On 6 May 2022, the Portuguese Government enacted Decree-Law 31/2022, which regulates covered bonds issued by Portuguese credit institutions (New Covered Bonds Law) and replaces the old covered bonds law, approved by Decree-Law 59/2006, of 20 March 2006. The New Covered Bonds Law implements Directive (EU) 2019/2162 and Directive (EU) 2021/2261.

Without bringing significant changes, the New Covered Bonds Law simplifies the mortgage-backed bonds and public sector debt backed bonds and establishes a single type of bond independent of the cover asset.

Eligible cover assets include:

  • Assets that fulfil the requirements set out in the European Union legislation on prudential requirements applicable to credit institutions for exposures in the form of covered bonds;
  • Credits granted to public undertakings which do not meet the above requirements; or
  • Other high-quality cover assets which are secured by first ranking security over assets located or registered in the European Economic Area.

Holders of covered bonds and counterparties of derivative contracts hold preferential rights which are secured by cover assets in case of insolvency of the credit institution.

In line with the Directive, bonds should have a cover pool liquidity buffer to cover the maximum cumulative net liquidity outflow over the next 180 days.

Covered bonds programs are subject to prior authorization by the Portuguese Securities Market Commission (Comissão de Mercado de Valores Mobiliários - CMVM), which has 90 days to review the application.

To ensure the authorization, the issuer must have:

  • An appropriate operational program that defines the issuance procedure;
  • Appropriate policies, processes, and methodologies for the protection of investors in the context of the approval of the loans included as cover assets; and
  • An administration and monitoring structure to ensure that the cover assets comply with the applicable requirements.

The New Covered Bonds Law will enter into force on 1 July 2022 and is expected to make the financing of credit institutions more flexible and allow the issue of bonds which will qualify as European covered bonds.


The new Decree-Law 30-A/2022 published today at the Portuguese official gazette implements the measures recently announced by the Portuguese Government to accelerate the entry into operation of renewable energy production projects.

Renewable energy plants, storage facilities, and production units for self-consumption are temporarily exempted of operating license or operating certificate whenever the grid operator confirms the existence of conditions for connection to grid. The operating license or operating certificate may now be requested within three years and the DGEG (Direção Geral de Energia e Geologia) may waive the need for a previous inspection.

The installation of generating plants and self-consumption units (“UPACs”) must follow minimum technical rules, to ensure the protection of natural resources, soil, water, territory, and the preservation of biodiversity, also requiring a minimum distance of 1km from population centers.

The installation of generating plants (UPACs included) with a capacity of 20 MW or more, or wind farms with at least 10 towers, are required to submit a project proposal to involve the local population.

The injection in RESP (Rede Elétrica de Serviço Público), the Portuguese public grid, of all production from existing wind power generating plants, is now allowed without administrative limitations is allowed.

Environmental impact assessment of generating plants, storage facilities, UPACs and projects to produce hydrogen by electrolysis of water, not located in sensitive areas, is no longer mandatory when their production process is free of hazardous materials and pollution, which shall be assessed on a case-by-case basis by the licensing entity.

The new rules are immediately effective for a period of 2 years, until April 19, 2024.

In addition to the above measures, Decree-Law 30-B/2022 established incentives of up to €400,000 per company to support gas-intensive industries affected by natural gas price increases resulting from the war in Ukraine.

Following the rejection of the 2022 State Budget proposal and the election of the new Parliament, a new 2022 State Budget proposal (Draft Budget) was presented last week.
We are reviewing the main tax changes of the proposal (including new ones) in this newsletter.


Regarding Personal Income Tax (PIT), these are the main changes:

  • Return Programme. The return programme, which exempts 50% of the employment income and professional income obtained by taxpayers who became Portuguese residents between 2019 and 2020, will be extended to taxpayers that become residents in 2021, 2022 and 2023, provided that they have not been residents in the three previous years.
  • Youngsters partial PIT exemption. A partial PIT exemption will apply to employment income and professional income obtained by 18- to 26-year-old taxpayers, who are not dependents, after the conclusion of an education level equal to or higher than level 4 (in the case of level 8, the exemption may extend until the age of 28). The exemption will apply in the first 5 years after the conclusion of the required level of education and will cover: (i) 30% of the income in the first two years, with a limit of 7.5 times the value of the Social Support Index; (ii) 20% of the income in the following two years, with a limit of 5 times the value of the Social Support Index; and (iii)10% of the income in the last year, with a limit of 2.5 times the value of the Social Support Index.
  • Mandatory aggregation of capital gains in the annual tax returns.* The positive balance between capital gains and capital losses arising from the disposal of shares and other securities held for less than one year will cease to be subject to flat rate of 28% and will have to be included in the annual tax returns if the taxpayer has a total taxable income equal to or greater than €75,009. The negative balance can be deducted in the following 5 years. This amendment will enter into force on 1 January 2023.
  • Change of PIT brackets. The current seven PIT brackets will be increased to nine, with the introduction of the following new brackets: (i) a new third bracket (between €10,736 and €15,216) subject to a rate of 26.5% (instead of 28%); and (ii) a new seventh bracket (between €36,757 and €48,033) subject to a rate of 43.5% (instead of 45%).

In parallel, the maximum limit of the eight bracket will be reduced from €80,882 to €75,009 and, as such, any income above this amount will be subject to the higher rate of 48%.


On the Corporate Income Tax (CIT) side, these are the most relevant changes:

  • Non-deductible expenses. Invoices issued by taxpayers who are not registered with the tax authorities will not be deductible for CIT purposes.
  • Tax exemption on IP income. The PIT exemption on income derived from the assignment (or temporary use) of industrial property rights subject to registration will be increased from 50% to 85%.
  • Special advance payment. The Special Advance Payment (the so-called “Pagamento Especial por Conta” or “PEC”) will be eliminated. The rules on the deduction and refund of the PECs paid in the previous years will remain in force.
  • Autonomous taxation relive. The 10% increase of the autonomous taxation will not apply to micro, small and medium-sized companies in 2022 if they (i) have obtained taxable profit in one of the three previous tax periods and (ii) have filed the annual tax returns in the two previous tax periods.

The Budget proposal also includes a few changes on the Value Added Tax (VAT):

  • Reduced VAT rate*. The following products are subject to the reduced VAT from 1 July 2022: (i) cheese-like products, without milk and dairy products, produced from nuts, cereals, cereal-based preparations, fruits, vegetables or legumes; (ii) the supply of repair services for domestic appliances; and (iii) delivery and installation of solar thermal and photovoltaic panels (until 30 June 2025).
  • Filing of VAT returns. The deadline for filing the VAT returns will be the 20th day of the second month following the relevant month or quarter (depending on whether the taxpayer is subject to the monthly or quarterly VAT filing regime).
  • Payment of VAT. The deadline for the payment of the VAT will be the 25th day of the second month following the relevant month or quarter (depending on whether the taxpayer is subject to the monthly or quarterly VAT filing regime).
  • Filing of the IES / DA and submission of the SAF-T file. The implementation of the new rules set out in Ordinance No. 31/2019 for the submission of the SAF-T (PT) file on accounting was postponed to the years 2023 and following, with first delivery scheduled to the year 2024.
  • Suspension of ATCUD in 2022. The affixing of the unique document code (ATCUD) on invoices and other documents relevant for tax purposes was postponed to 2023.


  • Electricity produced for self-consumption. A tax exemption will apply to electricity produced for self-consumption from renewable energy sources up to a limit of 1 MW of the installed capacity.
  • Additional to the TOEP rates. The additional TOEP rate of 0.0035 euros/l for colored and marked diesel up to a limit of €30,000,000 per year.
  • Products used in the production of electricity, electricity and heat or city-gas. Some products will be taxed at 100% of the TOEP rate and at 100% of the CO2 rate while others will be subject to lower rates (e.g. cogeneration processes).


The Government proposes an increase on taxes on alcoholic drinks and non-alcoholic drinks. Tabaco tax rates will also increase.


The Vehicles Tax rates applicable to the acquisition of cars, motorbikes, tricycles and quadricycles will be adjusted upwards taking into account their cylinder capacity and environmental component.


The Draft Budget includes a general increase of around 1% in the Single Circulation Tax rates applicable to all vehicles and keeps in force the additional tax for diesel vehicles in categories A and B.


In what concerns Real Estate Transfer Tax (RETT), the main highlights are:

  • Extension of RETT. RETT will apply to the following transactions: (i) transfer of real estate by the shareholders to the company for the payment of accessory capital contributions; (ii) award of real estate to the company’s shareholders upon a share capital reduction, the repayment of accessory capital contributions or the performance of other company’s obligations towards its shareholders; and (iii) award of real estate to participants in closed-end real estate investment funds in connection with the redemption of the investment units or the reduction of the funds’ capital.
  • Amendment to the tax brackets. The RETT brackets applicable to the acquisition of urban buildings or units of urban buildings allocated to housing will be updated.
  • Transfer of parts of a building. Upon the transfer of parts of a building, a surface/usufruct right or the land separated from the building RETT will be charged at a rate corresponding to the overall value of the building, considering the part or right transferred.
  • Incentives to urban rehabilitation. The RETT exemption on the first transfer of buildings or units subject to urban rehabilitation will expire if: (i) the property is used for a purpose other than primary residence / lease for primary residence within six years from the date of transfer; or (ii) the property is not used as primary residence within six months from the date of transfer; or (iii) a lease contract is not entered within one year from the date of transfer.

The Draft Budget does not include material changes to the Real Estate Tax, save for the following:

  • Urban buildings rented prior to the Urban Rental Regime. The communication of rents due under rental contracts entered before the Urban Rental Regime must be made between 1 January and 15 February of the following year according to the official models and procedures.
  • RET exemption. The €153,300 household income threshold applicable to the RET exemption on urban buildings or units built, improved or acquired for residential purposes will be assessed based on the total household gross income instead of its taxable income.

According to the Draft Budget the 50% increase of the stamp duty rates applicable to consumer credit contracts will remain in force in 2022.


According to Law 99/2021, of 31 December, in 2022 the following special contributions will remain in force:

  • Banking Sector Contribution;
  • Banking Sector Additional Solidarity Levy;
  • Audio-Visual Sector Contribution;
  • Pharmaceutical Industry Contribution;
  • Energy Sector Extraordinary Contribution (CESE);
  • Extraordinary contribution on the suppliers of medical devices industry of the National Health Service; and
  • Contribution on single-use plastic or aluminum packaging in finished meals.

In addition to these contributions, the 202 State Budget proposal foresees the creation of a special contribution for the conservation of forest resources, with a deadline of 90 days for regulation by decree-law.


The Draft Budget proposes the following amendments to the tax benefits:

  • Recovery Tax Incentive. A new Recovery Tax Incentive applicable to CIT taxpayers will be created. The incentive will consist of a CIT deduction in 2022 equal to 70% of the investment expenses (up to an accumulated amount of € 5,000,000) which are made in the first 6 months of the 2022 tax period, corresponding to: (i) 10% of the eligible expenses (e.g., tangible fixed assets (with some exceptions) acquired as new and that have entered into operation by the end of the 2022 period or intangibles subject to depreciation), up to the amount corresponding to the simple arithmetic average of the eligible investment expenses of the three previous tax periods; and (ii) 25% of the eligible expenses, in the part exceeding the above-mentioned limit.

To benefit from this incentive, among other conditions, the taxpayer may not: (i) terminate employment contracts during three years from the beginning of the tax period in which the eligible investment expenditure is incurred, either through a collective dismissal or a job extinction procedure; and (ii) distribute dividends during three years from the beginning of the taxation period in which the eligible investment expenses are incurred.

  • Support for the implementation of SAF-T (PT) and ATCUD. For micro, small and medium-sized enterprises, the extraordinary support corresponding to 120% of the respective expenses accounted in the 2022 tax period will remain in force.
  • VAT on donations. The exemption from VAT of transfers of goods and services provided free of charge is now limited to 25% (as a whole) of the amount of the donation received.
  • Amendments to the Investment Tax Code*. The Investment Tax Code is amended, with a view to: (i) the extension of contractual tax benefits to productive investment until 31 December 2027; and (ii) the update of the caps applicable to the contractual tax benefits to productive investment a in accordance with the national regional state aid map for the period from 1 January 2022 to 31 December 2027, approved by the European Commission on 8 February 2022.

In addition to the above proposed changes, the State Budget contemplates the following legislative authorisations for the Government to approve the following amendments:

  • Inland Support Programme. The Government will create, within the scope of the Inland Suppport Programme, a set of tax benefits for the creation of jobs in inland territories, including a deduction of 20% of the expenses incurred with the creation of jobs that exceed the value of the statutory minimum wage.
  • Start-up support. The Government will regulate the concept of "start-ups" for the purposes of granting financial or fiscal support, with a view to promoting the national entrepreneurial ecosystem and defining specific investment policies.
  • Environmental deductions*. Deduction to PIT, up to a limit of €500 per household, of part of the VAT incurred on expenses incurred with energy efficiency improvements, such as replacing inefficient windows with efficient ones, applying or replacing thermal insulation in roofs, walls or floors, ambient heating and/or cooling systems, among others.

* New changes/adjustments introduced by the Draft Budget.


Last Friday, the Portuguese Government approved new emergency measures to contain the increase in energy prices resulting from the war in Ukraine:

  • The reduction of Oil Products Tax at the rate of VAT reduction, so 13%;
  • Mechanisms to limit the impact of the gas price increase on the cost of electricity, by limiting the unexpected profits of electricity companies - which can cause considerable uncertainty and a decrease in investment in the energy sector since their profits are limited; and
  • Suspension of the carbon tax increase until June, representing 5 cents less, per litre, and its quarterly revaluation until the end of the year, without full reinstatement.

To accelerate the installation of renewable energy production projects, the Portuguese Government has decided to:

  • Reduce licensing deadlines, under terms to be regulated;
  • Allow the injection in the Electrical Public System (Rede Elétrica de Serviço Público – “RESP”) of all production from existing wind power generating centers, without administrative limitations and applicable immediately; and
  • Exemption of the issuing of an operating license or operating certificate for renewable energy generating centers, storage facilities, and production units for self-consumption whenever the grid operator confirms the existence of conditions for connection to RESP.

All projects owned by public or private entities related to renewable gases production, incorporating the development of new technologies, may apply for the Portuguese Recovery and Resilience Plan’s hydrogen incentive program, approved by Order 98-A/2022, of 18 February, which shall apply retroactively to all 41 applications registered submitted to this date.

Future notices of invitation to tender shall comply with the rules set out in Regulation (EU) 2021/241 of the European Parliament and the Council of 12 February 2021. They will be published at the website www.fundoambiental.pt.

The Portuguese Environmental Fund is the responsible authority for conducting the whole process of analysing the applications and notifying the participants within 60 working days of its acceptance or non-acceptance decision.

To benefit from these incentives, companies must:

  • Be legally established;
  • Have their tax and social contributions obligations in order;
  • Be able to develop activities in Portugal;
  • Declare not to have any unpaid salaries;
  • Have the technical, physical, and financial resources to develop their activities; and
  • Have a financially healthy environment.

Eligible expenses include all investment costs that are demonstrably related and strictly necessary to the production of renewable gases. Consequently, the eligible expenses will correspond to the difference between the investment costs to produce renewable gases foreseen in the application and the investment in a conventional plant for the production of hydrogen of identical production capacity. Applicants may also include accessory investments with storage, transportation, and distribution of renewable gases.

Expenses such as consumption and current maintenance costs, property purchases, electricity transportation infrastructures investment; interest and other financing charges, and publicity are not eligible.

Law 99-A/2021 approved several amendments to the Portuguese Securities Code that entered into force on January 30, 2022, of which we highlight the following:


Companies are entitled to issue multiple voting shares, with a cap of five votes per share.
Companies may also issue debt securities and increase their nominal value provided that the terms and conditions of the securities so allows it.


All disclosure rules applicable to listed companies (e.g., annual reports and accounts, corporate governance report, payments made to public administrations, semi-annual information, insider information, managers' transactions, transactions with related parties and other information by issuers of shares and other securities) are now included in the Securities Code and some reporting duties were eliminated.

Qualifying holdings

The minimum threshold for disclosing qualifying holdings was increased from 2% to 5%, in line with other EU countries’ securities regulations.

The rules on the attribution of voting rights were simplified.

Exercise of voting rights

A 21-days prior notice for the calling of the meetings was imposed, with a shorter period of not less than 10 days being permitted in the case of credit institutions and financial companies.

Shareholders who intend to participate in a General Meeting must deliver a single statement to the financial intermediary instead of the two statements previously required (to the Chair of the General Meeting and to the financial intermediary).

Beneficial owners of securities will be entitled to directly exercise the shareholders’ rights even if they are not the direct holders of the securities, provided they present a “certificate of beneficial owner” (certificado de legitimação).

Financial intermediaries, whether based in Portugal or not, who hold shares in their own name acting on behalf of others, and other financial intermediaries in the intermediation chain, must allow the investors on whose behalf the shares are held to exercise the rights linked to the shares.

Institutional investors (e.g., insurance companies and pension funds), asset managers and so-called "voting advisors" are subject to additional transparency and disclosure rules.

Public offers

Public offers are now defined as offers of securities that require the prior disclosure of a prospectus or a document required under EU law.

The engagement of a financial intermediary to provide assistance and placement services in a public offer is no longer mandatory.

Offerors are allowed to revise the terms and conditions of an offer up to two days prior to its term subject to the authorization of the Securities Market Authority (Comissão do Mercado de Valores Mobiliários, “CMVM”).

The threshold for the publication of a prospectus was increased from €5 million to €8 million.


The liability for the content of a prospectus is extended to the guarantor, if any, and the mandatory liability of the financial intermediary that assists the offeror no longer applies, unless and to the extent the financial intermediary accepts to be named as such in the prospectus.

Prospectuses for offers in Portugal may be presented in English, unless CMVM opposes; when written in another language, CMVM may require the summary of the prospectus to be translated to Portuguese.


The acquisition of securities by inheritance will not trigger takeover rules.

The double requirement for the exercise of the right to compulsory acquisition (i.e., 90% of the total voting rights and 90% of the voting rights covered by the takeover bid) was revoked, being sufficient that the takeover reaches 90% of the total voting rights.

The takeover rules no longer apply to debt exchange offers, being only applicable to companies with shares admitted to trading on a regulated market in Portugal.

Administrative authorizations related with takeovers must be obtained within 6 months.

The competing offer rules were amended and now allow competing offers with less favorable conditions in relation to a previously announced offer.

Delisting and other amendments

Voluntary delisting is admissible when the delisting is approved in a general meeting of the company by a majority of not less than 90%, being the company obliged to acquire, by itself or by a third party, the shares of the shareholders that voted against it.

If the issuer enters in liquidation or insolvency, the securities admitted to trading must be registered with the issuer or a financial intermediary.

Due to an increased use of digital services and platforms during the Covid-19 pandemic, Law 17/2022, of 26 April, the Portuguese Postal Services’ Law, is now amended by Decree-Law 22-A/2022, of 7 February.

ANACOM becomes responsible for supervising the universal postal service supply as well as the activities included in concession contracts relating to the designation of one or more postal service providers to cover different parts of the national territory.

ANACOM must also propose to the Portuguese Government for approval the SLA associated to the delivery of universal postal service for a minimum period of three years. Those SLA include delivery deadlines, regularity, and trustworthiness of services.

Universal postal service providers must comply with two new obligations, as they must:

  • Have a measurement system for the service quality that complies with the standards applicable to the universal postal service, including intra-Community services; and
  • Measure the quality of services, at least once a year, through an independent external entity, to which they must provide all the information necessary for the evaluation.

There are new rules regarding price determination of postal services that are part of the universal postal service offer. According to those rules, prices must take into consideration:

  • The sustainability and financial viability of the respective provision;
  • The traffic variation;
  • The quality of the service provided; and
  • The incentive to efficient universal postal service delivery.

These prices must be established for 3 years, under agreement between the universal postal service providers, ANACOM and the Consumers Commission (Direção Geral do Consumidor). This agreement must be notified to the Government.

It is also worth mentioning that recently CTT (Correios de Portugal) and the Government signed a new concession contract that will be the basis for the universal postal service, which will come into force after being approved by the Portuguese Court of Auditors until 31 December 2028.

The new framework applicable to the National Electrical System (“SEN”) finally came into force, brought by Decree-Law 15/2022, of 14 January (the “New SEN Framework Law” ). The main novelties are the following:

Electricity generation and storage

  • Instead of an ordinary and a special regime, generation, self-consumption, and storage will be covered by a single framework of prior control, which could be either a prior notification, prior registration, operating certificate, or production and operating license.
  • The feed-in tariff scheme is eliminated, and electricity generation and storage activities are now subject to prices freely established in the market, with two exceptions: (i) feed-in tariffs already granted will keep going until the end of the respective term; (ii) renewable production can benefit from specific traffic granted in new capacity auctions by the Portuguese Government.

Grid capacity titles and production licenses

  • The New SEN Framework Law sets a new timetable: (i) applications for production licenses from the National Department of Energy and Geology (Direção Geral de Energia e Geologia -“DGEG”), must be submitted until a year after the issue of the grid capacity title when an environmental impact assessment is required; if not, within 6 months; (ii) the production license must be issued until a year after the application submission; (iii) the operating license must be issued within 1 year after the date of the production license, with the possibility of extension.
  • Obtaining a grid injection capacity title is now subject to the payment of a EUR 1,500/MVA compensation to SEN.
  • The limits on transferability of production licenses and capacity titles are narrowed: they can be transferred before the production license is issued through a 50% increase of the bond.
  • Ongoing grid capacity titles requests, submitted to DGEG under the scheme of agreement with the grid operators, that have already obtained a final classification in the terms of reference’s lists (published at DGEG website) shall remain in place and will be governed by the rules of the New SEN Framework Law. Those not included in the lists are expired.


  • There is a new framework for hybridization and hybridized units, defined as the new generation units using different primary renewable energy sources to an existing power plant or self-consumption unit (“UPAC”), without changing the injection capacity of the pre-existing power plant or UPAC.
  • Hybridization, like over-equipment and re-equipment, is exempt from grid capacity title allocation despite being subject to the prior control scheme.
  • It will be possible for a legal entity other than the owner to hybridize a generating facility or a UPAC.


  • When electricity production includes storage, the prior control for production comprises the storage activity.
  • Autonomous electricity storage is subject to a production and operation license (i) when the installed capacity is above 1 MW or (ii) when an environmental impact assessment or environmental impact assessment procedure is required. When the installed capacity is equal to or less than 1 MW, the autonomous storage of electricity is subject to prior registration and operating certificate.

Decentralized production

  • The maximum distances between UPAC and User Facility (“IU”) allowed for self-consumption production range now from 2km to 10 km.
  • Consumer installations of Electro-Intensive Customers are not subject to any maximum distance requirements.
  • No municipal construction permits will be required for the installation of solar photovoltaic panels on (i) pre-existing-built structures not defined as buildings, (ii) installed on delimited areas of the ground, such as commercial complexes, large commercial surfaces, industrial parks, industrial plots, logistics platforms, camping parks, and parking lots.
  • Renewable Energy Communities (CER) can share energy through dynamic management systems but also trade energy among their members.
  • UPAC may be owned and developed by CER or by third parties if at CER’s service.
  • The New SEN Framework Law establishes rules for Citizens Communities for Energy.

New Market Agents

  • The awarding of (i) Last Resort Supplier, (ii) Last Resort Aggregator, (iii) Guarantees of Origin Issuing Authority, and (iv) Logistics Operator for Switching Suppliers and Aggregators licenses are subject to a public tender procedure.
  • The same applies to the concession for the new Integrated Operator of the High Voltage, Medium Voltage, and Low Voltage distribution networks.

Intensive consumers

  • The intensive electricity consumers will benefit from a new Electro-Intensive Customer Statute established by the New SEN Framework Law.
  • This new statute will include support measures, such as (i) reduction of electricity consumption charges or (ii) risk coverage mechanisms in the purchase of electricity from renewable energy sources through long-term agreements.

Technological Free Zones

  • The New SEN Framework Law created three Technological Free Zones (“ZLT”) for renewable energies: (i) an offshore zone for the generation of electricity through renewable energy from an oceanic source or location; (ii) a second one as part of the decommissioning of the Pego coal-fired thermoelectric plant and, (iii) a third in the Rega do Mira perimeter, for innovation and development land use for agriculture and electricity production projects.
  • ZLT are to be managed directly by DGEG or by third parties through concession awarded by a competitive tender.
  • The installation of research and development projects in ZLT are subject to prior communication and registration procedure rules.

Electricity transportation and distribution networks

  • Annexes II and III of the New SEN Framework Law set the bases for concessions the national electricity transportation network (RNT) and the concession bases for the national medium and high-voltage electricity distribution network (RND).
  • The concessions cover mainland Portugal and have a term of 50 years in the case of RNT and 35 years in the case of RND and may be extended if justified by public interest.
  • According to the new bases (in Annex IV to the New SEN Framework Law) for low-voltage electricity distribution network concession, these concessions will have a municipal geographic range and a maximum duration of 20 years.
  • The unification of the technical management of the high-voltage, medium-voltage, and low-voltage distribution networks in the new Integrated Operator of the distribution networks means that the concession agreements in force will have to be renegotiated and amended.

Other Relevant Changes

  • Holders of generating or storage facilities with a connection power exceeding 50 MVh are obliged to install (i) UPAC with an installed power equivalent to 0.3% of the connection power, or (ii) electric vehicle charging stations for collective use in public spaces with equivalent capacity in municipal buildings. Alternatively, Municipalities may opt for one-off cash compensation of 1,500 EUR/MVh of connection power allocated.
  • For unlawful appropriation of energy, new penalties that range from the interruption of energy injection or energy supply to the payment of compensation are established.
  • If a supplier has more than 200,000 clients, it must subject its electricity contracts to dynamic prices.

Portugal approved a new law regulating participating loans through Decree-Law 11/2022 of 12 January 2022, which has the purpose of fostering investment and capitalise businesses.

Participating loans are onerous credit agreements, in the form of loans or debt securities. Their remuneration and repayment may depend partially or entirely on the borrower's financial results. Participating loans may be converted into equity if the agreement so allows.

Participating loans are "quasi-equity" instruments that present a higher risk than senior debt and lower risk than common equity, that results from the following:

  • Participating loans may be classified as equity, provided their remuneration depends on the financial results of the borrower/issuer and the repayment or amortization depends on the satisfaction of the conditions for the distribution of profits set out in Articles 32 and 33 of the Portuguese Companies Code;
  • The borrower cannot, among other things, repay shareholder’s loans or ancillary/supplementary capital contributions, amortizing shares or reducing the share capital without the express authorisation of the lender while the contract or securities representing the debt are not fully amortised; and
  • In the event of insolvency of the borrower/issuer, they are treated as subordinated claims, but ranked above the claims of shareholders and other persons specifically related to the debtor.

In addition to the possibility of participating in the borrower’s financial results, participating loans may include equity conversion rights, such as breach of payments obligations.

This type of instrument is not new. There is a similar regime in Spain, where this type of loan is, however, limited to shareholders. Unlike Spain, Portugal restricted the granting of participating loans to entities that are licensed to provide credit on a professional basis, such as banks, loan funds and venture capital funds, as well as certain securities investment companies. This distinction may imply a different approach in each country.

For banks, participating loans can be a tool used in the restructuring of credits of distressed companies whereas for investment funds and other entities, these loans will be an alternative to shares or convertible bonds as investment instrument.

For borrowers, it is an alternative financing instrument which allows lenders to received a variable remuneration indexed to the borrower’s results, with a positive impact on the borrower’s equity, without necessarily implying the opening of the share capital to those lenders.

The Portuguese Resilience and Recovery Plan (RRP) incentive system for the decarbonization of industry, worth 715 million Euros in non-refundable subsidies, supports up to 100% of the expenses of projects that incorporate electrification of final energy consumption, energy efficiency, renewable energy, and energy storage.

The maximum limit per new project is 500,000 Euros, of which 250,000 Euros must be used on relevant upgrades of already existing projects. This limit may be exceeded for projects that exhibit a significant potential to reduce emissions at a national level.

Under the new Regulation of the Incentive System "Decarbonization of Industry" and the Public Tender Notice, the following types of projects are eligible for these subsidies:

  • New processes, products, and business models incorporating new raw materials, waste-derived fuels (e.g., biomass and biogas), replacement/adaptation of equipment and processes for sustainable technologies and renewable energy vectors. This typology also includes projects for the electrification of final energy consumption, particularly through the electrification of final energy consumption in industry and the strengthening of access and quality of service; and/or
  • Energy efficiency measures, that reduce energy consumption and greenhouse gas emissions, in connection with the adoption of consumption monitoring and management systems; and/or
  • Measures to incorporate energy from renewable sources and energy storage, such as hydrogen and other renewable gases.

Projects must reach COD within six months from the date of approval by IAPMEI (the Portuguese investment agency), and the expenditure financed shall be maintained and allocated to the relevant activity for a maximum duration of 2 years, with the possibility of extension by IAPMEI in duly justified cases.

Applications for the public tender must be submitted via electronic form available on the IAPMEI website. The application period will run until 7 p.m. on 31 March 2022.