2023-06-05

In Portugal, the gains obtained by employees or members of corporate bodies under stock plans are treated as employment income and subject to Personal Income Tax (“PIT”) at progressive rates.

To foster the use of these plans, Law 21/2023 approved a new tax framework that includes the following benefits:

  • 50% PIT exemption on the gains obtained under the stock plans;
  • Flat rate of 28%; and
  • Deferral of taxation to the moment the stocks are sold, except in the following cases:

-  Change of residency; or

- Donations/succession.

The benefits will apply to employees and members of corporate bodies of the companies that:

  • Qualify as a micro, small, or medium-sized enterprise or a small-mid-cap enterprise (<500 employees); or
  • Carry out an activity in the innovation sector, which will be deemed to be the case if the company invests in research and development ("R&D"), patents, industrial designs, or computer programs at least 10% of its total costs or turnover.

To be entitled to these benefits, the employees or members of corporate bodies must retain the stocks or equivalent rights for at least one year.

Except in the case of companies that qualify as startups or as micro or small enterprises in the year prior to the approval of the plan, the following persons will not be eligible:

  • Employees that hold, directly or indirectly, a stake of not less than 20% of the share capital or voting rights; and
  • Members of the corporate bodies.

The new framework will apply to stock plans approved in the year 2023 and also to plans approved until 31 December 2022, provided that, in this case, they are made available by companies that, until 25 May 2024, are recognized as startups, under the law in force, or that demonstrate they were eligible as start-ups on the date of approval of the plan.

2023-04-18

The Decent Work Agenda entered into force with Law 13/2023, of 3 April, which amended the Portuguese Labour Code and other connected legislation.

The main changes to the Portuguese Labour Code are the following:

  • Economically Dependent Employees

Economically dependent self-employed employees who provide an activity to the same beneficiary and receive more than 50% of the proceeds of their activity from that beneficiary are now entitled to a set of rights, including: (i) representation of their social and professional interests by trade union associations and employees' councils, even if they are not members; (ii) negotiation of specific Collective Bargaining Agreements through trade union associations; (iii) application of existent and negotiated Collective Bargaining Agreements to employees, as provided for in their terms; (iv) administrative extension of a Collective Bargaining Agreement or arbitration award; and (v) establishment of minimum working conditions (article 10-A).

Specific legislation will further define the right of economically dependent self-employed employees to collective representation.

  • Digital Platforms

An employment agreement presumption can be established between self-employed activity providers and digital platform operators if certain indicators are present, as follows: (i) the platform operator setts the activity provider's remuneration; (ii) the platform operator manages the provider's actions and presentation; (iii) the platform operator controls the activity provided, particularly through electronic means or algorithmic management; (iv) the platform operator restricts the activity provider's autonomy with regard to work organization, the ability to accept or refuse tasks, the use of subcontractors, the choice of clients, or providing activity to third parties via the platform; (v) the platform exercises labour powers over the provider, such as deactivating their account; and (vi) the work equipment and tools used by the provider belong to the digital platform operator or are operated by it through a lease contract.

The presumption, which may be rebutted, is applicable to the activities of digital platforms, including those regulated by specific legislation on remunerated passenger transportation in private vehicles from an electronic platform (article 12-A (12)).

  • Algorithms and Artificial Intelligence

Collective Bargaining Agreements can only regulate the use of algorithms, artificial intelligence, and associated technologies in a way that is more advantageous to employees (article 3 (3)).  Legal rules on equality and non-discrimination are now applicable to decision-making based on algorithms or other artificial intelligence systems (article 24(3)).  Employers must inform job applicants about the use of algorithms and artificial intelligence (article 106).

  • Discriminatory Practices

The grounds for claiming discrimination practices in access to employment, vocational training, or working conditions is expanded, particularly related to the exercise of parental rights, other rights regarding work life balance and caregivers’ rights (article 25 (6)).

Remuneration-related discrimination related to the award of attendance and productivity bonuses, as well as unfavourable assignments in terms of evaluation and career progression, are now considered "discriminatory practices" (25 (7)).

  • Parental Protection

Exemption from work is now established in the context of adoption and foster care procedures (article 35 (1) (j)).

Parents now have the option, after enjoying 120 consecutive days of initial parental leave, to combine the remaining days of leave on a part-time basis each day.

It is compulsory for the mother to take 42 consecutive days of leave following childbirth (article 41).

The mandatory leave for the father is extended from the current 20 business days to 28 days, either consecutively or interpolated periods of at least 7 days, within the first 42 days following childbirth.  Of the 28 days, 7 must be taken consecutively after childbirth (article 43 (1)).

An additional right is established for the father to take 7 days of leave, consecutive or interpolated, if they are taken simultaneously with the mother's initial parental leave (article 43 (3)).

Parents now have the right to complementary parental leave, in the form of part-time work for three months, with a normal workload equal to half the full-time, for assistance to a child or adopted child not older than six years, provided that the leave is fully exercised by each parent (article 51 (1) (c)).

  • Adoption and Foster Care

There are no longer time restrictions on employees pursuing for adoption or foster care (article 45 (1)).

Absences for adoption and foster family processes do not determine the loss of any rights and are considered as effective work, except as to remuneration (article 65 (1) (k)).

Absences due to gestational mourning, as well as absence for assisted reproduction consultation or prenatal visits, breastfeeding or lactation will not determine the loss of any rights and will be considered as effective work (article 65 (2)).

  • Caregiver Employee

A caregiver employee is someone who has been recognized as an informal non-primary caregiver, in accordance with the applicable legislation, upon presentation of the respective proof (article 101-A).

Caregiver employees are entitled to annual leave of five consecutive business days, without pay (article 101 (B) (1) (6)).

During the leave, the caregiver employees cannot perform subordinate work or provide continuous services outside their usual residence (article 101 B (4)).

The caregiver employees are entitled to request part-time work, in a consecutive or interpolated manner, for a maximum period of four years (article 101-C), with flexible working hours, in a consecutive or interpolated manner (article 101-D), and are not required to perform overtime work for as long as assistance/caregiving is required (101 (G)).

The termination of fixed-term employment agreements (Article 143º/3) and dismissal (101º-F) of caregiver employees depends on the prior opinion of the Commission for Equality in Labour and Employment ("CITE").

  • Duty to Inform Employees

The employer's duty to provide information to employees is expanded. The employee is now entitled to be informed of: (i) the identification of the user company in case of a temporary employee; (ii) the individual right to continuous training; (iii) in the case of intermittent work, the information provided for in the legally established framework; (iv) the parameters, rules, and instructions on which the algorithms or other artificial intelligence systems are based; (v) the duration and conditions of the probationary period, if applicable; and (vi) the method of payment of the remuneration, including the breakdown of its constituent elements (article 106 (3)).

It is not necessary to include all the elements in the employment agreement; given that if the deadlines are met, some of them may be the subject of later written or electronic communication to the employee.

The employer must ensure the conservation of proof of transmission or receipt of the information provided, which must be presented to the labour inspection service upon request (article107 (5) and (6)).

  • Information Concerning The Provision of Work Abroad

The employee who carries out his activity in the territory of another State for a period exceeding one month is entitled to the following information: (i) remuneration to which he is entitled under the law applicable in the host State, in situations of posting; (ii) allowances related to posting and reimbursement of travel, accommodation and meal expenses; and (iii) official website of the host State (article 108(1)).

  • Probationary Period

Employees seeking their first job or who have been unemployed for a long time will have their probationary period reduced or excluded depending on the duration of their previous fixed-term employment agreement (celebrated with a different employer) being equal to or greater than 90 days (article 112 (5)).

The probationary period may be reduced if the duration of a professional internship with positive evaluation for the same activity and a different employer has been equal to or greater than 90 days in the past 12 months (article 112 (6).

When the probationary period is longer than 120 days, the termination of the employment agreement by the employer becomes subject to a 30-day prior notice (article 114 (3)).

In the case of termination of open-ended employment agreements of employees seeking their first job or long-term unemployed, the termination is subject to communication to the Authority for Working Conditions (“ACT”) within 15 days after the termination (114 (6)).

Abusive terminations (in abuse of right) will be subject to the regime of the effects of unlawful dismissal, particularly with regard to the employee's right to claim: (i) compensation for damages (material and non-material); (ii) reinstatement in the company or compensation in lieu; and (iii) compensation for interim remuneration.

  • Fixed Term Employment Agreements

In unfixed term employment agreements the expected duration of the agreement must now be included.

Compensation for the expiry of term employment agreements (both for fixed and unfixed term) is increased to 24 days of basic pay and seniority allowance for each complete year of service (articles 344 (2) and 345 (4)).

  • Teleworking

The employment agreement and the applicable collective bargaining agreement must now determine the compensation, fixed or variable, due to the employee for additional expenses related to teleworking/hybrid work arrangements (article 168 (3)).

In the absence of an agreement on a fixed amount, additional expenses are deemed to be those corresponding to the acquisition of goods and/or services that the employee did not have before teleworking or working in a hybrid work arrangement, as well as those determined by comparing the corresponding expenses in the last month of face-to-face work (article 168 (4)).

The compensation is considered an expense for the employer and does not constitute work income for tax purposes up to the limit to be defined by ministerial order (article 168 (6)).

  • Temporary Work

After reaching the maximum duration of the temporary work employment agreement, the succession in the same job or professional activity by a temporary employee or an employee hired for a fixed term, concluded with the same employer or company that is in a relationship of control or group relationship, or maintains common organizational structures, is prohibited. The prohibition applies before the expiration of a period equal to one third of the duration of the agreement, including renewals (article 179 (1)).

A fixed-term temporary employment agreement may now be renewed only 4 times (article 182 (2)).

The duration of subsequent temporary work agreements between different users concluded with the same employer or company in a controlling or group relationship or with a common organizational structure, cannot exceed 4 years; otherwise, the agreement will be converted into an open-ended employment agreement for temporary assignment (article 182 (8) and (9)).

  • Overtime Work

Overtime work exceeding 100 hours per year must be paid at the hourly rate of pay with the following increases:

(a) 50 % for the first hour or fraction thereof and 75 % per subsequent hour or fraction thereof, on a working day;

(b) 100% for each hour or fraction thereof, on a mandatory or complementary weekly rest day or on a public holiday (article 268 (2)).

  • Employee's Credits

In the event of termination of the employment agreement by any means, the employee can no longer waive the credits arising from the employment agreement (e.g. holiday and Christmas allowances, holiday pay and training credit hours), except if such waiver is made through a judicial transaction (article 337 (3)).

  • Compensation in Case of Collective Dismissal

Compensation in case of collective dismissal is now 14 days' base pay and seniority payments for each full year of seniority (article 366 (1)).

In addition, the employee may also activate the labour compensation guarantee fund (article 366 (3)).

  • Outsourcing

In outsourcing, the applicable collective bargaining agreement of the beneficiary of the activity also applies to the service provider, when more favourable, after 60 days of activity in favour of the acquiring company (article 498-A (1)).

Before that, the service provider is entitled to the minimum remuneration provided for in the collective bargaining agreement that binds the beneficiary of the activity (article 498-A, (3)).

It is not permitted to resort to the acquisition of external services through third-party entities to meet needs that were provided by an employee whose agreement was terminated in the previous 12 months due to collective dismissal or job position extinction.

  • Collective Labour Relations

Even if there are no unionized employees, trade union activity can still be exercised in the company under specific applicable conditions, if it does not affect the normal functioning of the productive activity (article 460 (2)).

If an employee is already covered by an extension ministerial order, they can no longer choose a collective bargaining agreement (article 497 (5)).

In case of termination of a collective bargaining agreement, the recipient party may request arbitration from the President of the Economic and Social Council to assess the grounds for the termination, preventing the agreement from entering a survival regime (article 500-A).

  • Application in Time and Entry Into Force

This Decent Work Agenda Law shall enter into force on 1 May 2023, except for matters relating to the termination and expiry of collective bargaining agreements and the arbitration process, which entered into force on 4 April 2023.

Employment agreements concluded before the entry into force of this law shall be subject to this framework, except for the regime applicable to the validity of the employment agreement and/or its effects, in which case the previously applicable regime shall remain in force.

Collective bargaining agreements clauses that contradict the new rules must be amended in the first revision that takes place within 12 months following the entry into force of this law, under penalty of nullity. However, a transitional period, until 1 January 2024, was established for the amendment of collective bargaining agreement clauses contrary to the new regime for payment of overtime work.

The new framework is not applicable to fixed-term employment agreements concluded before the entry into force of this law, regarding their admissibility, renewal, and duration, as well as the renewal of temporary employment agreements.

2023-04-03

 The path has been extended, but the European Union (EU),  has one goal in mind: transparency and equal pay. In this sense, in March 2021 the Proposal for a Directive of the European Parliament and of the Council was presented, strengthening the application of the principle of equal pay for equal work or work of equal value between men and women through wage transparency and compliance monitoring mechanisms.

In December 2022, Parliament and the countries of the European Union managed to reach an agreement in negotiations on pay transparency measures.

A general vote on the Directive is awaited and it will come into force 20 days after publication in the Official Journal, with the Member States having 3 years to transpose it into their respective legal systems. We present below the main axes and measures of the Directive:

  • Pay transparency for job seekers

Employers will now be required to provide information about the salary amount for the vacancy they advertise and may do so in the vacancy announcement itself or at a time prior to the job interview.

In addition, the candidate may not be asked for any information regarding his salary history during any phase of the recruitment process.

  • Pay transparency and career progression in the employing entity

Employees will now have the right to simple access to salary and career progression criteria, as well as to request information from the employer on their individual salary level and average salary levels, broken down by gender, for categories of employees performing the same functions as them or functions of equal value to them. 

  • Salary transparency at an external level

Employers with more than 250 employees will have to publicly report the gender pay gap in categories of employees performing the same job or jobs of equal value.

Employers who demonstrate a pay gap on the basis of these factors of more than 5% and who cannot justify such a gap with objective, gender-neutral factors must either conduct a joint pay review with employee representatives or, if not applicable, appoint one or more employees to do so.

Confidentiality clauses that do not allow employees to disclose their remuneration are also prohibited.

  • Consequences of violating pay transparency and equality

Employers who violate the defined rules and whose employees suffer pay discrimination may be required to pay compensation to the employees concerned, including the amount of the pay gap they should have received as well as their bonuses.

Similarly, sanctions will be defined by the Member States for employers who violate the principle of transparency and equal pay, including the imposition of fines.

It should be noted that in cases of violation of these principles, the onus will be on the employer to prove that there was no wage discrimination.

2023-03-31

Yesterday, Decree-Law 21-B/2023, of March 30,  extended until December 31, 2023 the exceptional and temporary mechanism for adjusting the production costs of electricity in the Iberian Electricity Market (MIBEL) set by Decree-Law 33/2022, of May 14.

Those measures were applied by Portugal and Spain last year to face the strong instability in the energy sector, and included the setting of a reference price for natural gas consumed in the production of electricity traded at the MIBEL - a measure that would be in force until May 31, 2023.

In addition, this new regulation, which comes into force today, excludes from the cost of liquidation of the market adjustment value, consumption related to:

  • Fixed-price electricity supply contracts entered into before April 26, 2022; and
  • Contracts of hedging instruments entered into after April 26, 2022 and before March 7, 2023 and referring to the period between the months of May and December 2023.

It also requires the market agents to communicate to the appointed electricity market operator, to the global manager of the SEN and to ERSE the information relating to the contracting, within:

  • 5 days, as of March 31, 2023, for the case of fixed price contracts entered into before April 26, 2022 and for hedging instruments applicable in the month of May 2023; and
  • 15 days for hedging instruments applicable in the months of June to December 2023.
2023-02-17

The Portuguese government simplified the environmental requirements for the implementing, among others, renewable energy production plants, through Decree-Law no. 11/2023, of February 10th, also known as "Environmental Simplex", which is expected to reduce the project’s construction timelines. We highlight below the more impacting ones.

The Environmental Impact Assessment (“EIA”) is waived in the case of:

  • Solar plants,  irrespectively of their location, where the area occupied by solar panels is equal to or less than 100 ha;

  • Wind farms with 20 towers located outside sensitive areas or wind farms with 10 towers, if located in sensitive areas, with special conditions for over-equipment of existing wind farms; and

  • Transmission grid lines up to 20 km and 110 kV.

When a project is located outside environmentally sensitive areas, EIA is will not be required for:

  • Solar power plants where the installed area is less than 15 ha, is not located less than 2 km from other solar plants with more than 1MW and when the connection to the national grid is made by voltage line equal to or less than 60 kv and with length smaller than 10 km;

  • Solar plants where there is only one tower, at a distance greater than 2km from another tower.

The Environmental Simplex added two new rules to produce renewable energy:

  • In relation to the alternative grid lines, the deadline for the declaration of EIA is 90 days or it is deemed as approved; and

  • Solar self-consuming units are exempt from EIA when installed in built structures or buildings (except classified) or in artificial areas, existing or future.

The use of water produced for re-used to produce energy, in particular hydrogen, is now subject, in some cases, to a prior communication; In the case of decentralized systems, a production license was replaced by a prior communication; and if PEA does not decide in 20 days counted of the communication, the person concerned may start his activity.

2023-01-20

The current energy crisis has set the background for the introduction of a new tax policy both at EU level and at EU Members States, arguably to fight high energy prices on most vulnerable families and companies and the ongoing inflationary cycle. In this framework, Portugal has enacted a new contribution to certain companies’ surplus profits: the so-called windfall profits’ tax.

This new contribution has its origins in the Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices, including a mandatory temporary solidarity contribution aimed at taxing surplus profits of companies and permanent establishments in the European Union (“EU”) operating in the crude petroleum, natural gas, coal, and refinery sector and on food retailers; as their profits in 2022 were not profits these companies would or could be expected to have under regular circumstances.

On 31 December 2022, Law 24-B/2022, of 30 December (the “CST Law”) established two solidarity contributions taxing surplus profits: (i) the Energy Temporary Solidarity Contribution on energy companies and (ii) the Food Distribution Temporary Solidarity Contribution on food retailers. Both contributions are temporary and only applicable to profits considered to be extraordinary in the tax periods (for corporate income tax purposes) starting in the years 2022 and 2023.

In the next lines, you will find some detail on the scope, taxable subject, taxable amount, and revenue allocation of the Portuguese Energy Temporary Solidarity Contribution (“CST Energia”), where the CST Law implements Chapter III of Council Regulation (EU) 2022/1854 on the measure concerning the crude petroleum, natural gas, coal, and refinery sectors.

1. Who pays for the new CST Energia?

The CST Law, in its article 2 (that follows closely art. 1 of Council Regulation (EU) 2022/1854), establishes that CST Energia applies to resident corporate taxpayers whose main activity is commercial, industrial, or agricultural and non-resident corporate taxpayers with a permanent establishment in Portugal, that (in both cases) operate in the crude oil, natural gas, coal and refinery sectors.

Article 2/1/b of CST Law defines taxpayers operating in the crude oil, natural gas, coal, and refinery sectors as those with at least 37.5% of their turnover deriving from extraction, mining, petroleum refining, or coking plant sectors, as per Regulation (EC) 1893/2006 of the European Parliament and of the Council.

The above excludes companies operating renewable electricity production plants in Portugal from the scope of the CST Energia.

2. On which surplus profits falls CST Energia?

Surplus Profits are the taxable profits that are above a 20% increase of the average of the taxable profits in the four fiscal years starting on or after 1 January 2018. In such cases, a rate of 33 % will apply. When the average of the taxable profits is negative, it is equal to zero and the energy temporary solidarity contribution is levied on the total taxable profits.

3. How and when is CST Energy paid?

The CST Energia must be paid through an official model declaration (to be approved by the member of the government responsible for finance). This declaration must be electronically sent to the Tax Administration before the 20th of the 9th month following the end date of the tax period to which it relates. Taxpayers must pay this contribution on an individual and autonomous basis, even when the Special Taxation Regime of Company Groups, provided by the Corporate Income Tax Code, is applicable.

4. Where to go the revenues from CST Energia?

The Portuguese government does not yet know to how much they will amount, but, as expressed in the Council Regulation (EU) 2022/1854 and in the CST Law, revenues from CST Energia will be allocated to:

(1) Financial support measures to final energy consumers, especially vulnerable families;

(2) Financial support measures to help reduce energy consumption; such as through demand reduction auctions or tender schemes, lowering the energy purchase costs of final energy customers for certain volumes of consumption, promoting investments by final energy customers into renewables, structural energy efficiency investments or other decarbonization technologies;

(3) Financial support measures to support companies in energy-intensive industries, if they are made conditional upon investments into renewable energies, energy efficiency, or other decarbonization technologies; and

(4) Financial support measures to develop energy autonomy, in particular investments in line with the REPowerEU objectives.

How and when will that happen? Nobody knows yet as the CST Law does not add any clarity to this.

2023-01-09

The Portuguese Government published in Diário da República the bases of the new auction for a centralized purchase of biomethane and hydrogen produced by electrolysis of water using electricity from renewable energy sources. It will be composed of two parcels:

  • 150 GWh/year of biomethane; and
  • 120 GWh/year of hydrogen.

The Last Resort Supplier (LRS) shall buy the amounts auctioned through direct contracting with the producers. Contracts concluded with producers will last for 10 years and the base price, as the maximum price to be paid for by the LRS, is €62/MWh for biomethane and €127/MWh for hydrogen.

The quantities to be purchased by the LRS from each producer and the price payable shall be defined in the contract and valid throughout the contractual period, with the respective guarantees of origin.

The costs of network access tariffs, those for the injection of renewable gases, will be borne by the LRS.

The Environmental Fund will compensate the LRS for the costs of acquiring biomethane and hydrogen from producers (and associated guarantees of origin). Where the result of the sale of the gases of renewable origin is higher than the respective acquisition cost, the positive difference will be returned by the LRS to the Environmental Fund.

The contract is conditional on the qualification of producers to connect to the transport or gas distribution networks, as applicable.

The auction documents will be prepared by the Directorate-General for Energy and Geology (DGEGE) in coordination with the LRS to be submitted for approval to the Energy Secretary of State no later than May 30, 2023.

The auction is expected to be launched by June 30, 2023.

2023-01-02

The State Budget for 2023 was approved by Law 24-D/2022, of 30 December (OE 2023) with some changes compared to the proposal presented by the Government.

In this newsletter, we review the main changes approved by the Portuguese Parliament.

PIT

Regarding Personal Income Tax (PIT), we highlight the following novelties compared to the Government's proposal:

  • Commercial/industrial crypto assets activities. In the case of the application of the simplified tax regime 15% of the revenues will be taxed, with the exception of income from crypto asset mining in which case the percentage will be 95%. The cessation of activity and change of residence will be assimilated into the disposal of crypto assets. Crypto assets that are unique and not fungible with other crypto assets are excluded from the concept of crypto assets for PIT purposes.
  • Remuneration derived from operations related to crypto assets. Remuneration derived from crypto asset transactions (e.g. staking) will be considered for PIT purposes as capital income. This remuneration will be exempt from withholding tax, being the taxpayers obliged to report the income to the tax authorities. When the remuneration takes the form of crypto assets, the income will be taxed as capital gains at the moment of disposal of the crypto assets received.

Capital gains resulting from the sale of crypto assets. The change of residence will be assimilated to disposal for consideration. Capital gains will be calculated according to FIFO (First In, First Out) rules. The exclusion of taxation of capital gains and capital losses will apply not only in respect of disposals that relate to crypto-assets held for a period of 365 days or more but also those that are made against the delivery of new crypto-assets – in this case, the crypto-assets received will be attributed an acquisition value equal to the acquisition value of the crypto-assets delivered. The exclusions from taxation will not apply when the taxpayers or the debtors of the income are not resident in another Member State of the European Union or the European Economic Area or in another State or jurisdiction with which an international double taxation treaty, bilateral or multilateral agreement providing for the exchange of information for tax purposes is in force.

  • Crypto asset transactions carry forward period. The carry forward period will not apply where the beneficiaries or the entities paying the income are residents in a country or jurisdiction without information exchange instruments for tax purposes.
  • Real estate capital gains obtained by non-residents. Non-residents taxpayers will no longer benefit from the flat rate of 28% on capital gains arising from the disposal of property and such capital gains will be subject to the rules applicable to residents’ taxpayers, i.e. inclusion of 50% of the capital gains and taxation according to the general and progressive rates (up to 48% plus solitary rate up to 5%).
  • Deduction of VAT from newspapers. In 2023, taxpayers will be allowed to deduct part of the VAT borne by any member of the household in connection with the acquisition of subscriptions to periodical newspapers and magazines, both in physical and digital format.

CIT

With regard to Corporate Income Tax (CIT), we highlight the following changes:

  • Taxation of income related to crypto assets (simplified regime). Income from crypto assets that are not considered capital income, capital gains, and losses, or asset increases, are taxed by applying a coefficient of 0.15. Income from crypto asset mining activity is subject to a coefficient of 0.95.
  • Autonomous taxation of electric vehicles. Automobiles powered exclusively by electric energy, whose acquisition cost exceeds the value defined by the resolution of the Government, will be subject to autonomous taxation at a rate of 10%.
  • Deductibility of expenses with travel cards. Expenses incurred with the acquisition of travel cards for staff will be deductible at 150% instead of 130%.

VALUE ADDED TAX

As to Value Added Tax (VAT), the following changes are highlighted:

  • Increase the VAT exemption Limit. The previous VAT exemption limit of €12,500 will be increased to €13,500 in 2023, €14,500 in 2024, and €15,000 in 2025.
  • Extension of the deadline for submitting VAT returns. The deadline for filing the VAT returns for the month of June or the second quarter is extended to 20 September, and the payment deadline is extended to 25 September.
  • Reduction of VAT rate on vegetable-based drinks and butters. Vegetable-based drinks, yogurts, butters, margarines, and creams will now be taxed at 6%.
  • Reduction of the VAT rate on biomass equipment. The supply and installation of solid biomass local space heaters with a rated thermal input not exceeding 50 kW and solid biomass boilers with a rated thermal input not exceeding 500 kW meeting certain conditions, as well as pellets produced from biomass will now be taxed at 6%.

REAL ESTATE TRANSFER TAX

Regarding Real Estate Transfer Tax (RETT), the following measures stand out:

  • Exemption on the acquisition of real estate for resale. The exemption will now apply to taxpayers who prove that in the last two years they have resold property previously acquired for this purpose, increasing the previous required period of only one year.
  • Taxable value in the exchange of real estate. The real estate which is transferred within one year of the date of the exchange will no longer be covered by the rule which determines that the taxable value will be the taxable asset value when higher than the difference in values. For this purpose, the exchanger who has transferred the property must declare this fact to the Tax Authority within 30 days.

MUNICIPAL PROPERTY TAX

With regards to Municipal Property Tax (MPT), the following changes were included:

  • Increase of MPT on vacant buildings. Degraded buildings or ruins where the state of conservation has been caused by a natural disaster or calamity will be excluded from the MPT increase applicable to vacant buildings.
  • Increase of MPT on uninhabited houses or houses used as local accommodation. Municipalities may increase the MPT rate to be applied to buildings located in areas of urban pressure, as follows

- up to 100% in cases where the buildings are used for local accommodation.

- up to 25% in cases of houses that are not rented or in use as the taxpayer's own permanent residence.

A further 50% increase may apply whenever a taxpayer is a legal person or other equivalent entity.

  • Vacant properties located in areas of urban pressure. Municipalities may increase the MPT rate for buildings that have been vacant for more than one year - instead of the current two - and the limit may be increased by:

- 25% whenever the urban building or autonomous fraction is destined to habitation and, in the year to which the tax relates, is not rented or allocated to the taxpayer's own and permanent residence.

- 50% whenever a taxpayer is a legal person or other equivalent entity.

STAMP DUTY

In terms of stamp duty, we highlight these new rules:

  • Exemption on Housing Loans. Extensions of mortgage loan contracts entered between 1 November 2022 and 31 December 2023 will be exempt. Likewise, new contracts for debt refinancing will be exempt, as well as, under certain conditions, the provision of new guarantees/security related to existing loans.

TAX BENEFITS

The State Budget includes the following changes:

  • Benefits applicable to students’ rental income. Rental income arising from municipal programs providing student accommodation for displaced students and with a rent limit will now be exempt from PIT and CIT.
  • Investment Tax Code. The percentage of relevant investments that may be deducted in the computation of CIT is increased from 25% to 30%.

For more information on the other tax changes introduced by the State Budget 2023, please click here.

2023-01-02

The Parliament approved the State Budget for 2023 (2023 State Budget). In this newsletter, we summarise the main tax changes set out in the 2023 State Budget.

Personal income tax

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

  • Update tax brackets and reduce the rate of the 2nd bracket. The personal income tax brackets will be updated. For example, the first tax bracket will be increased from €7,116 to €7,479 and the last tax bracket from €75,009 to €78,834, which corresponds to an update of 5.1%. In addition, the rate applicable to the second bracket is reduced from 23% to 21%.

  • PIT partial exemption for young people. The exemptions of the "Young PIT" are now as follows:

- 50% with a limit of 12.5 times the value of the Social Support Index in the first year.

- 40% with a limit of 10 times the value of the Social Support Index in the second year;

- 30% with a limit of 7.5 times the value of the Social Support Index in the third and fourth years; and

- 20% with a limit of 5 times the value of the Social Support Index in the fifth year.

  • Dependents deduction. The deduction for the second and subsequent dependents who do not exceed the age of 6 by 31 December increases by €300 or, in case of joint custody, by €150.
  • Supplementary work. The autonomous withholding rate applicable to overtime work is reduced by 50% from the 101st hour, inclusive.
  • Reduction in withholding tax for borrowers of house mortgage loans. Withholding tax on Category A income is reduced to the rate of the lower bracket for taxpayers who are borrowers of a house mortgage loan and who cumulatively earn a monthly remuneration not exceeding €2,700.
  • Commercial/industrial crypto assets activities. Transactions related to the issue of crypto assets, including mining, or the validation of crypto assets transactions through consensus mechanisms will be qualified and taxed as commercial and industrial activities. In the case of the application of the simplified tax regime, the coefficient of 0.15 will apply, with the exception of income from crypto asset mining for which a coefficient of 0.95 will apply. The cessation of activity and change of residence will be assimilated to disposal. Crypto assets that are unique and not fungible with other crypto assets are excluded from the concept of the crypto asset for PIT purposes.
  • Remuneration derived from operations related to crypto assets*. Remuneration derived from crypto asset transactions (e.g., staking) will be considered for PIT purposes as capital income. This remuneration is exempt from withholding tax, being the taxpayers are obliged to report the income to the tax authorities. When the remuneration takes the form of crypto assets, the income will be taxed as capital gains at the moment of disposal of the crypto assets received.
  • Capital gains resulting from the sale of crypto assets*. Gains resulting from the sale of crypto assets for consideration are qualified and taxed as capital gains, except when they are considered business/professional income or capital income. A change of residence will be assimilated to disposal for consideration. Capital gains will be calculated according to the FIFO (First In, First Out) rules. Notwithstanding, capital gains and capital losses will be excluded from taxation in respect of disposals that:

- Relate to crypto assets held for a period of 365 days or more; or

- Are made against the delivery of new crypto-assets – in this case, the crypto-assets received will be attributed an acquisition value equal to the acquisition value of the crypto-assets delivered.

These exclusions from taxation will not apply when the taxpayers or the debtors of the income are not resident in another Member State of the European Union or the European Economic Area or in another State or jurisdiction with which an international double taxation treaty, bilateral or multilateral agreement providing for the exchange of information for tax purposes is in force.

  • Reporting obligations on crypto asset transactions*. Natural or legal persons, organizations, and other entities without legal personality, which provide crypto assets custody and administration services on behalf of third parties or have the management of one or more crypto assets trading platforms, must report to the Portuguese Tax Authorities, by the end of January of each year, for each taxpayer, through an official form, the operations carried out with their intervention, regarding crypto assets. However, the carry forward period will not apply where the beneficiaries or the entities paying the income are residents in a country or jurisdiction without information exchange instruments for tax purposes.
  • Partial exemption on income from the sale of energy. The annual income resulting from the transaction of surplus energy produced for self-consumption, from renewable energy sources, by production units for self-consumption, up to the limit of 1 MW of the respective installed capacity, and from the transaction of energy produced in small production units from renewable energy sources, up to the limit of 1 MW of the respective installed capacity, will be partially exempt up to €1,000.
  • Real estate capital gains obtained by non-residents*. Non-residents taxpayers will no longer benefit from the flat rate of 28% on capital gains arising from the disposal of property and such capital gains will be subject to the rules applicable to residents’ taxpayers, i.e. inclusion of 50% of the capital gains and taxation according to the general and progressive rates.
  • Deduction of VAT from newspapers*. In 2023, taxpayers will be allowed to deduct part of the value of the VAT borne by any member of the household in connection with the acquisition of subscriptions of periodical newspapers and magazines, both in physical and digital format.

Corporate income tax

In terms of Corporate Income Tax (CIT), the following changes should be highlighted:

  • CIT rate applicable to SMEs. The amount to which the 17% corporate income tax rate applies increases from €25,000 to €50,000. In addition, this rate is applicable in the two financial years following mergers, splits, transfers of assets and exchanges of shares carried out between 1 January 2023 and 31 December 2026, in which the taxpayers qualify as small, medium-sized, or small-medium capitalization companies.
  • Tax relief regarding electricity and gas costs. Companies will be allowed to deduct 120% of theelectricity and gas costs provided that certain conditions are met. This tax relief will not apply to taxable persons carrying out economic activities which generate at least 50% of turnover in the field of:

- Production, transport, distribution, and trade of electricity or gas; or

- Manufacture of petroleum products refined or from waste, and of agglomerated fuels.

  • Tax relief regarding agricultural production costs *. With effect from 1 January 2022 and provided certain conditions are met, companies will be entitled to deduct 140% of the expenses and losses incurred or borne with the acquisition of:

- Fertilisers, organic and mineral fertilizers, and correctives.

- Flours, cereals, and seeds, including mixtures, residues, and waste from food industries, and any other products suitable for the feeding of livestock, poultry, and other animals, referred to in the Codex Alimentarius, irrespective of breed and living functionality, intended for human consumption.

- Irrigation water; and

- Glass bottles.

  • Limitations on tax losses carry forward. The time limit applicable to tax losses carried forward is revoked and the limit of the annual deduction is reduced from 70% to 65%.
  • Limitations on financing costs carry forward. The non-deductible net financing costs carry forward is no longer applicable when there is a change in the ownership of more than 50% of the share capital or majority voting rights of the taxpayer, except when it is concluded that the main objective or one of the main objectives of the change was not tax evasion, which will be the case, namely, where the transaction was carried out for valid economic reasons.
  • Group taxation regime. In the case of a change of control, when the new controlling company chooses to continue applying the special regime for the taxation of group companies, the authorization of the  Government is no longer necessary for the deduction of tax losses of the group registered during the previous tax periods, except when it is concluded that the main objective or one of the main objectives of the change was not tax avoidance, which will be the case, namely, where the transaction was carried out for valid economic reasons.
  • Taxation of income related to crypto assets (simplified regime) *. Income from crypto assets which are not considered capital income, nor capital gains and losses or asset increases, are taxed by the application of a coefficient of 0.15. Income from crypto asset mining activity is subject to a coefficient of 0.95.
  • Taxation of profits of permanent establishments outside Portugal. If companies have deducted tax losses relating to a permanent establishment outside Portugal in the last 12 years, they may not exclude from CIT the taxable profits up to the number of such losses.
  • Autonomous taxation of electric vehicles*. Automobiles powered exclusively by electric energy, whose acquisition cost exceeds the value defined by the government’s resolution, will be subject to autonomous taxation at a rate of 10%.
  • Deductibility of expenses with travel cards*. Expenses incurred with the acquisition of travel cards for staff will be deductible at 150% instead of 130%.

Value added tax

With regard to Value Added Tax (VAT), the following changes should be highlighted:

  • Increase the VAT exemption limit*. The previous exemption VAT limit of €12,500 will be increased to €13,500 in 2023, €14,500 in 2024, and €15,000 in 2025.
  • Extension of the deadline for submitting the VAT returns*. The deadline for filing the VAT returns for the month of June or the second quarter is extended to 20 September, and the payment deadline is extended to 25 September.
  • Reduction of VAT rate on vegetable-based drinks and butters*.  Vegetable-based drinks, yogurts, butters, margarines, and creams will now be taxed at 6%.
  • Reduction of the VAT rate on biomass equipment*. The supply and installation of solid biomass local space heaters with a rated thermal input not exceeding 50 kW and solid biomass boilers with a rated thermal input not exceeding 500 kW meeting certain conditions, as well as pellets produced from biomass will now be taxed at 6%.

Special taxes on consumption 

In terms of special taxes on consumption, the following amendments should be noted:

Duty on petroleum and energy products (ISP)

  • Partial reimbursement for diesel and professional gas. Amendments to bring professional gas and public passenger transport to the refund framework, following the general requirements. The classification codes for diesel are changed to NC 2710 19 43 to 2710 19 48 and 2710 20 11 to 2710 20 19 and extended to gas NC 2711 11 00 and 2711 21 00. In addition to the requirement for the permissible total laden weight of vehicles to be not less than 7.5 tonnes, a requirement for a minimum capacity of 22 seats is added in the case of public passenger transport undertakings. The limitation of the maximum annual supply value eligible for gas reimbursement is between 25,000 and 40,000 gigajoules.
  • Coloured and marked diesel. The increase in the use of coloured and marked gas oil by small farmers, holders of family farming status, small fish farmers, and for small-scale and coastal fishing using coloured and marked gas oil with anannual consumption of up to2,000litres of €0.06 per litre on the reduced rate applicable to the equipment used, will remain in force in 2023.
  • Small-scale fishing. A subsidy corresponding to the discount on the final price of petrol consumed equivalent to that resulting from the rate reduction applicable to diesel used in fishing will remain in force in 2023
  • Products used in the production of electricity, electricity, and heat or town gas (except biofuels, biomethane, green hydrogen, and other renewable gases):

- Products covered by CN codes 2710 19 62 to 2710 19 67 and CN codes 2710 20 32 and 2710 20 38, used in the production of electricity and cogeneration, or town gas on the mainland, are taxed at a rate corresponding to 100 % of the ISP rate and at a rate corresponding to 100 % of the addition on CO2 emissions.

- Covered by CN codes 2710 19 43 to 2710 19 48, CN 2710 20 11 to 2710 20 19, CN 2710 19 62 to 2710 19 67, CN 2710 20 32 and 2710 20 38, consumed in the Autonomous Regions of Azores and Madeira and used for the production of electricity, electricity, and heat (cogeneration) or town gas, by entities which carry out such activities as their main activity, are taxed at a rate corresponding to 50% of the ISP rate and 50% of the rate of the CO2 emission surcharge. It is set to rise to 75 % and 100 % on 1 January 2024 and 2025 respectively.

- Falling within CN code 2711, used in the production of electricity, of electricity and heat (cogeneration), or of town gas, by entities carrying out such activities as their main activity, apart from those used in the autonomous regions, are taxed at a rate corresponding to 40% of the ISP rate and at a rate corresponding to 40% of the rate of addition on CO2 emissions. It is set to rise to 50% as of 1 January 2024;

- Falling within CN codes 2701, 2702, 2704, 2713, and 2711 12 11 which are used in installations subject to an agreement on the rationalization of energy consumption (ARCE), and fuel oil with a sulfur content not exceeding 0,5% falling within CN codes 2710 19 62 and 2710 19 66 will be taxed at a rate corresponding to 30% of the additional rate on CO2 emissions.  It is set to increase to 65 % and 100 % on 1 January 2024 and 2025 respectively.

Duty on Beverages

  • Duty on alcohol and alcoholic beverages*. Increase in the tax rates applicable to (i) beers, which will now vary between 8.76 euros/hl and 30.77 euros/hl, (ii) fermented, still, and sparkling beverages, which will now be 10.96 euros/hl, (iii) intermediate products, which will now be 79.93 euros/hl and (iv) spirits, which will now be 1,456.83 euros/hl.
  • Duty on beverages containing added sugar or other sweetening matter. Increasing the taxable unit, with the tax rate varying between 1.05 euros/hl (sugar content less than 25g/l), 6.32 euros/hl (sugar content less than 50g/l and equal to or greater than 25g/l), 8.42 euros/hl (sugar content less than 80g/l and equal to or greater than 50g/l) and 21.07 euros/hl (sugar content equal to or greater than 80g/l). In liquid form the values increase to 6.32 euros/hl, 37.93 euros/hl, 50.56 euros/hl and 126.42 euros/hl, respectively; and in powder, granules, or other solid forms they increase to 10.54 euros/hl, 63.21 euros/hl, 84.28 euros/hl and 210.71 euros/hl per 100 kilograms net weight, respectively.

Duty on Tobacco

  • Regular tobacco. Increase of the specific element to €112.5 and of the ad valorem element to 12%.
  • Heated tobacco. Increase of the specific element to Euro 0.0896/g and of the ad valorem element to 15.15%.The minimum tax amount is also increased from 0.193 €/g to 0.182 €/g.
  • Cigars and cigarillos. The ad valorem component of both is maintained at 25%. The 1,000 cigars and cigarillos will be increased to €432.87 and €64.93 respectively.
  • Fine-cut tobacco, other smoking tobacco, snuff, chewing tobacco. Increase of the specific element to 0.087 euros/g, and the tax may not be less than €0.188.
  • Water pipe tobacco. Increase of the ad valorem element to 50.50%, and of the specific element of the tax on the liquid containing nicotine, in containers used for loading and reloading electronic cigarettes to €0.336/ml.
  • Cigarettes manufactured in the Autonomous Region of Madeira. Increase of the specific element to €64.01 and maintenance of the ad valorem at 9.1%, on cigarettes manufactured by small producers whose annual production does not exceed, individually, 500 t and which are consumed in these regions, the specific element.  The minimum tax threshold is reduced to 87% and the rates of duty to be added to all cigarettes consumed in these regions are increased in the specific component to €22.47, maintaining the ad valorem at 9%.
  • Cigarettes manufactured in the Autonomous Region of the Azores. The specific component is reduced to €35.36, and the ad valorem is maintained at 42%, for cigarettes manufactured by small producers whose annual production does not exceed, individually, 500 t and that is consumed in these regions. The minimum tax threshold is reduced to 80%.

Carbon tax

The carbon tax for consumers traveling by air, sea, and river remains in force in 2023.

Vehicles tax

Increase in the vehicles tax rates applicable to cars, motorbikes, tricycles, and quadricycles, regarding their cylinder capacity and environmental component.

Single circulation tax 

A generalized increase in the single circulation tax rates is applicable to all vehicles.

Real state transfer tax

Regarding Real Estate Transfer Tax (RETT), the following measures stand out:

  • Transactions involving crypto assets. The value of crypto assets given in exchange for the transfer of the property will now be considered for the purposes of determining the taxable value.
  • Updating of the tax brackets. RETT rates remain unchanged, but the values of the tax brackets for the acquisition of an urban building or building unit will be increased.
  • Exemption on an acquisition of real estate for resale*. The exemption will now apply to taxpayers who can prove that in the last two years have resold property previously acquired for this purpose, increasing the previous required period of only one year.
  • Taxable value in the exchange of real estate*. The real estate which is transferred within one year of the date of the exchange will no longer be covered by the rule which determines that the taxable value will be the taxable asset value when higher than the difference in values. For this purpose, the exchanger who has transferred the property must report this fact to the Tax Authority within 30 days.

Municipal Property Tax

With regard to Municipal Property Tax (MPT), the following measures are of particular importance:

  • Increase of MPT on vacant buildings*. Degraded buildings or ruins where the state of conservation has been caused by a natural disaster or calamity will be excluded from the MPT increase applicable to vacant buildings.
  • Increase of MPT on uninhabited houses or houses used as local accommodation*. Municipalities may increase the MPT rate to be applied to buildings located in areas of urban pressure, as follows

- up to 100% in cases where the buildings are used for local accommodation.

- up to 25% in cases of houses that are not rented or in use as the taxpayer's own permanent residence.

A further 50% increase may apply whenever a taxpayer is a legal person or other equivalent entity.

  • Vacant properties located in areas of urban pressure*. Municipalities may increase the MPT rate for buildings that have been vacant for more than one year - instead of the current two - and the limit may be increased by:

- 25% whenever the urban building or unit is intended for habitation and, in the year to which the tax relates, is not rented or allocated to the taxpayer's own and permanent residence.

- 50% whenever a taxpayer is a legal person or other equivalent entity.

Stamp Duty

In terms of stamp duty, we highlight these new rules: 

  • Gratuitous transfers. The transfer of crypto assets without consideration is now considered to be a free transfer and subject to stamp duty.
  • Fees for the provision of crypto assets-related services. Fees and considerations charged by or through crypto assets service providers are subject to stamp duty at a rate of 4%. Stamp duty is borne by the customers but must be levied by the crypto assets service providers unless they are not domiciled in Portugal, in which case the taxable persons are (i) the crypto assets service providers domiciled in Portugal who have intermediated the transactions or (ii) the representatives mandatorily appointed in Portugal for that purpose.
  • Taxable value of crypto assets. The taxable value of crypto assets is determined as follows: by applying the specific rules set out in the Stamp Duty Code, the value of the official quotation, if any, or the value declared by the custodian or beneficiary, and should, as far as possible, approximate the market value. However, the Portuguese Tax Authorities have the power to determine the taxable value based on the market value when it justifiably considers that there may be a divergence between the declared value and the market value.
  • Exemption on Housing Loans*. Extensions of mortgage loan contracts entered between 1 November 2022 and 31 December 2023. Likewise, new contracts for debt refinancing will be exempt, as well as, under certain conditions, the provision of new guarantees/security related to existing loans.

Special Contributions

The 2023 State Budget extends the following special contributions to 2023:

- Special contribution to the conservation of forest resources.

- Contribution to the banking sector.

- Additional solidarity contribution to the banking sector.

- Contribution to the Pharmaceutical Industry.

- Extraordinary contribution to the energy sector.

- Extraordinary contribution to the suppliers of medical devices industry of the National Health Service; and

- Contribution to single-use plastic or aluminum packaging in prepared meals.

Tax Benefits

The State Budget includes the following changes:

  • Benefits for companies located in Portugal inland. The 12.5% rate applicable to companies that carry out economic activity in Portugal inland will now apply to the first €50,000 of taxable income, instead of the first €25,000. To determine the taxable income, the expenses with the net creation of jobs will be considered in 120% of its amount. Only employees working on an indefinite term basis who earn income from employment and reside, for tax purposes, in inland territories will be considered, excluding employees assigned by temporary employment companies, employees on a casual assignment basis (in relation to the assigning entity) and employees in a multi-employer regime.
  • Benefits for students of educational establishments in Portugal inland or Autonomous Regions. Students who attend educational establishments located in Portugal inland or in the Autonomous Regions will benefit from an additional tax relief of 10% in respect of the amounts borne as education and training expenses for PIT purposes, with the overall limit of such expenses being increased to €1,000 when the difference is related to these expenses. The deduction of real estate expenses will be limited to the amount of €1,000, over three years, for students who transfer their residence to Portugal inland.
  • Incentives for salary increases. The costs corresponding to salary increases determined by a dynamic collective work regulation instrument for employees with an indefinite employment contract will now be considered at 150% of the respective amount for the purposes of determining the taxable income for CIT and PIT taxpayers with organized accounting. In any case, only costs related to employees whose remuneration has increased by at least 5.1% and above the minimum monthly salary will be considered. The maximum amount to be considered, per worker, is limited to 4 times the minimum monthly salary.
  • Incentive to companies’ capitalization. An amount corresponding to 4.5% of the net shareholder’s equity increases will be deductible from the companies’ taxable income. This rate increases to 5% in the case of micro, small or medium-sized companies or small and medium capitalization companies. The deduction cannot exceed €2,000,000 or 30% of the net result. The beneficiary must have organized accounting and no outstanding tax or social security debts, and its profit cannot be determined by indirect methods. This benefit is not applicable to credit institutions, financial companies, or similar entities.
  • Benefits applicable to students’ rental income*. Rental income arising from municipal programs providing student accommodation for displaced students and with a rent limit will now be exempt from PIT and CIT.
  • Investment Tax Code*. The percentage of relevant investments that may be deducted in the computation of CIT is increased from 25% to 30%.

* New amendments or adjusted amendments during the discussions held in Parliament. 

2022-12-30

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:

  • A maximum period of 3 months for procedures relating to the installation of solar energy equipment and collocated energy storage assets (including solar installations integrated into buildings or on building roofs), provided that the main purpose of these structures is not solar energy production;
  • An exemption of these projects from the obligation of environmental impact evaluation;
  • That the licence for installation by self-consumers of solar energy equipment not exceeding 50 kW is deemed to be approved if the competent authority does not reply to the licence application within 1 month;
  • A maximum period of 6 months for procedures relating to the repowering of projects;
  • A maximum period of 3 months for procedures relating to the  repowering of projects, where the  repowering does not result in an increase of more than 15 % in the plant's capacity and does not affect the need to evaluate potential environmental impacts;
  • A maximum period of 1 month for procedures relating to the installation of heat pumps not exceeding 50 MW or 3 months in the case of geothermal heat pumps;
  • That that grid connections of heat pumps with a capacity not exceeding 12 kW and those installed by self-consumers not exceeding 50 kW must be authorised by the competent authority upon notification, provided that the capacity of the installed self-consumer is at least 60 % of the capacity of the heat pump.

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.