The Government presented measures to combat inflation

Articles 16/09/2022

In July, the country recorded an inflation rate of 9.2%, the highest since November 1992. The latest estimate from the National Institute of Statistics (INE) for the August rate was 9%. In the face of the loss of income that this price increase entails, the Portuguese Government has replicated the initiatives of other countries and moved forward with a package of “anti-inflation measures” that will cost, according to him, a total of 2,400 million euros.

One of the measures that are already in place is the possibility of entering the regulated market for natural gas (for annual consumption of up to 10,000 m3), which, for the time being, is expected to last until the end of 2025. To join the regulated market, know which “last-in-business trader” of the area of residence and contact him to conclude a contract for natural gas supply. The Energy Services Regulatory Authority has published an explanatory leaflet on the subject.

Three other measures will consist of one-off payments in October that will cover most of the population and have already been published in Diário da República.

For dependent workers with holiday and Christmas allowances, they will be entitled to the extraordinary support of €125 per person. The unemployed registered in the IEFP, other than those in voluntary unemployment, will also be entitled to this amount. 

Extended support also for beneficiaries who received unemployment, IHR or social benefit benefits for inclusion (being of legal age), solidarity supplement for the elderly (without pension), primary informal care support allowance, parenting allowance (monthly up to €2,700) and health and work sickness allowance (in these two, for at least one month, and up to €2,700).

All minors and young people entitled to a family allowance for children and young people or who are still considered dependent, for IRS purposes, on persons eligible to receive the €125 will be entitled to the extraordinary support of €50. The €125 is not cumulative with this €50 in the exceptional case of those who meet the criteria for allocating the two supports. 

According to the Government, IRS taxpayers who share a dependent and have chosen separate taxation in the last year or do not belong to the same household (e.g. divorced parents with shared custody) will each receive €25.

It is important to note that these two amounts will be excluded from the IRS incidence base (it will not change the level because of them) and social security contributions will be supported by the State Budget and not the Social Security budget. To receive this support is enough to have the IBAN registered with the Tax and Social Security Authority and if it is up to date.

The last of these three single instalments, the exceptional supplement to pensioners, will consist of 50% of the value of the October pension, including supplements, and will be given to pensioners whose pension does not exceed €5,318.40 (twelve times the IAS, which in 2022 is €443.20).

The amounts delivered shall not be cumulated with the pension to calculate the withholding tax on IRS but shall nevertheless be subject to an autonomous withholding tax at the withholding rate applicable to the pension itself. 

However, this support has been hotly contested because it boils down to an advance in the number of pension updates in 2023, an update that will be reduced as a result of this support. 

This is because the 50% of the value of the October pension divided by the 14 pensions delivered in a year is equivalent to 3.57% of the value of each pension this year and, on the other hand, it has already been announced that roughly these same percentage points will precisely cut the rate of pension updates for 2023 compared to what would result from the application of the update mechanism provided for by law.

Of the other measures, some enter into force as early as October, the maintenance of the latest decreases in the rate of petroleum products tax (ISP) and the suspension of the increase in the “carbon tax” (which will prevent, according to the Government, an increase of 28 cent/L in diesel and 32 cent/L in gasoline) and the reduction of the VAT rate on electricity from 13% to 6% in the first 100 KWh of monthly consumption December 2023. The latter will also be proposed to the Assembly of the Republic, which will have to approve it.

In 2023, the Government will limit to 2% the updating of rents in contracts that make up one year (update that, without the measure, could reach 5.43%) and ensures that it will compensate landlords, in IRS or IRC, for the difference between the value of the new limit rate of 2% and the value of the rate that would result from the general rules of update (5.43%). According to the information already available, to benefit from compensation, landlords will no longer have to do than declare income to IRS. 

The price of CP tickets and public transport passes will remain the same as in 2022.

From now on, gas companies are obliged to make the difference between the tax amount (ISP and VAT) that the consumer pays today and what they would pay before the latest isp reductions.


The content of this information does not constitute any specific legal advice; the latter can only be given when faced with a specific case. Please contact us for any further clarification or information deemed necessary in what concerns the application of the law.


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