Windfall tax on energy companies to go ahead

A windfall tax on energy company profits made incidentally because of inflation caused by a lack of supply and increased demand will be introduced by the government.

• The tax on extraordinary profits in the petroleum, natural gas, coal and refinery sectors will be introduced this year as part of the State Budget 2023 which was delivered to the Portuguese parliament on Monday by the Ministry of Finances.
• Among other measures which will effect companies directly or indirectly include a €52 increase in public sector workers’ pay — varying in percentage terms for salary scales, the lowest seeing increases of 8% with the percentage decreasing as salaries get higher.
• Meal allowances (part of wage packets) to increase from €4.77 per day to €5.20.
• Minimum salaries to increase from €705 to €760 (with a new agreement with social partners setting yearly increases to the end of this legislature)
• A selective reduction in IRC business tax for those businesses that increase wages by the 5.1% agreed with social partners by reducing IRC dues.
• A bolstering of the Apoiar.pt programme for the tourist rentals sector, restaurants and similar.
• Extra support for farming businesses with 10% off each litre of agricultural diesel.
• Changes to IRS (income tax) scales — to cater for the 5.1% salary increases agreed with social partners and to help increase family incomes (by giving higher child benefit allowances).
• Crypto profits remain untaxed for another year as long as long as those earning them have held their currencies for longer than a year. In cases where profits are made on currencies that are more recent, the tax is to be 28%, as they viewed as speculative.
• IRS compensation for landlords probated by law from increasing rents by more than 2% in 2023. (amount not specified)
• The banking sector will continue to pay a pandemic supplement, as well as a solidarity supplement payment in 2023 which should bring the government in €38 million. The tax was created in 2020 to help pay the costs of the pandemic and was added to the contribution from the sector introduced in 2011 as an extraordinary measure during the troika period, but kept on.
• Tax sweeteners for company mergers. The budget will enable an extraordinary two-year tax reduction on IRC on companies which “lose their status as SMEs or Small Mid Caps through mergers and restructuring operations between 2023 and 2026.
• A 10-year tax deduction on capitalisation. The new Incentive on Company Capitalisation allows for a tax deduction on net capital increases of 4.5% — rising to 5% for SMEs and Mid Caps which may be applicable for companies with up to 500 staff.
• Tax loss deduction. Companies will no longer have a set time limit to report tax losses (currently set at a limit of five subsequent taxable periods.
• Special tax rate up to €50,000. The tax base subject to a special IRC rate on micro and SMEs and Small Mid Caps will increase from €25,000 to €50,000. This means the tax of 17% will fall to 12.5% if the company is located inland. Over this revenue, the applicable tax will be 21%.
• Tax incentives for wage increases will be increased by 50% on all tax deductible costs on fixed salaries and social security contributions in line with agreements signed with unions. This will mean a salary increase of 5.1% in 2023. The Government has set a ceiling and will exclude family members. The measure is expected to benefit more than 500,000 companies and cost €75 million in 2024.
  The President of the Portuguese Industrial Confederation (CIP), António Saraiva, said of an agreement reached between the Government and unions as one that would permit some predictability against an economic backdrop of unpredictability.