The European Commission has recently issued guidelines for the development of contact tracing and warning applications in the fight against COVID-19, which can have a significant impact in the control of the disease and play an important role as part of containment measures.

Contents. These applications may include: (i) accurate information about the COVID-19 pandemic for users; (ii) self-diagnostic questionnaires and guidance for users (symptom control feature); (iii) alert notification to persons who have been in close contact with an infected person for testing or be isolated (contact tracing and warning features); and/or (iv) a communication forum between patients and physicians, including providing further diagnosis and treatment advice (e-treatment advice).

Applicable regulations and supervision. Given the extremely sensitive nature of the data (in particular health data) and the purpose of the applications, they must comply with the General Data Protection Regulation (GDPR) and the Electronic Privacy Directive. They must also be implemented in close coordination with and under the supervision of the relevant public health authorities and national data protection authorities.

User control and consent. Users must keep full control over personal data and hence they must give their prior consent (complying with GDPR requirements) and separately for each application’s features.

In case of use of location data, this data must be stored on the user's device and only be shared with their prior consent; users must be able to exercise their rights under the GDPR and, among others, they have to be entitled to, at any time, withdraw their consent.

Principle of data minimization and data accuracy. Applications must comply with the principle of data minimization and it may be only processed personal data required for the purpose at stake. For example, for the purpose of tracing contacts, the European Commission considers that the processing of location data is not necessary and thus it does not advise its use.

EU rules require that processed personal data are accurate. Therefore, the Commission considers that technologies such as Bluetooth should be used to more accurately assess contact between different users. The data must be stored on the user's device and encrypted and must only be kept for the necessary period, in medical terms, and for the duration of the containment measures.

For the success of these applications, the confidence of citizens and those who feel safe with their use is essential, which must be ensured under strict compliance with EU rules on personal data protection.

Susana Vieira

Following the extension of the state of emergency in Portugal until 17 April 2020, the Portuguese Parliament enacted new legislation with a view to mitigate the impact of coronavirus pandemic in lease agreements.

Law no. 4-C/2020 of 6 April 2020 is applicable to housing and commercial leases, as well as to other forms of exploring real estate assets, and to the rents falling due between 1 April 2020 and the first month after the expiry of the state of emergency.

In housing lease agreements, tenants whose households have suffered a significant income reduction (to be determined pursuant to the new legislation) may delay payment of the above-mentioned rents. Provided that the amount of the delayed rents is paid during the subsequent 12-month period - in monthly instalments of not less than 1/12 of the total amount and together with the relevant rents - landlords will be prevented from terminating lease agreements. Tenants in these circumstances may, alternatively, file an application with the Portuguese Institute for Housing and Urban Rehabilitation (Instituto da Habitação e da Reabilitação Urbana - IRHU) to obtain an interest-free loan to cover payment of rent.

In case tenants wish to make use of these rules, they must inform the landlord in writing at least 5 days before the relevant rent falls due or until 27 April 2020 for the rent falling due in April.

Landlords suffering a significant income reduction arising of the suspension of payment of rents by tenants now permitted, may also apply for an interest-free loan with IRHU to cover income they stop receiving.

As to commercial lease agreements, tenants with businesses under lockdown or activity restrictions due to mitigation and containment measures (such as, for example, restaurants, which are only allowed to sell for take-away or home delivery), may defer payment of the above-mentioned rents to the subsequent 12-month period, where the deferred amount should be paid in monthly instalments of not less than 1/12 of the total amount together with the relevant rents. No penalties for delay may be claimed to tenants.

Other measures already in place with a view to mitigate impact of the coronavirus pandemic in lease agreements include suspension of early termination of lease agreements by landlords, suspension of expiry of lease agreements at the end of the relevant term (unless accepted by tenants) and prohibition of terminating commercial lease agreements with grounds on business lockdown or activity restrictions.

Following the most recent extension of the state of emergency (up to 17 April), the Portuguese Parliament enacted new legislation ending the suspension of the procedural time limits in urgent  proceedings as from today.

Law 4-A/2020, of 6 April 2020, amending previous measures on the functioning of the courts’ activity during the emergency period, came into force today and ceases the suspension of procedural time limits for the performance of procedural acts and diligences before courts in urgent proceedings, namely, insolvency proceedings and precautionary measures.

The end of the suspension does not however affect the suspension period already elapsed in accordance with Law 1-A/2020 (now amended), that is, between 9 March and 6 April 2020.

In order to discourage companies from going into insolvency and to safeguard directors from any legal consequences that might result from failure to comply with this statutory duty during the emergency period, the legal deadline for filing for insolvency is suspended, even though pending insolvencies remain in progress. Acts performed within the scope of enforcement proceedings, namely the sale of assets and other acts of attachment of the debtor's assets, are also suspended to the extent that they do not cause serious damage to the creditor's survival.

In short:

  • In cases of urgent proceedings, the procedural time limits are no longer on standby from 7 April 2020, but the suspension period between 9 March and 6 April 2020 is not counted for time limits purposes;
  • In cases of non-urgent proceedings, the procedural time limits are suspended from 9 March  2020 and they will continue suspended until the end of the state of emergency.

Notwithstanding the suspension of time limits in non-urgent proceedings, the law clarifies that the current situation of state of emergency does not, however, hinder the carrying out of the proceedings and the performance of their relevant acts either face-to-face acts or using distance means when all the parties consider that they have the conditions to ensure their performance through online platforms. In non-urgent proceedings, courts may also render a final decision in cases in which they understand not to be required the performance of further actions.

On the same subject, you may also view our previous newsletter, available here.

The Portuguese Government approved the Decree-law 12/2020, of 6 April transposing Directive (EU) 2018/410 of the European Parliament and of the Council, approved in the sequence of the Paris Agreement and its decarbonization goals.

Entities on the national list of facilities covered by the ETS list may benefit from free of charge emission permits, upon request to the Portuguese Environmental Agency (Agência Portuguesa do Ambiente, I.P.) (“APA”) in a specific form for the collection of data and methodology report. The criteria for the allocation of free of charge emission permits are based on fully standardized measures which set benchmarks at Community level.

Emission permits not granted under the free of charge method shall be subject to a sale in auction, the revenue from which shall be used for measures contributing to the development of a competitive and low carbon economy.

For the first time in Portugal, ETS of low emission installations (up to 25.000 tCO2eq) will not need an emission permit, provided that they are subject to measures allowing an equivalent contribution of emission reductions, or very low emission installations (up to 2.500 tCO2eq), without any equivalent measure. In addition, the amount of free emission permits is adjusted to the operators’ activity if its levels decrease or increase by 15% compared to the level used to establish the emissions.

Failure to obtain an emission permit, when mandatory, is an administrative offence and the owner of the relevant facility may be subject to the payment of a penalty up to the amount of 5 million euros if committed with intent, or 144 thousand euros if committed by negligence.

On the other hand, failure to comply with the threshold of the emission permit, entails the duty to financially compensate the Portuguese State, under the “polluter pays” principle, corresponding to the emission excess, and taking into account the possible costs that the owner would have incurred by buying more emission licenses in the auction.

The new regulation becomes effective on 7 April 2020.

On April 2nd, the declaration of a state of emergency was renewed by Decree of the President of the Republic, no. 17-A/2020, of April 2 (Portuguese only).

With regard to employees' rights, the law establishes the suspension of the exercise of the right to strike to the extent that it may compromise the functioning of critical infrastructure, health care units and essential public services, as well as in economic sectors vital to the production, supply and distribution of goods and services essential to the population.

This measure was already provided for in the previous decree of the President of the Republic that declared a state of emergency, now extending the suspension to essential public services.   

The same decree also defines the suspension of the right of trade union associations to participate in the drafting of labor legislation to the extent that the exercise of such right may represent a delay in the entry into force of urgent legislative measures for the purposes foreseen in the decree.

Following the continuity of the state of emergency, the Government approved a set of additional provisions in order to reduce the possibility of contamination and propagation of illness, through Decree no. 2-B/2020 of 2 April (Portuguese only).

In addition, other employment actions were taken, namely the reinforcement of the competencies of the Authority for Working Conditions (ACT), through the requisition of inspectors.

The ACT inspectors will now have the power to suspend any dismissal when they see evidence of illegality, without the need for recourse to the courts.

With this measure, the Government intends to prevent Employers, during the current state of emergency, from making abusive dismissals. 

The suspension of the right to strike and the possibility for the ACT to preventively suspend dismissals should disappear after the end of the state of emergency.

The Portuguese Government passed Decree-Law 10-F/2020, which approved new fiscal support measures to mitigate the social and economic impacts arising from COVID-19, which are in addition to the measures already approved by Order 104/2020-XXII and Resolution 71-A/2020. In this newsletter, we describe the main fiscal support measures approved sofar.

Extension of deadlines for annual tax returns and advance payments

Order 104/2020-XXII approved the following measures:

  • The annual tax returns (Model 22) for the year 2019 may be filed until 31 July 2020;
  • The special advance payment (pagamento especial por conta) may be delivered until 30 June 2020; and
  • The first advance payment (pagamento por conta) and the first additional advance payment (pagamento adicional por conta) may be delivered until 30 August 2020.

Deferral of delivery of VAT and withholding taxes

Decree-Law 10-F/2020 allowed the payment of VAT and CIT and PIT withholdings in three- or six-monthly instalments, interest free, for self-employed workers and companies with a turnover up to €10 million in 2018, which have begun their activity as of 1 January 2019 or that operate in closed sectors (Decree no. 2-A/2020).

The remaining companies and self-employed workers who do not meet the conditions set out above may apply for a fractionation of the payment when there has been a decrease in the turnover of at least 20% in the average of 3 months preceding the month in which this obligation exists, compared with the same period of the previous year.

Requests for payment in instalments should be submitted electronically by the deadline for voluntary payment and no guarantee is required.

Deferral of social security contributions

Social security contributions due between March and May 2020 can be paid as follows:

(i)     One third in the month in which it is due (in the month of March, exceptionally, by the 31st);

(ii)    The remaining amount will be paid in equal and successive instalments in July, August and September 2020 or in the six months between July and December 2020, interest free.

This measure applies automatically to self-employed workers and to employers with up to 50 employees.

Other employers can also access this mechanism if they have a decrease in the turnover of 20% or more in the months of March, April and May 2020, provided that:

  • They have up to 250 employees; or
  • They have 250 or more employees, when they are private social security institutions or similar, or operate in closed sectors (Decree 2-A/2020) or in the aviation and tourism sectors.

Measures to mitigate corporate crisis situations

Resolution 71-A/2020, subsequently amended by Resolution 76-B/2020, approved several support measures for companies that have their activity freazed, their establishments closed or a 40% reduction in their turnover:

(i)     Extraordinary support for employment contracts. This support consists of the payment by the State of 2/3 of the employee's gross remuneration, 70% of which is ensured by the Social Security and 30% by the employer. The support has a maximum amount of €1,905.

(ii)    Extraordinary training plan. This support will be granted to each employee, depending on the hours of training, up to a limit of 50% of the gross remuneration, with a maximum limit of €635.

(iii)   Exemption of employer social securiy contributions. Employers are exempted from paying social security contributions in respect of workers covered by measures (i) or (ii) above. Contributions in respect of the members of their statutory bodies will also be exempt. This exemption may also extend to self-employed workers who are employers benefiting from the measures above and their spouses and will be in force for the duration of the measures they benefit from.

(iv)   Incentive to support the normalization of the company's activity. Employers are entitled to receive €635 for each employee covered by the measures referred to in (i) or (ii) above.

Other support/incentives

Support for employees

An exceptional financial support in an amount equal to 66% of the basic remuneration (33% to be paid by the employer, 33% to be paid by the Social Security) will be granted to employees who need to be away from work due to unavoidable assistance to a minor under 12 years of age or a dependent, resulting from the closure of an educational establishment, early childhood support or disability, with a minimum limit of €635 and a maximum limit of €1.905, calculated according to the number of days of absence from work.

Portugal 2020 Program - Deductibility of expenses

Within the scope of the projects approved by the Portugal 2020 program, expenses incurred by beneficiaries in initiatives or actions cancelled or postponed for reasons related to COVID-19 will be deductible.

Suspension of tax and social security debt enforcement proceedings

The enforcement proceedings relating to tax and social security debts are suspended until 30 June 2020, as well as the installment plans, without prejudice to the possibility of their fulfillment.

On 26 March 2020, the Portuguese Government passed Decree-Law 10-J/2020, which approves exceptional measures to protect families, companies, private charitable institutions and social economy entities in connection with the Covid-19 crisis, including a moratorium on credits.

In this newsletter, we describe the main conditions for the application of the moratorium.

Protection measures:

  • Prohibition of the cancellation, in whole or in part, of credit facilities and loans;
  • In relation to bullet loans, extension of the maturity as well as of any ancillary obligations, including interest;
  • In relation to other loans, suspension of payment of instalments, rents and interest and automatic extension of the payments schedule.

Moratorium period:

Until 30 September 2020.

Eligible entities / persons:

  • Companies that:

(i)     have their head office and perform their economic activity in Portugal;

(ii)    are classified as micro, small or medium-sized enterprises;

(iii)   as of 18 March 2020, were not in default of cash payments towards financial institutions for more than 90 days or, if they were, did not meet the materiality threshold established in the Bank of Portugal Notice 2/2019 and Regulation (EU) 2018/1845 of the European Central Bank of 21 November 2018;

(iv)   as of 18 March 2020, were not in an insolvency, suspension or cessation of payments situation or subject to an enforcement proceeding; and

(v)    are not in default towards the Tax Authority and Social Security.

  • Other companies, regardless of their size, who meet conditions (i), (iii), (iv) and (v) above, excluding those of the finance sector;
    • Individual entrepreneurs, private charitable institutions, non-profit organisations and certain social economy entities who have their domicile or head office in Portugal and fulfil the conditions (iii), (iv) and (v) above;
  • Natural persons, in relation to primary residence mortgage loans only, who reside in Portugal, fulfil the conditions (iii), (iv) and (v) above and fall in one of the following circumstances:

(i)     prophylactic isolation or disease situation;

(ii)    assistance to children or grandchildren;

(iii)   reduction of normal working period or suspension of the employment agreement due to business crisis;

(iv)   unemployment situation registered with IEFP;

(v)    are eligible for the extraordinary support for the reduction of the economic activity of self-employed workers under Decree-Law 10-A/2020, of 13 March 2020;

(vi)   are employees of entities whose establishment or activity has been closed or suspended during the state of emergency period pursuant to Decree 2-A/2020, of March 2020.

Eligible transactions:

Credit transactions carried out by:

  • Credit institutions;
  • Financial credit companies;
  • Investment companies;
  • Leasing companies;
  • Factoring companies;
  • Mutual guarantee companies;
  • Branches of credit and financial institutions operating in Portugal.

Excluded transactions:

  • Credits or financing for the purchase of securities or the acquisition of stakes in other financial instruments;
  • Credits granted to beneficiaries of schemes, subsidies or benefits (e.g. tax benefits) to establish their head office or residence in Portugal, including for investment activities, with the exception of citizens covered by the Return Programme (Programa Regressar); and
  • Credits granted to companies for the individual use of credit cards by members of board, supervisory bodies, employees or other workers.

Interest capitalisation:

The extension of the payment of principal, rents, interest, fees and other charges (where applicable) will not prevent the accrual of interest which shall be capitalised in the value of the loan.

Moratorium application:

The moratorium must be requested before the relevant financial institution. The eligible entities and persons may request the suspension of the repayment of principal only (or a part thereof).

Today, the Portuguese Energy Secretary of State announced in an online session that the first 2020 solar auction will be, on the whole, similar to the 2019 solar auction. Despite the announcement, there is no date for the auction’s launch, due to the Covid-19 pandemic’s effects on the market.

The injection capacity to be auctioned will be of 700 MW, all in the Alentejo and Algarve areas.

The promoters may apply to the following remuneration schemes:

  • a market scheme without storage where the promoters bid for a contribution made to the National Electric System (“SEN”), in €/MWh. The Promoters available to pay larger contributions will be awarded with the capacity title;
  • a fixed guaranteed tariff structure, where the bids will express a discount to the reference feed, to be announced (in 2019, was 45€/MWh);
  • a market scheme for power plants incorporating a storage system. A value of an annual payment to be made to SEN, in MW, will be announced and the promoters interested in this new option offer a discount to this value.

The obligations for the awarded bids in the auction will be similar to those of the 2019 solar auction and they include a performance bond (60.000€/MWh) to guarantee the compliance with a tight schedule to connect the plant to the grid.

A few days ago the Portuguese government also enacted  Decree 80/2020, of 25 March initiating the simplified licensing for small production units (up to 1 MW). Through this proceeding, the Promoters may apply for a guaranteed remuneration for 15 years. On a monthly basis, until offering a total of 20 MW, the Portuguese Energy Authority (“DGEG”) will organize sessions where the Promoters bid among themselves. The Promoters will offer a discount to the reference feed (45 MW/h). The first session is scheduled to June of 2020, however due to the Covid-19 pandemic’ effects, there is some uncertainty regarding this date.

new law (Portuguese only) was enacted creating a fast track process for the Lay Off, which now includes cases of suspension of the employment contract and reduction of the normal work period provided for in the Labor Code. The new rules are as follows:

Who can access it: private sectoremployers, including employers in the social sector affected by the epidemic and who are in business crises.

Business crises: companies that find themselves in one of these situations:

  • total or partial closure of the company or the establishment as a result of the obligation to close installations and establishments,
  • total shutdown of the company's or establishment's activity resulting from the interruption of global supply chains, suspension or cancellation of orders; or
  • an abrupt and sharp break of at least 40% of the billing in the period of 30 days prior to the application with the social security, with reference to the monthly average of the two months prior to that period, or compared to the same period of the previous year.

Documents to apply:

  • Simple statement issued by the employer, announcing there’s a business crises,
  • Certificate from the company's certified accountant attesting to the crises situation,
  • The employer should have his tax and contribution situation up to date before the competent authorities.

Amount of salaries:

  • If the employment contract is suspended, the employee stays at home and receives 2/3 of the salary, up to a maximum of 3 RMMG (€1905,00), with the State paying up to 70% of this amount, up to a maximum of €1.333,5
  • If the normal working period is reduced to more than 66% of the normal period (for example, the worker works 80% of the normal working time), the worker receives the number of hours worked (80%), but the State only contributes up to 2/3 (66%) of the salary.

Prohibition of dismissal: the employer financially supported is prohibited to dismiss the employee covered by the State support through collective redundancy or dismissal based on the extinction of a job position, up to 60 days after the conclusion of the State support.

It is estimated that about one billion people are under voluntary confinement in their homes in order to halt the spread of the current pandemic, which explains the significant increase in the amount of data moving across fixed and mobile networks when combined with services like Netflix, HBO, Prime Video, Instagram, Facebook and Youtube and practices such as telecommuting and homeschooling.

Netflix was invited by the EU to reduce its streaming quality in Europe, a public call that Netflix attended to, but others such as YouTube, Apple TV+, Amazon Prime and Disney Plus are also committing to tone down the image quality of their streaming applications in order to free up bandwidth space.

The Portuguese government, in its turn, has set out temporary and exceptional measures regarding the telecommunications sector in order to prevent a network overload. According to Decree Law 10-D/2020, telcos must ensure the provision of the following services, which are deemed key telecommunications services:

  • Ininterrupt voice chat and text messaging under fixed and mobile networks;
  • Ininterrupt access to the emergency services, including geolocation and ininterrupt availability for public warnings to be sent to the population;
  • Sufficient data under fixed and mobile network that ensure access to a set of essenial services, such as email, search engines, news, homebanking, financial and insurance services, both in fixed and mobile broadband; and
  • Analog and digital television signal.

These services must be provided to prioritary clients such as healthcare providers included in the national health service, security forces and Home Affairs, both in continental territory and Madeira and Açores.

In view of ensuring these services, telcos may take exceptional measures regarding network and traffic management, prioritizing voice chat and text messaging traffic, while limiting video streaming, online gaming or other categories of data transfer, provided that limitations are only to ensure the integrity and safety of the networks.

Network repairing is also going to be a priority, since compliance with obligations usually applicable to the telecommunications sector will be simplified and/or suspended.

The new legal framework is already in force and will be until the measures for the prevention, containment, mitigation and treatment of the pandemic are waived by the national public health authority.