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The European Regulation published yesterday, lays down temporary emergency rules to speed up the licensing procedure for renewable energy plants. Under this Regulation, the planning, construction, operation and grid connection of renewable energy plants and installations deemed to be of overriding public interest and Member States must ensure that they have priority in the licensing procedures. To speed up licensing procedures it establishes:
This temporary framework enters into force today, on 30 December 2022 and applies to licensing procedures starting until 30 June 2024. The European Commission will review this Regulation by the end of 2023, with a view to a possible extension of its period of validity. |
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The Portuguese windfall profits’ tax law has finally been approved last week by the Portuguese Parliament, confirming that:
According to the Portuguese Government, this new tax will generate revenue between 50 and 100 hundred million euros. But GALP alone has already announced that its tax burden for 2022 and 2023 will exceed 100 hundred million euros. In any case, the impact on prices to consumer will be high and this new tax will contribute to extending the inflation pressure on oil and gas products in 2023. |
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Portugal completes the implementation of Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources by establishing the new national goals for renewable energy consumption. Within those, stands out the establishment of a minimum quota of use of energy from renewable sources in 2030 of at least 49 % of renewable energy use in gross final consumption of energy. This represents a more ambitious goal compared to the previously 47 % forecast. In the transport sector, the target is lower: in 2030, the minimum share of renewable energies in the final consumption of energy should be of 29%. To guarantee the fulfilment of these goals, the Portuguese Government established that:
With a view to promoting the use of renewable energies, new incentives are created, of which we highlight the following:
Decree-Law No. 84/2022, of 9 December, where the above goals and measures are set, came into force on December 10, 2022. |
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Yesterday, the Portuguese Cabinet approved in its weekly meeting a new bill proposal to create a temporary and extraordinary solidarity contribution on the energy sector. The goal of this new bill is, the Portuguese Government says, to provide an adequate tax treatment for windfall profits arising from unanticipated circumstances, such as rising inflation, which result in current profits not matching those usually made by energy companies. The Portuguese Government also claims that this new tax will mitigate the economic effects of inflation and the consequent increase in energy prices. Of course, it is yet to see how energy companies will reflect this tax on energy prices and whether it will in fact help the decrease in inflation or, on the contrary, add additional inflationary pressure to an already overheated energy market. This law proposal will now be submitted to Parliament for discussions and most likely approval, giving the majority the Government party has in the Parliament. The market is anticipating a no less than 33% tax rate applicable to profits falling under this new contribution, that will be added to the energy companies’ CIT on overall profits. Until the text of the proposed bill is known, it will remain unclear if and how this tax will apply to the Portuguese energy companies’ 2022 profits or only to those from 2023 onwards. |
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In 2023, rents under urban and rural leases will be reviewed in accordance with an index of 1.02, i.e., increasing rents will be limited to 2%, unless the parties agree otherwise. Pursuant to Law no. 19/2022, of 21 October 2022, the above index of 1.02 shall apply to urban and rural lease agreements that establish annual rent review to take place in accordance with the index established in the applicable law or the annual publication made by the National Statistics Institute in the Official Gazette (Diário da República). To compensate landlords for the above-mentioned limitation to rent review – which will be below inflation and consumer price index in 2022 – only a portion of their real estate income will be considered for purposes of income taxation. For individuals, real estate income subject to the tax rates established in article 68, section 1, or article 72, section 2, of the Individual Income Tax Code (IITC), shall be determined by applying a factor of 0.91. As to real estate income subject to the special tax rates established in sections 2 to 5 of article 72 of IITC. For companies, taxable income originating in rent subject to the tax rates established in article 87 of the Corporate Income Tax Code (ITC) shall be determined by applying a factor of 0.87. This form of support granted to landlords shall apply to rents (i) that become due and are paid in 2023, (ii) originated in lease agreements in force before 1 January 2022 and reported to the tax authorities as required by Portuguese law and (iii) that do not originate from lease agreements which rents are reviewed in accordance with an index exceeding the above-mentioned index of 1.02 established for 2023. |
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The Portuguese government has enacted a recent regulation (Decree-Law 72/2022) adding new easing rules to those recently published (Decree-Law 30-A/2022), setting forth new measures aimed at fostering and streamlining the licensing of renewable energy generation and storage plants. 1.Construction
2. Compensation to Municipalities
3. Agreements with the DSO/TSO
4. 2019, 2020 and 2021 Auctions new benefits
These rules new rules enter into force today, October 20th, 2022, and will apply until April 19th, 2024. |
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A “Medium-Term Agreement on Improving Incomes, Wages and Competitiveness” (“The 2023-2026 Social Pact”) has recently been signed by the so-called Portuguese Social Partners (representatives of employers, unions, and the Government). It sets guidelines for employment collective bargaining on the increase of salaries for the years 2023 to 2026. The most relevant provisions of the Portuguese 2023-2026 Social Pact in this regard are: (i) The annual nominal appreciation of salaries per employee of 4.8% on average (appreciation of 5.1% in 2023; 4.8% in 2024; 4.7% in 2025 and 4.6% in 2026); (ii) An increase of the minimum monthly guaranteed remuneration up to at least €900.00 in 2026 (increase to €760.00 in 2023; €810.00 in 2024; €855.00 in 2025 and €900.00 in 2026). (iii) The increased remuneration for overtime work above 100 hours: (i) 50% for the first hour; (ii) 75% for each subsequent hour; (iii) 100% for each hour on weekly rest days or public holidays. (i) A tax exemption on the meal allowance of up to €5.20 per day. (ii) The increase to the severance compensation to 14 days’ salary per year of seniority in case of collective dismissal or job extinction. (iii) An increase of 50% to the employer’s tax deductions regarding an increase in salaries (wages and social contributions), for all companies that have at least complied with one of the following conditions: (i) they have signed or renewed their collective bargaining agreements less than three years ago; (ii) they have annually increased salaries above the values of the 2023-2026 Social Pact and of their application framework collective bargaining instruments; (iii) they have reduced the difference between the remuneration of the 10% of better remunerated and the 10% of less well remunerated. |
Employers must pay attention to the 2023-2026 Social Pact for the impact it will have on their labor costs, as the above guidelines can be construed as an instrument that, to some extent, allows anticipating the Portuguese companies’ labor costs in the forthcoming years.
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The legal background of entry, stay, exit and expulsion of foreigners from the national territory have recently been changed. The same law that amended the legal regime for the entry, stay, exit and removal of foreigners from national territory also created the conditions for the implementation of the Agreement on Mobility between the Member States of the Comunidade dos Países de Língua Portuguesa (Community of Portuguese Language Countries - CPLP), concluded in 2021. The amendments aim to attract a new wave of immigration to the country, in a regulated and integrated way, which may contribute to its development and mitigate the labour shortage felt in Portugal. The law also created the digital nomad visa. The main measures include the following:
The new visa for work search allows foreigners to enter Portugal to look for work. The visa has a maximum duration of 120 days, extendable for 60 days. With a view to simplifying procedures, the visa integrates the scheduling with the services competent for granting residence permits within 120 days of the visa's duration, conferring the right to request a residence permit, after establishing and formalising the operating agreement within that period.
In situations where the visa applicant is a national of a State where the Agreement on Mobility between the CPLP Member States is in force, the procedure for issuing visas is facilitated. The following changes have contributed to speeding up the process: (i) waiver of the prior opinion of the Serviço de Estrageiros e Fronteiras (Foreigners and Borders Service - SEF); (ii) direct and an immediate consultation of the Schengen Information System databases by the competent services; (iii) refusal to issue visas limited to situations where there is an indication of a ban on entry and stay in the Schengen Information System for security reasons.
The new visa applies to remote work carried out by people who work in Portugal (e.g. digital nomads), by employees or independent contractors, and for entities with residence or head offices outside our country.
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The rules implementing the 2022 State Budget were recently approved.
We’re analyzing labor measures in this article. The main ones are:
Salary and bonuses
- State-owned companies must have instruments (e.g. collective labor agreements, legal or contractual instruments, or internal regulations approved under the State Business Sector Legal Framework) establishing mechanisms for: (i) performance assessment; (ii) performance awards; and (iii) general employee validation. The lawfulness of these acts depends on the prior existence of those instruments.
- Promotions not covered by mandatory changes in remuneration, general career progressions, as well as internal selection procedures for change of level or tier that can result in a pay raise, not explicitly mentioned in a specific rule of the 2022 State Budget Law (LOE 2022), depend on special Government approvals.
- Directors of the bodies and services can, in compliance with the legal requirements and budget sums, allow: (i) remuneration changes by management option; (ii) award performance bonuses.
New hirings
- Public Administration and Finance Government members can open hiring procedures, for open-ended contracts or fixed-term contracts and for general or special careers, as long as: (i) there is relevant public interest in recruitment; (ii) a budgetary responsibility statement is issued by the requesting body, service or entity; and (iii) the Government member leading the service or body carrying out the recruitment agrees.
- Legal persons under public law and public business sector companies can hire permanent workers.
Operating expenses of companies in the state's business sector
- The operating expenses ratio must be equal to or lower than in 2019 or 2021, depending on which is higher.
- In any case, operating expenses should be equal to or lower than in 2021 when it comes to: (i) staff; and (ii) travel, cost aid and accommodation, and the ones associated with contracting of studies, opinions, projects and consulting services.
Introduction
The new Portuguese Electronic Communications Law ("LCE"), published on August 16, 2022, transposes Directive (EU) 2018/1972, which informs the most recent recast of the sector's regulatory framework establishing the European Electronic Communications Code ("EECC").
In 2004, Portugal transposed the Review99’s Directives (of 2002) into a single act thus creating a national version of an electronic communications code, the transposition of EECC should have been an easy task. Interestingly, as the transposition deadline was practically expired before the pandemic outbreak, the cause of this delay seems to be mostly attributable to the sector's upheavals, such as the 5G auction technology implementation, rather than to COVID-19 lockdowns.
Although it broadly follows its predecessor, the newly enacted LCE is an entirely new piece of legislation, and, as such, some relevant changes were introduced, not only to accommodate all the new features of EECC, but also to reflect the new regulatory policy priorities.
Most of the relevant new features focus on issues regarding consumers vis-à-vis operators’ rights in general, privacy in electronic communications and a thorough overhaul of the sanctions’ framework. We highlight some of them below.
Consumer rights
Regarding consumer protection rules introduced by the new law:
- Retention period. According to the new paragraph 3 of article 131, the availability of installments with shorter retention periods (12 or 6 months) is no longer mandatory, however, there is a new maximum limit of 24 months.
- Unavailability of service. The law states that in case there are any reports of service unavailability lasting longer than 24 hours, the operator must credit the equivalent value. The return of this amount does not only apply when there are interruptions of more than 24 consecutive hours, but also to situations where the failures added together exceed this time, per billing period. However, for the consumer to be able to terminate the contract free of charge, a 15-day period of persistence of the problem is required (after the report).
Situations in which no early termination costs are charged. The new LCE defined a few situations where early termination costs cannot be charged, such as unemployment (for reasons not attributable to the consumer), incapacity to work for more than 60 days with a loss of income or a change of address to a place where the operator cannot provide an equivalent service.
Electronic Communications Privacy
- Amendment to the Law on Privacy in Electronic Communications. Regarding the Law on Privacy in Electronic Communications (Law no. 41/2004, of 18 August), Articles 7 and 10 are amended. Essentially, the amendments concern the increase of the number of organizations to which personal data regarding the location of emergency communications may be shared with, now covering not only the organizations legally entitled to receive such communications, but also those entitled to process them.
- Itemized billing. Article 122, paragraph 5, of the new LCE provides that itemized bills do not have to identify free of charge calls, including calls to helplines.
- Procurement avoidance. It is not clear in Article 126 whether, in the case of services provided to a company, the company that contracts the electronic communications services will be included in the database or if it will be the employees as actual users of the services.
Sanctioning framework
Article 176 and partially Article 164 of LCE outline a new and very broad sanctioning framework for electronic communications in Portugal.
Some more details...
- "Electronic communications service". The definition of "electronic communications service" was broadened and now includes a range of activities typically carried out by instant messaging applications, email, internet calls and personal messages through social media.
- General consent. A notifying duty is now imposed where companies intending to offer public electronic communications networks and publicly available electronic communications services must inform the National Regulatory Authority ("ARN") about the start of their activity.