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Budget 2021, what the Portuguese government plans

If the 2021 budget in Portugal is passed as is, next year could bring new social support, wage and pension increases and relief from the IRS. All these measures that are foreseen in the preliminary version of the 2021 budget proposal by the Portuguese government clearly announce the color. They want to get back on the path of pre-covid growth and are ready to put the means to it.

Budget 2021 in Portugal, what the government plans

The Portuguese government predicts when this year-end, the country's economy will collapse by about 8.5% , a more pessimistic figure than the 6.9% decline predicted by the former Finance Minister in the 2020 budget .

Here are the main measures planned in the draft 2021 budget in Portugal for next year:

Employment and Social Supports

  • Extraordinary increase of the lowest pensions by 10 euros, paid from August, which will cost the state 99 million euros.
  • Increase of the minimum social income, which is currently 438.81 euros and should increase to 505.10 euros. This measure has an estimated cost of 75 million euros.
  • Creation of an extraordinary income support for workers in response to the pandemic crisis, which will cover employees, domestic services and the self-employed, with a minimum value of 50 euros. A measure that will cost approximately 450 million euros.
  • Support continues for informal workers for up to six months.
  • The allocation of the income received through IMI and part of the IRC will be redirected to the social security budget.


  • Allocation of an extraordinary risk premium of up to 219 euros to health professionals working in areas dedicated to covid -19. A measure estimated at 60 million euros.
  • Recruitment of 261 professionals for INEM and 4,200 for the National Health Service ( SNS ).
  • The respiratory protection masks and disinfectant gel will remain subject to the reduced VAT rate. The measure has an estimated cost of 23 million euros.
  • Reinforcing investments in the primary health care units of the National Health Service (SNS) to the tune of 90 million euros.
  • Primary Care User Fee Waiver, a measure that will have a financial impact of 47.3 million euros.
  • A budget of almost 26 million euros will be made available for the construction work of the new Central do Alentejo Hospital, in Évora , and 5.5 million euros to launch the tender for the construction of the Seixal Hospital, in the Setúbal district .
  • Companies will be able to deduct from their profits the donations allocated to the hospital entities EPE .


  • Hired over 3,000 employees in the schools next year.
  • Increase in the number of free places in day care centers, including children from families up to the 2nd income bracket, for the benefit of approximately 65,000 children. A measure estimated at 11 million euros.
  • Primary and secondary education and administration with a school budget of 7 billion euros, an increase of 7.1% compared to 2020.
  • Scientific and higher education institutions will be exempted from paying VAT in activities related to the reduction of the spread of Covid-19 .


  • The Institute of Housing and Urban Rehabilitation ( IHRU ) will receive 10 million euros for the recovery of state assets for housing purposes and 317.6 million euros for housing promotion policies.


  • The VAT paid by consumers on accommodation, culture and catering expenses incurred in one quarter may be discounted on consumption in these same sectors in the following quarter. The measure has an estimated cost of 200 million euros.
  • VAT paid on sports activities will be partially deducted in the IRS in the same way as the deduction currently allowed for expenses at restaurants, hairdressers and veterinarians.
  • The IRS withholding tables will be reduced in 2021 by an amount equivalent to 200 million euros.
  • The permanent reduction of the VAT rate on electricity will save families 150 million euros next year.


  • Offshore entities are excluded from public aid created in the context of exceptional and temporary pandemic measures.
  • Large companies with profits in 2020, which use the support granted during the pandemic or which benefit from certain tax advantages can not lay off workers and will have to maintain in 2021 the level of employment registered on October 2020.
  • The government has set aside 500 million euros in guarantees for TAP, so that the company can eventually finance itself on the market, in addition to the 1,200 million euros already approved in loans.


  • Funding of approximately €260 million for the Public Transport Fare Reduction Support Program (PART).
  • The Environmental Fund plans to allocate more than 36 million euros to the Metropolitano de Lisboa, to finance the extension of the network and purchase new trains.
  • Investment of 384 million euros in rail infrastructure: 147 million euros for Corredor Internacional Sul, 99 million euros for Corredor Internacional Norte, 78 million euros for Corredor Norte-Sul and 60 million euros for Corredores Complementares.


  • Implementation of the "Lotaria do Património", in the form of "scratch cards", and implementation of a regime of "extraordinary cultural patronage", thanks to tax benefits.
  • Creation of the status of cultural professionals.

The 2021 budget in Portugal, is very courageous on the part of the Portuguese government, it clearly wishes to put the country back on the path of growth, let's hope, now that it will be well heard after some corrections voted by the majority by the assembly and accepted by Europe.

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