2025-01-03

The Portuguese Parliament approved the State Budget for 2025 (“2025 Stage Budget)”. In this newsletter, we summarise the main tax changes contemplated in the 2025 State Budget.

PERSONAL INCOME TAX

Regarding Personal Income Tax (PIT), the main changes introduced by the 2025 State Budget are as follows:

  • PIT brackets update. The PIT brackets will be updated according to the following table (pdf above).
  • Youth PIT. The Youth PIT rules, which partially exempt young people's employment income (dependent or self-employed), are amended as follows:

            - Young people up to the age of 35 will now be eligible.
            - The condition of completing a cycle of studies no longer applies.
            - The PIT exemptions extend to the first 10 years of income, with the following limits:
               o 100% in the first year;
               o 75% from the second to the fourth years;
               o 50% from the fifth to the seventh years; and
               o 25% from the eighth to the tenth years.
             - The exempted income cannot exceed 55 times the value of the Social Support Index (“SSI”) (i.e. €28.009,30). Taxpayers who (i) benefit or have benefited from the non-habitual resident regime, (ii) benefit or have benefited from the tax incentive for scientific research and innovation, (iii) have opted for the taxation applicable to former residents or (iv) do have tax debts will not be eligible.

  • Withholding tax on income subject to Youth PIT. Income eligible for the Youth PIT program will be exempt from withholding tax, corresponding to the portion of income exempt from taxation. (*)
  • Meal allowance. The increase in the value of the meal allowance that is not considered income from dependent work for IRS purposes, when it is given through meal vouchers, goes from €9.60 to €10.20.
  • Withholding tax on supplementary work. Income from overtime work obtained in Portuguese territory by non-residents will be exempt from withholding tax in respect of the first 100 hours (instead of the 50 hours provided for in 2024), with the 25% withholding tax applying to the part that exceeds that limit or number of hours. It is also planned that withholding tax will apply to 50% (and not all) of the monthly remuneration for overtime work.
  • Withholding tax on self-employment income. The PIT withholding tax rate applicable to income from professional activities is reduced from 25% to 23%.
  • Autonomous taxation. The reference value of light vehicles acquisition cost for the calculation of the autonomous taxation will be increased, with the rate of 10% being applicable when the costs are less than €30,000 (instead of €20,000) and the 20% rate being applicable when the costs are higher. Vehicles powered exclusively by electricity are not subject to this taxation.
  • Advance payments. The total amount of advance payments due by self-employed persons will now be 65% (instead of 76.5%) of the legal basis.
  • Specific deductions from employment income and pensions. How the specific deductions from category A and H income are calculated has been changed from the fixed amount of €4,104 (updated annually in line with the Social Support Index (SSI)) to the amount corresponding to 8.54 times the SSI (currently €4,349.08).
  • Minimum subsistence amount. The reference value for the minimum subsistence has been increased to the greater of €12,180 or 1.5 x 14 x SSI.

CORPORATE INCOME TAX

In terms of Corporate Income Tax (CIT), the following measures from the State Budget for 2025 are highlighted:

  • Reduction of CIT rate. Reduction of the general CIT rate from 21% to 20% and, in the case of small and medium-sized companies and small and medium capitalization companies, from 17% to 16% on the first €50,000 of taxable income.
  • Health or sickness insurance costs. Expenses associated with health or sickness insurance for employees and their families will be tax deductible at a rate of 120% when assessing the taxable net income.
  • Autonomous taxation. The rates of autonomous taxation for light passenger and cargo vehicles, as well as motorcycles, will be reduced by 0.5% and the cost limits will be increased by €10,000, as follows:

           - For vehicles costing up to €37,500 (instead of €27,500) the rate will be 8% (instead of 8.5%);
           - For vehicles costing between €37,500 and €45,000 (instead of €27,500 to €35,000) the rate is 25% (instead of 25.5%); and
           - For vehicles costing €45,000 or more (instead of €35,000) the rate is 32% (instead of 32.5%).
It is also planned to exclude entertainment expenses related to shows from the scope of autonomous taxation.

VALUE ADDED TAX

Regarding Value Added Tax (VAT), the following changes are stand out:

  • Extension, until December 31, 2025, of the VAT exemption (with the right to deduct the tax) applicable to transfers of certain goods, when normally used in the context of agricultural production activities, such as fertilizers and soil improvers.
  • Legislative authorization for the Government to amend in 2025 item 2.18 of List I annexed to the VAT Code to apply a reduced rate to the construction or rehabilitation works on residential properties, to be defined according to criteria established by members of the Government. Properties with a value exceeding the established limit will be excluded from the scope of this rate.
  • Clarification has been issued that the restrictions on VAT deductions do not apply to bicycles, whether motorized or non-motorized. (*)
  • Reduction of VAT rate applicable to tauromachy performances (amendment to item 2.32 of list I annexed to the VAT Code). (*)
  • The reduced VAT rate will apply to food products designed for infants and young children, including transitional formulas, as well as medical-purpose foods and complete dietary substitutes for weight management (item 1.14 of list I annexed to the VAT Code). (*)

SPECIAL CONSUMPTION TAXES

In terms of Special Consumption Taxes, the following changes are planned:

PETROLEUM AND ENERGY PRODUCTS DUTY (ISP)

Certain oil and energy products used in facilities subject to an energy consumption rationalization agreement will now be taxed at 100% instead of 65%.

TOBACCO TAX

  • The total minimum reference tax to be applied to tobacco and in force each year will now correspond to the value of the national average tobacco tax.
  • The tax on cigarillos will now be 50% of the minimum tax on cigarettes instead of 100%.

VEHICLE TAX (ISV)

  • A rate of 25% will be applied to passenger cars registered in another EU Member State between 2015 and 2020 and with hybrid engines.
  • When the taxpayer disagrees with the provisional assessment issued by customs, the fee for requesting a recalculation is waived.

REAL ESTATE TRANSFER TAX (RETT)

Regarding the Real Estate Transfer Tax, the 2025 State Budget establishes:

  • Update of the brackets for calculating the IMT applicable to the transfer of urban properties or autonomous units of urban properties intended exclusively for residential use.
  • An exemption is granted for registration fees and other associated costs for all acts and contracts required to facilitate land consolidation involving contiguous or adjoining rustic properties owned by the same individual, regardless of their economic use. This exemption also applies to the registration of rights and encumbrances associated with the consolidated rustic properties; and (*)
  • Exemption from RETT on transfers of rustic property required for the implementation of the above-mentioned land consolidation transactions. (*)

STAMP DUTY

In terms of Stamp Duty, the following changes stand out:

  • Extension until 2025 of the exemption applicable to certain housing credit restructuring operations, as well as to operations involving the temporary adjustment of payments and the capitalization of deferred amounts;
  • Exemption from stamp duty on transfers of rural property required for the implementation of the above-mentioned land consolidation transactions. (*)

SPECIAL CONTRIBUTIONS

The 2025 State Budget extends the following special contributions to the year 2025:

  • Audiovisual contribution;
  • Banking sector contribution;
  • Pharmaceutical industry contribution;
  • Extraordinary contribution to suppliers of the National Health Service of medical devices; and
  • Extraordinary contribution to the Energy Sector.

TAX BENEFITS

The 2025 State Budget includes the following changes to the Tax Benefits Statute:

  • Incentives for salary increases. The costs related to salary increases for workers with a permanent employment agreement will be considered at 200% (instead of the 150% foreseen for 2024), provided that the following conditions are met:

           - The increase in the average annual base salary per employee is at least 4.7% (instead of 5%); and (*)
           - An average increase of at least 4.7% in the annual base salary of employees who are paid the company's average annual salary or less.
For this purpose, the expenses related to (i) workers covered by a Collective Bargaining Agreement signed or updated less than three years ago and (ii) amounts spent by the employer on the worker by way of base salary and social security contributions will be considered. The maximum deduction from taxable income per employee is increased to five times (instead of four times) the guaranteed minimum monthly salary.

  • Incentives for the recapitalisation of companies. The 20% relief provided for capital contributions in cash to a company in which a shareholding is held, applied to the gross amount of profits or capital gains resulting from the sale of that shareholding, now covers any company and not only to companies with a loss of half their share capital. However, entities subject to supervision by the Bank of Portugal or the Insurance and Pension Funds Supervisory Authority, as well as branches in Portugal of credit institutions, other financial institutions or insurance companies, are excluded from this provision.
  • Incentives for the capitalization of companies. An amount corresponding to the 12-month Euribor rate plus a spread of 2% (instead of 1.5%) can be deducted when determining taxable net income. This measure will now apply to any company, instead of being restricted to small or medium-sized enterprises or small-medium capitalization companies. The relief will be increased by 50% in 2025.
  • PIT and social security exemption for performance rewards. If the employer complies, in 2025, with the conditions laid down for the application of the tax incentive for salary increase, there may be an exemption from PIT and social security contributions (SS) on the amounts paid in 2025 to employees as performance and productivity rewards, profit-sharing and balance-sheet bonuses, up to a limit of 6% of the annual base salary.
  • Extension of the Madeira Free Trade Zone regime. Entities licensed to operate in the Madeira Free Trade Zone between 2025 and 2026 will benefit from the reduced Corporate Income Tax Rate of 5% until 31 December 2028. (*)

(*) Tax measures introduced in the final version of the 2025 State Budget.

 

Acknowledging the evolution of advertising practices and the growing digitalization in the marketing of financial products and services, the Bank of Portugal issued Notice no. 5/2024 (“Notice”) which introduces a comprehensive set of principles and rules governing the advertising of financial products and services under the Bank of Portugal’s supervision, replacing the previous Notice no. 10/2008.

The Notice distinguishes 3 distinct categories of advertising:

  • Advertising of financial products and services;
  • Advertising of the activity; and
  • Institutional advertising, i.e. promoting the entity itself.

Each type of advertising is subject to specific rules.

The Notice also includes detailed provisions applicable to specific financial products and services, such as corporate loans and package accounts. For each of these products, advertisement must include clearly defined and detailed information.

The Notice applies to the following entities:

  • Credit institutions, financial companies, payment institutions and electronic money institutions; and
  • Credit intermediaries and entities authorised to carry credit intermediary activities.

Under the new rules, the advertising disseminated by these entities must:

  • Be truthful, up-to-date and coherent;
  • Comply with certain font size requirements;
  • Be displayed for a sufficient duration to allow proper reading or listening;
  • Highlight the required information and the benefits in the same way; and
  • Identify the entity responsible for the advertisement.

The entities must keep proof of advertising approval for two years and submit to the Bank of Portugal, on the start date of the campaign, a copy in digital format of the advertising materials, regardless of the channel or medium used.

The Notice will come into force on 1 July 2025. Until then, the relevant entities should review their advertising practices and procedures to ensure full compliance with the new requirements.

2024-12-05

On 8th October 2024, the European Council approved the “EU Listing Act”, a regulatory package that follows the “Capital Markets Union Action Plan”, initially approved on 30 September 2015. The “EU Listing Act” envisages simplifying the rules governing public offers and the listing of EU companies on stock exchanges, while preserving transparency, investor protection, and market integrity.

This package includes the following acts which were approved by the European Parliament on 23 October 2024 and published on 14 November 2024:

Regulation 2024/2809 amends the following acts:

The Directives and Regulation 2024/2809 entered into force on 4 December 2024.

DIRECTIVE AMENDING MIFID II

This Directive repeals Directive 2001/34/EC on the admission of securities to official stock exchange listings and the information to be published on those securities ("Listing Directive").

As a result of this revocation, several provisions of the Listing Directive have been incorporated into the MiFID II.

In addition to this revocation, the Directive approves significant amendments, including without limitation:

  • For the listing of companies, a minimum market capitalization requirement of €1,000,000 and a minimum free float  requirement of 10% (instead of 25%) will apply; and
  • Stricter requirements for issuer-sponsored research are introduced in accordance with the new EU code of conduct.

MULTIPLE VOTING SHARES DIRECTIVE 

This Directive harmonizes the rules on multiple voting shares. In particular, this Directive approves the following measures:

  • Member States are authorised to adopt multiple voting share structures even before a request for admission to trading is made, with the option to condition this authorisation to the admission to an MTF; and
  • Protective measures to safeguard the interests of minority shareholders.

AMENDMENT TO PROSPECTUS REGULATION

The amendment to the Prospectus Regulation aims to address the challenges faced by many European companies in financing their growth through market-based sources.

The high administrative costs and the complexity of the procedures involved, particularly the requirement to prepare a prospectus, discourage SMEs from raising funds in the capital markets..

Key measures include:

  • New exemptions from the obligation to publish a prospectus;
  • Amendments to the "EU Growth Prospectus" rules, now incorporated in the Prospectus Regulation;
  • Introduction of a new "EU Complementary Schedule" for secondary issuances;
  • New requirements for the disclosure of ESG information; and
  • Easing of the language requirements, allowing the use of a language accepted by the competent authority of the Member State.

AMENDMENT TO MARKET ABUSE REGULATION

Regulation 2024/2809 also amends the Market Abuse Regulation. The key measures include:

  • Elimination of the requirement to disclose intermediate stages in protracted processes (e.g., mergers and acquisitions); and
  • Increase of the threshold for manager’s transactions notifications from €5,000 to €20,000.

NEXT STEPS

Although the regulatory package entered into force on 4 December 2024, the approved acts will only take full effect in the year 2026.

On one hand, the Directives must be implemented by Member States by 5 June 2026.

On the other hand, several provisions of Regulation 2024/2809 will only come into effect on 5 March 2026 and others on 5 June 2026. In addition, the Commission and the Member States will need to take measures to implement the changes outlined in the Regulation 2024/2809.

© 2024 Macedo Vitorino

2024-12-05

Decree-Law 99/2024 of December 3rd,  partially transposed the RED III Directive and amended Decree-Law 15/2022.

We highlight the main changes:

(i) Storage

The definition of ‘Storage Facility’ is extended to cover two specific types of storage:

  • Autonomous storage: when the installation has a direct connection to the Public Service Electricity Grid (“RESP”’);
  • Colocated storage: a storage facility that is combined with a renewable electricity generating center or UPAC and is connected to the same network access point.

In addition to the required procedures for obtaining a production license, prior registration or communication, storage activities must now undergo a verification process. This process checks the charging capacity of the RESP and is conducted by the network operator and the overall manager of the National Electricity System (“SEN”). The Portuguese Directorate-General for Energy and Geology (“DGEG”) requests opinions from these entities to determine the maximum power allowed for charging the storage units from the RESP.

(ii) Deposit

The amount of the security deposit has been changed from €15,000.00 to €10,000.00 per MVA of reserve capacity in the form of an agreement between the interested party and the RESP operator, with a maximum limit of €10,000,000.00, for a minimum period of 30 months (instead of the 24 months previously established), and will be extended until the electricity generating centre, storage facility or UPAC comes into operation, failing which the procedure will lapse.

The deposit will now also be refunded if the agreement between the interested party and the RESP operator is not signed for a reason attributable to the latter.

(iii) Municipal Concessions

Concessions to municipalities where renewable electricity generating centres or storage facilities are located will now be subject to a threshold of 1 MVA of connection power assigned, as opposed to the previous 50 MVA, in which case the respective holder must cede to the municipality: 

  • UPAC with installed power equivalent to 1% (instead of the previous 0.3%) of the connection power of the electricity generating centre; or
  • Electric vehicle charging stations located in public spaces and intended for public use, provided they have equivalent capacity.

(iv) Deadlines

The deadlines for applying for the issue of a production and operating licence can now be extended without limit by the decision of the member of the Government responsible for energy, in exceptional circumstances at the request of the duly justified applicant.

Nevertheless, maximum time limits have been set for the procedures for issuing production and operating licences, which can be extended by order of the DGEG for a maximum period of 6 months:

  • Two years for onshore renewable energy projects; and
  • Three years for offshore renewable energy projects.

The following periods are also now excluded from the deadlines for issuing the production and operating licence:

  • Construction of electro-production centres, including their connections to the grid;
  • The administrative process for significant modernisations of the network to guarantee its stability, reliability and security; and
  • The procedures for administrative or judicial challenge of a decision, act or omission to comply with Decree-Law 15/2022.

The amendment to the production licence in the event of over-equipment and re-equipment cannot now exceed one year from the date of the application, and this period may be extended by order of the DGEG for a maximum period of 3 months. If the retrofit does not increase installed power of more than 20%, the deadline is reduced to 3 months.

(v) Autoconsumption

The concept of proximity between the UPAC and the Electrical User Installation(s) (‘UI’) is amended, applying only the maximum distances between the UPAC and the UI of (i) 4 km in the case of a medium voltage connection; (ii) 10 km for high voltage connections and (iii) 20 km for very high voltage connections, when they are not connected to the same substation (in which case there is no maximum distance).

If the UPAC and IU are in low-density territories (identified by government decree) the distances increase twofold.

(vi) Hybridisation

The hybridisation of an electricity generating centre or UPAC can now take place after the issue of the Production Licence, Prior Registration or Prior Communication, i.e. without the project having entered operation.

Hybridisation also now allows for the possibility of new storage units and not just the addition of another renewable energy source, through an amendment procedure to the prior control title.

(vii) EIA Exemption

Solar power generation centers and their storage facilities, as well as additional equipment and retrofitting, are now exempt from Environmental Impact Assessment (“EIA”) if they are installed on existing or future artificial buildings or structures. However, this exemption does not apply to installations on artificial bodies of water, in classified areas or buildings being classified, and their respective protection zones, or in areas important to national defense or security.

In particular, the retrofitting of a solar or wind power plant is exempt from EIA when the retrofitting is implemented in the pre-existing power plant and complies with the conditions of the previous environmental permits and decisions issued.

(viii) National Agricultural Reserve

The rules for using areas of the National Agricultural Reserve (“RAN”) have been simplified. RAN areas can now be used for the purposes of installing solar power generation centres and their internal connection lines to the RESP, provided that these areas represent less than 10% of the total contracted area and are less than 1 hectare in size.

In addition, the requirements of article 22 of Decree-Law 73/2009, of 31 March, for the use of RAN areas are met when, for the purposes of installing supports and lines connecting energy centres to the RESP, they do not impose restrictions that harm agricultural activity.

(ix)  Measures to support Electro-intensive customers

Consumption facilities with Electrointensive Customer Status can now receive a reduction of up to 85% on the Costs of General Economic Interest (“CIEG”) charges, which are part of the overall system use tariff for electricity consumption from the RESP. This is an increase from the previous 75% reduction. However, the reduction cannot result in a charge lower than €0.5/MWh.

The intensity of the support is:

(x) Registration and bilateral energy contracting activity

The bases for the activity of registration and bilateral contracting of energy are established, which consists of the registration of all transactions operated by bilateral energy contracts, in which at least one of the parties is a market agent, including the compulsory registration of energy contracts, including their price and volume conditions.

ERSE will be responsible for regulating the activity and approving the respective Manual of Procedures, while the Government will be responsible for establishing the terms and conditions of the energy registration and bilateral contracting activity no later than 120 days after the entry into force of Decree-Law 99/2024.

The new rules come into force on 18 December 2024.

2024-12-04

On November 29th, 2024, the Portuguese Government approved the rules for the deployment and maintenance of small-areas wireless access points through Decree-Law No. 97/2024. This decree establishes the legal framework for ensuring compliance with European Union ("EU") Regulation 2020/1070.

In a 5G environment, Small Area Wireless Access Points (SAWAPs) enable mobile devices to stay connected by either boosting the coverage of cellular networks or by offloading their data traffic to Wi-Fi networks, a process known as "Wi-Fi offloading. This allows to expand wireless networks and coverage without the need for additional infrastructure. The deployment of SAWAPs is crucial to achieve the objectives of the Radio Spectrum Policy Programme to ensure that all EU citizens have broadband access, both indoors and outdoors, at a speed of no less than 30 Mbps, as outlined in the Digital Agenda for Europe.

Electronic communications companies will now have the right to access public or private infrastructure suitable for installing wireless access points or connecting these points to a core network, such as lampposts, underground stations and traffic signs.

The installation and maintenance of SAWAPs areas will only be subject to subsequent notification, in line with the regime established by the Portuguese Electronic Communications Law for general authorizations, except in exceptional cases.

The main rules for the installation and maintenance of SAWAPs are:

  • Interested parties are now required to notify the Autoridade Nacional de Comunicações (ANACOM) through a designated platform within 10 days of the installation of network points. The notification must include the following details: (i) the geographical location of the network points, (ii) the installation and removal dates, (iii) the main technical characteristics, and (iv) the infrastructure used.
  • A register will be established to maintain up-to-date, geo-referenced data on public and private infrastructures suitable for installing small-areas wireless access points. ANACOM will be authorized to exempt certain types of infrastructure from inclusion in the register, subject to prior public consultation.
  • Since it is exempt from prior approval and fees, the consent of the infrastructure owner will serve the operator to not only install the access points but also to arrange the necessary services, such as energy supply.
  • However, the installation of small-areas wireless access points is subject to municipal authorization in the following cases:

a)     Monuments, groups of buildings, or sites classified as being of national, public, or municipal interest, along with their respective protection areas, as well as those undergoing classification, and cultural assets subject to protection under municipal master plans.

b)     b) Buildings or sites whose use is restricted for reasons of public safety, aimed at protecting people and property.

  • Municipal authorization can only be granted after a consultation with the relevant entities, which must provide their opinions on the approval of the small-areas wireless access points. This consultation process must be completed within a maximum of 20 working days.
  • The request for municipal authorization must be decided within a maximum of 40 working days.

Finally, no additional fees or charges can be applied for the deployment of small-areas wireless access points. Only in cases requiring municipal authorization will a one-time fee be applicable, payable at the time of application. This fee will depend on the administrative costs associated with processing the application, including the costs of obtaining opinions and overseeing the installation of the small-areas wireless access points.

 

2024-12-03

The Directive 2024/2831 of the European Parliament and of the Council (“the Directive”) on improving working conditions in platform work was published on November 11th, having the Member States, until December 2nd, 2026, to transpose the Directive into national law.

The Directive aims to improve working conditions in platform work and the protection of personal data, particularly by introducing measures to facilitate the determination of the correct employment status of persons performing platform work.

To accomplish its objective, the Member States must have appropriate procedures in place to determine the correct employment status of persons performing platform work, enabling the verification of the existence of an employment relationship, inter alia, through the legal presumption of an employment relationship in favor of persons performing platform work. This being similar to what already occurs in Portugal. Hence, the Directive foresees that, where facts indicating direction and control are found, there is a contractual relationship between the person performing platform work and the digital labor platform. In case the digital labor platform considers that an employment relationship does not exist, it will have the burden of proof regarding the non-existence of said relationship.

Article 12-A of the Portuguese Labor Code, approved in 2023, requires the existence of some facts evidencing an employment relationship for it to be presumed that such relationship actually exists: (i) the remuneration is set by the platform operator; (ii) the operator directs the way in which the provider operates and presents itself; (iii) the operator controls the activity provided, in particular through electronic means or algorithmic management; (iv) the operator restricts the autonomy of the provider with regard to the organization of the work, the possibility of accepting or refusing tasks, the use of subcontractors, the choice of clients or the provision of the activity to third parties via the platform; (v) the platform operator exercises employment powers over the provider, in particular by deactivating the account, and (vi) the equipment and work instruments used belong to the digital platform operator or are exploited by the latter through a leasing agreement.

There are already court decisions on the subject in Portugal.

The vast majority of decisions (around 11 to date) have considered that there is a hidden employment relationship within digital platforms, which must prevail even if the title of the contract says otherwise (e.g. Judgment of the Court of Appeal of Guimarães, 03/10/2024). There is also an opposing decision, which in a specific case did not recognize the existence of an employment contract. (Judgment of the Évora Court of Appeal, of 12/09/2024).

The new Directive has already been materially transposed into Portuguese law, so its approval in Portugal will no longer have a major impact in practical terms.

The development of the issue will continue to be carried out by the courts.

2024-12-03

On March 17, 2023, the European Commission introduced an added support plan to help economies affected by the war between Russia and Ukraine. One part of the plan is about encouraging investments in important industries that will help Europe move towards cleaner energy. These industries include the production of batteries, solar panels, wind turbines, heat pumps, and technology to capture carbon emissions.

In Portugal, the program "Investment in Strategic Sectors" created by Ministerial Order 306-A/2024/1 aims to support large-scale projects for a carbon-neutral economy in 2025, namely renewable energy production and storage. The program has a budget of one thousand million euros. Here are the key features of this incentive works:

  • It’s available to companies of any size in Portugal, including Azores and Madeira, but only for the production of the specific items mentioned above.
  • The amount of support companies can get depends on where they are located in Portugal and the specific rules of the program.
  • In most cases, the support will cover up to 15% of eligible costs, but there’s a limit of 150 million euros per company.
  • If the company is in the Lisbon Metropolitan Area or Algarve, the support can be higher — up to 20% of the eligible costs, with a 200 million euros limit.
  • If the company is in the North, Center, Alentejo, Azores, or Madeira, the support can cover up to 35% of the costs, with a limit of 350 million euros.
  • Eligible costs include things as purchasing machinery, equipment, and patents, but do not cover land, VAT, or financial expenses.

An online form is available to submit all applications to AICEP, the foreign investment Portuguese government agency. AICEP will review the application and recommend it to the program’s decision-making body, COMPETE 30, for a final decision on support.

2024-11-12

The Global Minimum Tax Regime approved by Law 41/2024 of 8 November implemented the Council Directive (EU) 2022/2523 of 14 December 2022  on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union.  

The aim of this Directive is to reinforce the efforts to avoid aggressive tax planning within the internal market by establishing a global minimum tax, mitigating the practice of shifting profit to jurisdictions with low or no taxation.

The 15% global minimum tax applies to entities that are part of multinational groups or large domestic groups, with consolidated income of €750 million or more in at least two of the previous four years.

Under this regime, the effective tax rate in each jurisdiction where the group operates will be compared with the minimum rate of 15%. After this comparison, it will be determined whether the group is required to pay a top-up tax, in accordance with the following rules:

  • Income Inclusion Rule (IIR).  The parent of a multinational enterprise group or of the large-scale domestic group (or the intermediate entity, if the parent is not subject to the IIR) will calculate and pay its allocable share of the top-up tax with respect to the low-taxed constituent entities of the group, or to itself.
  • Under-Taxed Profits Rule (UTPR). A constituent entity of a multinational enterprise group will be responsible for paying its allocable share of the top-up tax that has not been collected by the parent entities through the application of the IIR. The formula used for this purpose considers the proportion of employees and tangible assets in each jurisdiction, acting as a backstop to the IIR.
  • Qualified domestic minimum top-up tax (QMDTT): Portuguese companies subject to this regime will have the option to deduct a percentage of the value of tangible assets and employee salaries located in Portugal when calculating the taxable profits. This percentage will gradually decrease over the coming years, reaching 5% by 2033.

This regime is expected to affect large Portuguese groups with subsidiaries in other jurisdictions.

The new rules have entered into force on 9 November 2024, with retroactive effect as from 1 January 2024. However, the UTPR rule will only apply from 1 January 2025 onwards.

It should be noted that the Global Minimum Tax Regime establishes various transitional periods during which the additional tax will be reduced to zero.

2024-11-06

On November 4th, 2024, Decree-Law 85/2024 was published, implementing Regulation (EU) 2018/1807 into Portuguese law to establish a framework for the free flow of non-personal data within the European Union (EU).

A Regulation that establishes the free flow of non-personal data across the EU. Non-personal data includes information that does not directly identify individuals, such as aggregated and anonymised datasets, commonly used in large-scale data analysis.

This data type is gaining importance with the rapid expansion of the Internet of Things, Artificial Intelligence, autonomous systems, and 5G networks. The Regulation generally prohibits EU Member States from enforcing mandatory data localisation requirements for non-personal data, effectively removing rules or practices that require data to be stored and processed in specific geographic locations. Exceptions are allowed only for reasons of public security or national defence.

While Regulation (EU) 2018/1807 is mandatory and directly applicable within the Portuguese legal system, specific provisions require local implementing measures. These include appointing a competent authority as the local contact point, establishing mechanisms and procedures for notifications and communications with the European Commission, and defining the sanctioning framework.

The Decree- Law 85/2024 appoints the Agency for Administrative Modernization, I.P. (AMA, I.P.) as the local contact point, liaising with the single contact points of other Member States and the European Commission. AMA, I.P. is also tasked with managing and updating the single national information point.

The powers of AMA, I.P. include:

  • Providing and regularly updating detailed information on data localisation requirements applicable within the national territory and contributing data localisation information to a central information point.
  • Assisting the competent authorities of other Member States in accessing data in line with the cooperation procedures outlined in the Internal Market Information System (IMI).
  • Notifying the European Commission of any provisional data relocation measures implemented.
  • Preparing an impact assessment report with support from competent national authorities, who must gather and provide relevant data.

Existing data localisation requirements must be communicated to the European Commission, along with a justification based on public security grounds, in line with the principle of proportionality. The national authorities responsible for enforcing the data localisation requirements will carry out this communication.

Supervision is carried out by the Portuguese Food and Economic Safety Authority (ASAE), which may, if necessary, cooperate with other entities, particularly the Portuguese Data Protection Authority when personal data is at stake.

Regarding penalties, failure to provide information or providing false information and failing to grant access to data when requested by the supervisory authority constitutes a severe economic offence, punishable by a fine ranging from €1,700 to €24,000, depending on whether the company is micro, small, medium, or large. In turn, providing inaccurate or incomplete information constitutes a minor economic offence, punishable by a fine ranging from €250 to €12,000, depending on whether the company is micro, small, medium or large. At the same time, ASAE can impose ancillary sanctions.

The Decree-Law 85/2024 will enter into force on January 3rd, 2025.

To find out more about Regulation (EU) 2018/1807 on a framework for the free flow of non-personal data, learn more about our insights.

2024-11-04

On October 30th, 2024, the Portuguese Government approved a revised version of the National Energy and Climate Plan for 2030, known as "NECP 2030". This plan is Portugal's primary energy and climate policy instrument, outlining long-term goals and commitments to reduce greenhouse gas emissions and promote the energy transition.

This is the first revision of the NECP 2030 since its publication in 2020, which has been subject to two phase public consultation. From March to April 2023, where 58% of the participants considered the goals ambitious, while 35% viewed them as not ambitious enough, highlighting the importance of establishing higher storage capacity. In the second phase, from July to September 2024, on the final proposal incorporating recommendations from the European Commission, 177 contributions were received, reflecting similar feedback to the previous phase.

The final version of the NECP 2030 establishes more ambitious targets than the version released for public consultation. It sets a goal of 93% (instead of 85%) of energy production from renewable sources by the end of 2030. The final version outlines a solar capacity target of 20.8 GW by 2030, representing an increase of 0.04 GW:

  • Centralized photovoltaic production capacity reaching 15.1 GW (instead of 14.9 GW)
  • Self-consumption solar production is set to reach 5.7 GW (instead of 5.5 GW).

Regarding wind energy, the NEPC maintains the estimates of 12,4 GW for installed capacity unchanged from the first version.

For green hydrogen production, the target has been reduced from 5.5 GW to 3 GW by 2030, establishing a less ambitious goal.

The target for installed battery storage capacity is set at 1 GW, despite a consensus that this amount is inadequate for the needs of the Portuguese electrical system. This limitation may lead to higher costs for consumers and could impact grid stability as increasing battery storage capacity is an effective way to address these challenges, according to the public consultation responses.

To know more on the PNEC: Portugal updates its 2030 Energy and Climate Plan.