The State budget for 2021 (OE2021) introduces 18 changes from January 1, 2021, ranging from minimum wage increases and pension cuts to the creation of new social assistance schemes and a reduction in VAT on electricity. Let's take a look at what's changing in Portugal in 2021.
The national minimum wage (SMN) for 2021 is set at 665 euros. This represents an increase of 30 euros on 2020 (+4.7 %) and an increase of 160 euros (+32 %) on 2015. This increase will also have an impact on the salaries of public administration (PA) workers in 2021.
Pensioners with pensions of up to €658.2 will benefit from an extraordinary €10 increase. The Ministry of Finance guarantees that this increase "will guarantee real gains in purchasing power for around 1.9 million pensioners". The January increase will be paid in conjunction with the February increase.
Workers who have suffered a drop in income as a result of the pandemic crisis. They will receive extraordinary new social support, which will be based on the value of the poverty line (€501.16). It is estimated that the new social benefit could reach 258,000 people. The aid will cover employees who lose access to unemployment benefits in 2021; economically dependent self-employed workers; self-employed workers with at least three months' contributions in the 12 months preceding the application and whose invoicing is less than 40 %.
In 2021, the minimum unemployment benefit threshold will rise from €438.81 to €504.6 for full-time workers, covering around 130,000 people. At the same time, workers whose unemployment benefit expires in 2021 will be entitled to an extension of this assistance for a further six months.
In 2021, free day care will cover all children attending a public day care center or cooperative system. The measure is aimed at households in the 1st and 2nd income brackets and could benefit 60,000 children.
The Extraordinary Aid for Progressive Recovery is extended until June 30, 2021, and provides for the payment of 100% of the salary up to three minimums (1,995 euros). Full pay also covers workers who are laid off.
The OE2021 includes the hiring of 4,200 employees for the National Health Service and 261 additional workers for the INEM; the reinforcement of Continuing Care Units, with 400 new beds for the general network, ten Day Units and Autonomy Promotion (200 places), 600 new places in the Mental Health CCIs; in addition to a reinforcement of 150 million euros in primary health care for equipment and facilities and 50.5 million euros for the replacement and purchase of heavy hospital supplies.
During 2021, a further five thousand operational assistants will be hired for state schools, and a 400 million euro reserve is set aside for a school digitization program.
In 2021, the Government promises to continue the gradual, progressive route to blurring the gap between the deductions at source made by dependent workers and the final amount of tax payable. This adjustment will make around 200 million euros available to households next year, estimates the Ministry of Finance.
IRS exemption ceiling increases by €100. The minimum amount up to which taxpayers are exempt from paying IRS, will be increased by €100 to €9,215. Around 30,000 new aggregates will therefore also be exempt from this tax, reveals the Ministry of Finance.
The reduction in VAT on electricity - to an intermediate rate of 13 % for consumption up to 100 kilowatt-hours (kWh) of monthly consumption - came into effect on December 1, meaning that January's bill can already reflect savings. From March 2021, large families (aggregates with five or more elements) will benefit from an increase of 50 %, and the VAT rate of 13 % applies to consumption up to 150 kWh per month.
There is a rule in EO2021 that prohibits the disconnection of essential services such as water supply, electricity, natural gas, or communications (in the latter case, if the consumer is unemployed, has a drop in income greater than 20%, or is infected with COVID19) during the first half of 2021.
The Extraordinary Investment Tax Credit is a deduction from the collection of IRCs corresponding to 20% of the investment expenses incurred until the end of the first half of 2021, up to a limit of 5 million euros, to be used for a maximum of five years. It requires the maintenance of jobs during the period of use of the tax credit, with a minimum of three years.
During the first half of 2021, businesses and self-employed people can benefit from a special, transitional VAT supply phase. Compliance with benefit schemes is made with the tax authorities.
The program IVAucher aims to stimulate consumption in the sectors most affected by the pandemic, while increasing disposable household income by around 200 million euros. Consumers will be able to accumulate 100 % of VAT incurred in the accommodation, culture and catering sectors over a 12-week period, and this balance will also be available for use in these sectors over another 12-week period. However, the Government has conditioned the measure's entry into force to the extent that the health crisis evolves.
To cope with the liquidity and cash-flow constraints arising from the economic impact of the second wave of the pandemic, the government has approved an amendment to the banking moratorium scheme, allowing new enrolments up to March 31 and for a maximum period of nine months from the date of enrolment. For example, families and companies applying for a moratorium at the beginning of January will be able to benefit from it until the end of September. If the bank is notified at the end of March, the moratorium will remain in force until the end of the year. Companies in the sectors hardest hit by the pandemic can still benefit from a 12-month extension to their credit terms, in addition to the credit deferral period, enabling payments to be made more gradually and in line with economic activity.
The budget provides for public guarantees of up to €6 billion, enabling the creation of credit lines to support the economy. This amount, aimed at businesses and households, includes job preservation and support for the liquidity and cash flow of economic operators.
From January 11, frequent private users and passenger vehicles will benefit from discounts on tolls on the former SCUT. Class 1 and 2 vehicles benefit from a discount of 25 % from the 8th day of use in a month on the same route. The reduction applies to certain 10-lane routes or sub-laning: A22 - Algarve; A23 - IP; A23 - Beira Interior; A24 - Interior Norte; A25 - Beiras Litoral e Alta; A28 - Norte Litoral; A4 - AE transmontana sub-concession; A4 - Tunnel de Marão; A13 and A13-1 - Pinhal Interior sub-concession. In the case of freight vehicles, the current reduction of 30 % during the day and 50 % at night is reduced to 35 % and 55 % respectively. The 55 % reduction also covers weekends and public holidays. This reduction scheme is extended to passenger transport on these ten routes, in addition to the Grand Port concession (A4, A41 and A42) and the Côte d'Argent concessions (A17, A25 and A29).
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