As other European countries, Portugal has made several changes to its employment laws in the last few years and increased the flexibility of the legislation to attract foreign investment.
According to the World Economic Forum's Report 2016-2017, presently the Portuguese employment legislation is less rigid than that many European countries (for instance Germany and France), although still more rigid than that of the benchmark countries.
The labour reform approved in 2009 and the changes introduced after Portugal’s international bailout in 2011 have contributed to reduce the level of rigidity of employment rules. Nowadays Portugal is also better ranked in OECD´s Employment Protection Legislation Index.
Several aspects of the legislation have been revised since the adoption of the 2009 Labour Code, which adopted more employer-friendly legislation concerning the organisation of the workforce. For instance, working schedules may now be managed in a more flexible way without increasing the labour costs. The Labour Code also contains flexible rules that allow the employer to unilaterally change the place of employment and the employee’s functions.
According to the WEF Report, the changes in the labour regime has put Portugal 0.3 points behind the EU average, but ahead of larger European countries such as Spain and France.
After Portugal’s international bailout in 2011, Portugal simplified the termination procedures, reduced the severance pay, decreased the holiday leave period and suspended some public holidays.
Of course the elimination of some public holidays, rest days after overtime were not consensual, even though viewed as necessary by the Troika at the time.
After the general election of 2015, the suspension of the public holidays was removed in 2016 but no relevant changes to the labour legislation were made. Portugal believes that the system now strikes the right balance between securing employees’ acquired rights and benefits and the level of flexibility required by employers.
This translates into a low level of employment disputes. According to Pordata, an independent database of socioeconomic data, the average number of working days lost through industrial action by employee in 2014 was 1.7 against 1.1 in 2013, despite the harsh austerity measures imposed in Portugal in the last years.
After mini-hydro and wind, photovoltaic solar energy could become the third wave of the renewable energy revolution in Portugal. By 2020, the established power in the country promises to grow three times up to 900 megawatts.
Portugal has been one of the most enthusiastic countries regarding renewable energies. In 2015, 28% of the energy consumed was produced by renewable sources, compared to 19.2% in 2004. The amount consumed through renewable energy is the eighth highest among European countries and the fifth highest between countries that share the euro, being Portugal’s target for 2020 set at 31%.
In addition, in May 2016, the country used only renewable energy for four consecutive days and was able to supply the country's electricity grid without any carbon emissions relying only on wind, water and solar energy.
Regarding solar energy, Portugal has a strong potential, boosting an annual average of 2,200 to 3,000 hours of sun in the mainland, making it the European country with most hours of sun exposure.
Today, the established solar power in Portugal is of 299,89 MW. This represents a 484% increase compared to the 62 MW installed in 2008. The Moura solar park with its established 46MW and an annual production of 93 GW is the biggest in Portugal.
However, in 2016, despite the fact that renewable sources represented 58% of the electricity generated in Portugal, still, more than 30% of the renewable quota was achieved by the electricity generated by large-scale hydro power plants (with more than 10 MW of capacity), continuing solar energy very far from what could be its potential in the country, representing only 1% of the energy produced.
Given that evidence, the Government has already begun to reverse this trend with the issuing of licenses to build around 400 central MW. In addition, the establishment costs of a solar power plant in Portugal has decreased by 80% compared to 2008, being expected that by 2020 the capacity in the country will be 900 MW and by 2030, it will increase to 2,871 MW.
As a result of these changes, the construction of 15 new solar plants is currently being planned. The largest investment will take place at Alcoutim with the installation of the largest solar power plant in Portugal with 220 MW, and an estimated cost of 200 million euros, led by the international consortium China Triumph International Engineering Co. group and its Irish partner WELink.
The water sector in Portugal comprises the activities of (i) abstraction, treatment and distribution of water for public consumption, and (ii) wastewater sanitation. The responsibility for providing the services is shared between the State and municipalities.
The State is responsible for the Multimunicipal systems, or “upstream” systems, consisting of a set of components upstream of the water distribution network and downstream of the sewage network, which allow connection to the "downstream" system.
In turn, municipalities are responsible for Municipal systems, or “downstream" systems, which allow the “upstream” system to be linked at the end user, as well as collecting residual water from the producer by rejecting them in a “upstream“ system.
The State and municipalities can use different management models to carry out the activities of the sector, namely: (i) direct management, (ii) delegated management, or (iii) concession management.
The sector is characterized by a huge diversity of realities, not only in the scale and resources of the management entities but also in the management model adopted, subsisting several distinct entities that operate within the framework of different management models.
The water sector is a sector with greater prevalence of public entities. The upstream systems are made up of a universe of 14 companies, of which 9 are from the state business sector, owned by the AdP Group - Águas de Portugal. Only 3 private entities provide services in upstream, which are owned mostly by the private groups AGS and Aquapor).
In downstream systems there tends to be greater openness to private entities. Of the 61 companies that render downstream services, 30 are municipal concessions granted to private companies, 27 are delegations in municipal and intermunicipal companies, 1 is a concessionaire of a multimunicipal system, 2 were established in partnership between the State and municipalities through the ÁdP Group, and 1 is a state-owned company.
According to the latest data published in the Annual Report of the Portuguese Water and Waste Services | 2016 (RASARP 2016), in the multimunicipal water supply the most used management model are the multi-municipal concessions, covering a total of 174 municipalities and more than 5.1 million inhabitants. In contrast, the predominant model in municipal systems is the direct management of municipalities with a total of 70% of the total municipalities and approximately 52% of the population of mainland Portugal.
In 1993, the year the Portuguese natural gas project lifted up, Portugal had no backbone high pressure natural gas pipeline, storage and other infrastructures. From 1993 onwards, such infrastructures were built and natural gas became one of the most important sources of energy used in Portugal.
In the period between, 2000 and 2011, the natural gas demand increased 10% per year, and in 2015 the gas consumption, registered an increase of 16%.
Until 2006 the promotion of natural gas and the development of the system’s main infrastructures were handled by the Galp group companies, Transgás – Sociedade Portuguesa de Gás Natural, S.A. (“Transgás”) and GDP – Gás de Portugal, SGPS, S.A. (“GDP”), under concession agreements entered into with the Portuguese State.
The public service concession for the import, transmission and supply of natural gas through the high pressure pipeline, was granted to Transgás, and the public service concession for the distribution of natural gas through regional pipeline networks, was granted to six different companies, held by the GDP group.
However, the Decree-Law no. 30/2006 of 15 February 2006 (“Gas System Law”) transposed Directive 2003/55/EC, implementing common rules for the internal market.
The most important measures established by the Gas System Law were (i) the creation of a National Natural Gas Distribution Network (RNDGN), licensed or licensed to several operators, to guarantee non-discriminatory and transparent access to the network infrastructures of Liquid Natural Gas (LNG) and RNDGN terminals, (ii) the legal unbundling between the network and infrastructure operators of the National Natural Gas System (SNGN) and the marketers, and (iii) the creation the figure of the natural gas supplier and the last resort supplier.
The Gas System Law principles were specified by Decree-Law 140/2006, of 26 July 2006 (“Gas Regulatory Law”), with new rules for the exercise of transmission, operation of storage of the LNG facilities, and distribution and supply services.
As a result of these changes, the natural gas sector was unbundled, and is currently divided into several activities, each one with different operators. Thus, the sector is structured in (i) reception, (ii) storage and regasification, (iii) underground storage, (iv) transportation, (v) distribution, and (vi) commercialization.
This briefing intends to give an overview on the functioning and organization of the different activities of the Portuguese Natural Gas Sector and on the main players of the sector.
Following harsh economic years, Portugal has shown an unexpected surge in tourism and in the real estate market in 2016 which is now catching the attention of local and foreign investors.
Portugal’s moderate growth rate in 2016, the support of the European Central Bank’s monetary policy and the commitment of the government to bring the deficit to 2.3% have renewed investors’ interest in Portugal. Still there are challenges ahead. Portugal needs to reduce historically high levels of Government debt and unemployment.
After implementing a harsh economic program with little social unrest, Portugal has facilitated the creation of new businesses, reduced the time for obtaining administrative permits, improved its labour legislation and reduced its corporate tax to 21%. For international investors looking for a place to invest in Europe, Portugal offers several advantages, of which many investors are not aware. Portugal is an ideal location for nearshoring industrial and services facilities because of its access to Europe’s 500 million consumers’ market and to the Portuguese-speaking world, which spreads across five continents: Europe, America, Africa, Asia and Oceania.
Portugal has a proven track record of successful foreign investments across a wide range of sectors. Investors that are considering Portugal as a place to invest want to know the hard facts about the country and not the stereotypes associated with the country and its people. Autoeuropa, Volkswagen’s Portuguese auto-plant, is one of its most productive plants. Nokia Siemens Networks chose Portugal to install its new Global Networks Solutions Center. Microsoft, Colt, Ikea have also successfully invested in Portugal in recent years.
Portugal has one of the most favourable business environments in the world. The World Bank's "Doing Business 2017" Report ranks Portugal in the top 25 of the world’s – 12th in the EU – most attractive locations to do business.
The «WhyPortugal 2017» report aims to answer the main questions of international businesses, institutional investors, private equities and industry players that are considering Portugal as a location to invest in Europe. This report provides an overview of the opportunities and challenges of doing business in Portugal and reviews the main aspects to be considered by foreign investors considering Portugal as a place to invest as regards the setting up of a business, hiring employees, taxation and government incentives.
The General Data Protection Regulation (“GDPR”) promises to be the most significant global development in data protection laws across all European Union (“EU”) Member States since Directive 95/46/EC (“Data Protection Directive”), which was implemented in Portugal by Law 67/98, of 26 October 1998.
The GDPR will be directly applicable in all EU Member States from 25 May 2018. The new regulation will have a global scope, as businesses based outside the EU that offer goods or services to individuals in the EU may be required to comply with the GDPR.
The risk of fines up to 4% of annual worldwide turnover or €20 million is surely a strong incentive for companies to comply with the GDPR.
The new regulation is expected to be homogenously applied throughout the EU. Notwithstanding, Portuguese law will apply in cases it may impose more detailed conditions, such as those relating to the processing of sensitive data, particularly genetic data, biometric data or data concerning health. Portuguese law may also contain specific rules regarding the processing of employees' personal data, especially for the purposes of recruitment, performance and termination of the employment contract, which will apply together with the GDPR.
The combined application of the GDPR and the Portuguese law will be particularly relevant where companies collect and process data from Portuguese individuals and/or the Portuguese supervisory authority acts as lead authority due to the fact the main establishment or the single establishment of the controller or processor is located in Portugal.
Individuals, who are resident in Portugal, will have the right to lodge complaints with the Portuguese supervisory authority. For proceedings against a data controller or processor, the plaintiff will have the right to bring the action before the Portuguese courts if the data controller or processor’s business or the individuals’ residence is located in Portugal.
Although the core data protection rules remain broadly the same, there are important changes with impact on day-to-day business and for which companies should be aware of and prepare in advance.
As companies prepare for the entry into force of the GDPR, we propose a seven steps plan detailing the main aspects of the GDPR that companies need to take. This should be also used as an opportunity to improve the way the companies deal with personal data within their organization. The countdown to 2018 has started.
Renewable energy sources (“RES”) play an important role in the energy mix of the future. The requirements set for climate preservation, the increase in energy consumption and the limited life of fossil fuels have been taken into account by European Institutions and countries in order to stop the vicious circle of energy consumption and climate changes.
The alternative is renewable energy. There are several clean and environment-friendly energy sources that do not have negative effects over the climate such as the sun, the wind, biomass or ocean waves. In 2016, from January to September renewable sources represented 62% of the electricity generated in Portugal. Still, more than 34% of the renewable quota was achieved by the electricity generated by large-scale hydro power plants (with more than 10 MW of capacity), which in the market are not considered as being part of the renewables sector.
Portugal has been one of the most enthusiastic countries as regards renewable energies. Portugal has achieved its commitments under the Kyoto Protocol and was allowed to increase 27% of the emission of greenhouse gases, however they had increased only by 19% until 2012. Decree-Law 141/2010, of 31 December 2010 established as a binding target that, by 2020, at least 31% of Portugal’s primary energy consumption should come from renewable sources (higher than the 20% set by the European Union). By 2020, the use of energy from renewable sources in energy consumption in all modes of transport is set at 10% of the total energy consumption. In 2016, from January to September, 62% of our electricity was already coming from renewable sources. Portugal reduced its foreign energy dependency from 89%, in 2005, to 71% in 2014. Between 2011 and 2014, a total 2.757 MW from renewable sources were licensed, achieving 11.6 GW of installed capacity.
As far as MIBEL is concerned, according to the monthly report of October 2015, 18.506 GWh of energy were negotiated on the daily market (14.410GWh of energy acquired in Spain and 4.096 GWh of energy acquired in Portugal. 54% of the energy placed on the daily market came from renewable energies.
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Following the end of Portugal’s bailout programme by the European Union (EU), the International Monetary Fund (IMF) and the European Central Bank (ECB), which lasted from May 2011 until June 2014, foreign investors are now looking at Portugal with different eyes.
As part of the bailout programme, Portugal implemented an ambitious privatisation programme and made other reforms to reduce its public debt, attract foreign investment and foster competition in closed or semi-closed sectors.
Foreign investment showed some positive signs in 2014 pushed by the success of the privatisation programme, increased activity in private sector, M&A and investments in residential and commercial real estate.
The golden visa programme which gives foreign investors the possibility of obtaining a Portuguese visa provided they invest a minimum of €500,000 is probably the main factor in attracting investment in medium-size properties, especially in the residential market.
Still price and yield in the current market conditions remain interesting, as local banks and corporations holding large real estate investments are looking to dispose or monetize real estate assets.
The recently announced quantitative easing measures adopted by the ECB which will increase liquidity in the financial markets are likely to renew investors’ appetite for real estate assets in Europe.
The Portuguese real estate market now offers very interesting opportunities, as the country emerges from its worst crisis in the last thirty years, with good valuation opportunities.
This paper summarises certain legal and regulatory issues affecting the investment in property in Portugal.
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Travelling to Portugal and you are not an EU Schengen State resident?
You will need a travelling visa to cross the Portuguese border, and a temporary residence permit, if you stay for more than 60 days. To live in Portugal you must have a permanent residency permit.
Find in this paper a quick guide to obtain these permits.
The Portuguese Government launched the Residence Permit for Investment Activity programme (ARI), in 2012. This program known as Golden Visa, is a quick solution for investors from outside the Schengen area to obtain a residence permit in Portugal.
This plan includes new rules on the awarding of residence permits for investment activity, known as “golden visa”, to citizens of non-European Union (EU) countries that wish to make a significant investment in Portugal and meet certain requirements.
The “golden visas” grant their holders the right to free circulation in Portugal and in the rest of Schengen area countries. In addition to general requirements applicable to residence permits, “golden visas” require their holders to undertake the obligation of investing in Portugal of certain minimum amounts for a minimum period.
In this paper, you will find an outline of the opportunities of living in Portugal and of the main aspects to be thought-out by everybody considering Portugal as a place to live.