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Portugal: Tax relief for businesses (COVID-19)

Portugal: Tax relief for businesses (COVID-19)

Various decree-laws and other guidance are intended to provide relief to business taxpayers that have been economically affected by the coronavirus (COVID-19) pandemic.

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Decree-law no. 23-A/2021, of 24 March 2021

Decree-law no. 23-A/2021 amends the scheme providing “extraordinary support” concerning the progressive reopening of business activity of companies that experienced a temporary reduction of the “normal working period” and the scheme that establishes “support mechanisms” under the current state of emergency. The measures adopted under this decree-law aim to support workers and as well as those who were unemployed.

In particular, the decree-law provides for employers in the tourism and cultural events sectors, full (100%) and partial (50%) exemptions of social security contributions due for March, April, and May 2021.

  • An employer experiencing a temporary reduction of the “normal working period” is entitled to an exemption of 50% of the social security contributions when there is a decrease in turnover of 75% or more.
  • For an employer experiencing a decrease in turnover of less than 75%, there is a full exemption of the social security contributions due for the period.

For these purposes, for taxpayers that had been in business for less than 24 months, the decrease in turnover is computed by comparing the monthly average turnover measured at the beginning of business activity against the month (penultimate month) prior to the month that the request for the extraordinary financial benefit refers to.

In addition, Decree-law no. 23-A/2021 provides relief for “micro companies”—for the first half of 2021, “simplified financial support” is provided to support employment (corresponding to two times the minimum national salary, per employee). Micro companies also may be eligible to receive additional financial support, to be received between July and September 2021, corresponding to an extra minimum national salary, per covered employee. This additional support is available if: (1) the company continues to be in a “business crisis” situation in June 2021; and (2) the company has not benefited from other financial support provided to maintain employment or jobs (per Decree-law no. 6-E/2021) or as funding to compensate in the progressive reopening of business activity (per Decree-law no. 46-A/2020).

Furthermore, companies in a “business crisis”—that is, a total suspension of business activity or a suspension of at least 40% of business activity (in the previous month)—and that experienced a disruption of supply chains or had orders suspended or cancelled, when more than half of the company’s invoices from the prior year were related to activities or sectors that were or have been suspended or closed pursuant to a legislative or government orders, may apply for “extraordinary support” to maintain employment jobs. An application for this extraordinary support is to be made in March and April 2021.

Finally, Decree-law no. 23-A/2021 provides “extraordinary financial support” for companies that in the first trimester of 2021 benefited from the extraordinary support to maintain jobs or the extraordinary support for the progressive reopening of business activity. Subject to certain conditions, eligible companies are entitled to receive an extraordinary financial support, as follows:

  • When requested on or before 31 May 2021, the support will correspond to two times the minimum national salary, per employee, paid fractionally over six months. In this situation, the company is entitled to an exemption of 50% of the social security contributions during the first two months of the incentive.
  • When requested after 31 May 2021, the support corresponds to one times the minimum national salary, per employee, paid fractionally over three months.

Decree-law no. 24/2021, of 26 March 2021

Decree-law no. 24/2021 amends the exceptional and temporary scheme for compliance with tax obligations and social security contributions available in response to the pandemic. It also allows for the payment in instalments of taxes and social security contributions.

Regarding the deferral of tax payments for the first half of 2021, taxes may be remitted under general terms (i.e., until the end of the voluntary payment period) or in monthly instalments (three-month or six-month instalments of €25 or more, without any interest). This deferral mechanism is available for taxpayers that:

  • Had for FY 2019 a turnover of no more than the maximum limit available to be classified as a micro or small and medium-sized enterprise (SME) and declared and provided proof of reduced turnover (reported through the e-invoice scheme) of at least 25% of the monthly average for 2020 (the full calendar year) compared to the same period for  the previous year, or
  • Had their main business activity in accommodations, catering and similar, or cultural events, or
  • Started or restarted their business activity on or after 1 January 2020

Under Decree-law no. 24/2021, a special scheme allows for the deferral of the following corporate income tax payments:

  • Corporate income tax payments relating to tax return declaração Modelo 22:  The relief allows taxpayers to remit the difference between the total assessment of corporate income tax due and the amount of advance corporate income tax payments for (1) the tax period beginning on or after 1 January 2020 and (2) for taxpayers with a turnover in that period up to the maximum limit for classification as either a micro or SME, can be fulfilled under the established general terms and dates or in instalments of €25 or more (without interest).
  • Corporate income tax payments on account: The deferral regime is also available with regard to the first and second payments on account regarding the tax year beginning on or after 1 January 2021, and the tax payment obligations may be fulfilled in three equal monthly instalments of €25 or more (without interest). Under this relief measure, taxpayers must comply with the instalment plan until the legally established deadline for compliance with these tax obligations.
  • Possible to limit corporate income tax payments on account: The deferral regime allows eligible taxpayers to limit the second payment on account up to 50% of the amount due whenever such payment relates to: (1) the tax period beginning on or after 1 January 2021; and (2) the taxpayer had for FY 2020 turnover of up to the maximum limit allowed to be classified as a micro enterprise.

In instances when as a result of adhering to this limitation, the taxpayer fails to pay more than 20% of the amount that would have been paid under normal conditions, the payment obligation may be regularized without any additional costs. Also, for taxpayers that are members of a taxpayer group, this deferral mechanism is only available when all of the companies of the group comply with the requirements under the law.  

Lastly, Decree-law no. 24/2021 sets out an exceptional scheme to remit payments in instalments for tax and social security debts, as applicable, for the period between 1 January and 31 March 2021. 

Law no 13-B/2021, of 26 March 2021

Under Law no 13-B/2021, in response to the pandemic, any proceedings before the administrative and tax courts may be conducted via technologic means (e.g., video conference) when the physical presence of the involved parties is required.  Additionally, certain deadlines and procedural acts that cannot take place under the alternative means are suspended.

The suspension regime is applicable to tax procedures and proceedings in response to the COVID-19 pandemic (as implemented by Law no 1-A/2020, of 19 March 2020, with amendments made under Law no. 4-B/2021, of 1 February 2021). 

Order no. 99/2021 – XXII, of 26 March 2021

This order allows relief for taxpayers claiming depreciation or amortization for FY 2020. Specifically, taxpayers may communicate to the Portuguese tax authorities the depreciation or amortization of assets based on depreciation or amortization rates lower than the minimum rates provided for by law until the end of the fifth month following the end of the applicable tax period, without penalty, provided that the reasons for adopting the lower rates result from a break in business activity due to the COVID-19 pandemic.


For more information, contact a KPMG tax professional in Portugal:

Pedro Alves | pmalves@kpmg.com

Sandra Aguiar | saguiar@kpmg.com

Pedro Almeida | pedrofalmeida@kpmg.com

Joana Pombinho | jpombinho@kpmg.com

Rita Gomes | rmgomes@kpmg.com

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