, in the opinion of the CGTP-IN, be profoundly negative. The CES Opinion, also in the area of taxation, does not criticise the measures envisaged in the State Budget in relation to corporate income tax, namely those measures which aim to deepen the Tax Benefits regime. The CGTP-IN voted against the Opinion of the CES on the State Budget for 2023.

Sources

• 07 November 2022: Opinion of the CES on the Draft State Budget for 2023 (ces.pt)
• 30 December 2022: State Budget for 2023 (dre.pt)