End of double penalty for early retirement
One of the main innovations of the next budget is the end of the sustainability factor for long contributory careers, ending the double penalty on early retirement. The second and third phases of the revision of the pension system are thus progressing in January and October, respectively. The reduction of 14.5% to the reforms requested by those who are 63 years or more and 40 years of discounts in the first month of next year and in October of the taxpayers at 60 years of age and 40 of discount, with only the 6% penalty for each year until the legal age.
Minimum increase of ten euros for pensioners
The government gave in to the demands of the left and pensioners will have a minimum increase of ten euros already in January next year. The measure will be included in the budget proposal, confirmed the parliamentary leader of the PCP, João Oliveira. The PCP has reached an agreement with the Executive and pensioners with pensions that are below 1.5 Indexes of Social Support (IAS) will receive the extraordinary update in the first month of the year, unlike the last three years, whose payment was made in August. Thus, in the first month of next year, all pensioners will receive increases both due to the updated inflation and GDP calculation and stipulated by law – that is, pensions up to 653.85 euros will increase by 1.65% , or pensions that fall below this limit.
New progression of civil servants paid in full
The government gave in to the demands of the unions and the left and will change the model of payment of salary increase of the new career progressions of the civil service next year. Speaking to Jornal Económico, the leader of the Federation of Public Administration Workers' Union (FESAP), José Abraão, revealed that the formula agreed between the Minister of Finance and the unions for the State Budget for 2019 (OE2019) provides for payment integral part of the remuneration increase next year and not until 2020 as it has been proposed by the executive.
The effects of the measure will thus be felt even during this legislature and not beyond 2019. However, the phase-out model is not yet defined, but José Abraham anticipates the possibility that 75% of the remuneration increase will be paid in May and the 100% in December.
Salary increases for the Civil Service
The prime minister and the finance minister have already signaled that there will be salary increases for the civil service, but the value is still under negotiation. On the table are three scenarios to achieve wage increases: an increase of five euros for all workers, an increase of ten euros for the 200,000 workers who earn up to 835 euros; or up to 35 euros for the 85,000 workers who earn between 600 and 635 euros. The finance ministry has already ruled out a salary increase of ten euros for all officials and the finance minister has already pointed out that only 50 million euros is available, but the left and the unions want more.
Energy bill relief
The Block signed an agreement with the Government to reduce light billing by 5% in 2019 and 2020. This was achieved by reducing VAT from 23% to 6% in contracted power (up to 3.45 kVA) and the second component through of the enlargement of the EESC (Extraordinary Contribution on the Energy Sector) to companies that produce renewable energy. As a result, there will be a transfer of the EESC envelope to cut the tariff deficit in two stages: 10 million in 2019 to cover this deficit – covering only domestic consumers (plus 40 million from the carbon fund); and another by 2020 of EUR 200 million from the EESC slot. The final impact is 5%, but it is not the same as saying that the light bill will lower 5%.
In recent weeks, the Government has been negotiating with BE and PCP on the extension of the EESC, which means the end of the exemption from this tax, which has been foreseen since 2014, for special regime (PRE) production. The EESC was created by the previous government, and maintained by the current one, as a rate of 0.85% on the net assets that energy companies have in Portugal, providing for some exemptions. Leftist parties kept the objective of reducing VAT on electricity and gas to 6% on the negotiating table, but the budgetary impact of the € 500 million measure has led the Government to rule out this possibility.
Discounts on social passes in Lisbon and Porto
The prime minister revealed earlier this month in an interview with TVI that the next budget will have a "radical innovation" with the introduction of the single transport pass in Lisbon and Porto. At stake is the creation of the family pass, which could allow monthly savings of more than 100 euros to families living in these metropolitan areas. The idea of the so-called family pass is for these families to pay a maximum of two passes for public transportation within the municipality. Each pass will cost a maximum of 30 euros and the pass between counties 40 euros. The measure will cost 90 million euros. According to the package of measures for public transport, children up to 12 years of age no longer pay in public transport and young people under the age of 18 will have a 25% discount.
School manuals are free until the 12th year
Free textbooks will be extended to secondary education, including all compulsory schooling, confirmed the PCP last Thursday in the framework of the negotiations for the 2019 State Budget (OE2019). The communist parliamentary leader, João Oliveira, welcomed the agreement reached, although "the way the measure will be implemented on the ground" is still to be implemented, starting in the academic year 2019/20, ie until September next year.
Until now, free books only covered 1st and 2nd cycles, ie basic education, now extending to the 7th, 8th, 9th, 10th, 11th and 12th grades. Years of schooling. According to communist estimates, the costs of the announced measure amount to "just over 100 million euros".
Another measure already "closed" between the socialist executive and his parliamentary partners, according to the communist deputy, was "a reinforcement of the family allowance, between three and six years of age, whose value happens to correspond to a third of the budget intended for the first three years "of a child.
Plastic bags rise from 8 to 12 cents
The Government intends to increase the value of the contribution on each light plastic bag to 12 cents, according to a draft version of the State Budget proposal for 2019 (OE2019).
Government re-aggravates stamp duty on consumer credit
The general stamp duty rate on consumer credit will change. At a time when consumer credit continues to increase, the government intends to further exacerbate the stamp duty. This tax will be aggravated in four of the segments. In loans with a term of less than one year, it will increase from 0.08% to 0.128%. For loans with a maturity of one year or more, it rises from 1% to 1.6%; in credit of a term equal or superior to five years also rises from 1% to 1.6% and in current accounts, bank overdrafts or any other way in which the term of use is not determined or determinable (including credit cards ) increases from 0.08% to 0.128%.
Government wants 600 million bop dividends
The Government will count next year with a reinforcement of the contribution of the Bank of Portugal (BdP) to the public accounts. The monetary authority should distribute dividends to the State in 2019 in the amount of 600 million euros. The amount is still being negotiated between the Finances and the BOP, but it is certain that it will exceed the 525 million euros that went into the state's coffers this year, according to the Economic Newspaper source known to the process. And there is a projection that could amount to 600 million euros, or even exceed. An amount representing record dividends for the year to be delivered by the BOP, at an amount not yet closed and which will depend on the risk assessment being carried out, namely the level of provisions for risks carried out by the central bank with impact in the net results that the central bank estimates for 2018 and whose amount will only be verified at the end of the year.
IRS: 50% discount for migrants
António Costa announced that OE2019 will have "strong incentives" to return to Portugal those who emigrated between 2011 and 2015, from tax benefits to deductions of return costs. The measure foresees that all those who want to return between 2019 and 2020 to Portugal, will spend, for three to five years, to pay half of the IRS rate that would pay and can fully deduct the costs of resettlement. For this it is required that the tax situation be regularized. Still at IRS level, the PS signaled this week another measure: housing tenancy agreements that last between five and ten years must pay a 25% fee, regardless of the amount of the rent. From outside are the landlords who have IMI to pay. Already the links between 10 and 20 years will pay 14% and contracts over 20 years with a rate of 10%, being that by law, the maximum limit is 30 years.
Unemployed couples with children keep 10% increase in unemployment benefit
The Government will maintain next year extraordinary measures to support the long-term unemployed and unemployed couples with children next year. According to the preliminary version of the State Budget for 2019 (OE2019) to which the Economic Journal had access, the Government will maintain the measure of increase of 10% of the unemployment subsidy for unemployed couples with children. This extraordinary measure of support for the long-term unemployed has been replicated since 2012, when it was adopted by the previous Government.
The amount of the unemployment allowance is increased by 10% where, in the same household, both spouses or persons living in a de facto union are unemployed and have children or equivalent.
This increase also applies when, in a single-parent household, the single-parent receives unemployment benefits or work-related allowances.
Also, the extraordinary measure of support for the long-term unemployed that allows for the award of unemployment benefits after six months will continue into the next year. This measure was introduced in OE2018 and will be implemented again next year.
IMI over EUR 100 paid in three installments
The measure is expected to be included in the EO / 19 with the Government wanting to reduce from 250 to 100 euros the amount that has to be paid in one go, thus allowing households to dilute the burden of tax throughout the year. Currently, homeowners who receive a IMI settlement note up to 250 euros are required to pay in one go. Only families whose tax liability exceeds € 250 may resort to a fraction payment. If the settlement is not more than 500 euros, it is made in two installments, above this amount will be three installments. The first installment, and only, for those who pay less than € 100, will be charged in May instead of April. This change in schedule is due to the "increasing complexity of the liquidator system", and also because the tax authorities need more time to set up the collection process.
IRC: increase of 20% to the maximum allowable deduction for investment in the interior
In the list of new tax benefits, the majority of which is under the Forest Savings Plans, is the increase in the value of the interior, with an increase of 20% to the maximum deduction foreseen. The OE2019 document, to which the Economic Journal had access, states that "the Government is still authorized to create a scheme of tax benefits under the Program for the Appreciation of the Interior, applicable to taxpayers of IRC in function of the expenses resulting from the creation of jobs in the interior territories ".
The meaning and scope of the changes to be introduced, "under the terms of the legislative authorization", are "to add to the Tax Benefits Statute a rule that establishes a deduction for IRC collection"; and "to enshrine the collection deduction under the terms of no. 2 of article 90 of the IRC Code [procedimento e forma de liquidação do IRC], corresponding to 20% of the expenses of the period incurred with the creation of jobs in the territorial areas referred to in the previous number, having as maximum limit the collection of the period of taxation.
This is another measure to try to energize the interior of the country. It should be recalled that this summer, the government has already announced the creation of an investment fund for the Interior of € 1.7 billion under Portugal 2020.
The Government maintains that the legislative authorization to create a scheme of fiscal benefits under the Program for the Enhancement of the Interior is implemented by the Government after the approval of the European Union to extend the regional basic aid scheme "in accordance with Regulation (EU) No No 651/2014 of 16 June ".
Tax incentives for employers contributing to the Certificates of Retirement Fund
In 2019, the Government allocates a tax benefit to employers who contribute to the Workers' Retirement Certificates Fund (known as the State PPR). The purpose of the Certificates of Reform Funds is to act as a mechanism to promote savings aimed at the moment when citizens become pensioners or retirees due to old age or absolute and permanent disability.
In the new version of the OE proposal submitted to the Council of Ministers, it is provided that "the expenses borne by employers, when they respect the values applied in the public capitalization regime for the benefit of their workers, are considered, for the purpose of determining the taxable profit , in an amount corresponding to 120% ". This is one of the IRC-level measures to strengthen worker protection.
Moving to the interior gives for three years a deduction of rents up to one thousand euros
Families moving inland and moving to their permanent residence will have a three-year increase in household income deduction at the IRS – from the usual 502 euros, the deduction rises to one thousand euros. Students attending schools located in inland territories will have an increase in deductions from the collection: the 30% of education expenses they can deduct from the IRS increase by 10 percentage points. The maximum ceiling increases from 800 euros to one thousand euros.
In the articles of the Official Journal, which the Economic Journal had access to, it is stated that "in the case of students attending educational establishments located in the interior (…) an increase of 10 percentage points is applied to the amount borne by education and training referred to in Article 78d (1) of the IRS Code, the overall limit established therein being raised to 1,000 when the difference relates to these expenses. "
Also attached is a point to the Statute of Tax Benefits that stipulates that "the deduction to the IRS collection referred to in paragraph a) of paragraph 1 of article 78.º of the IRS Code has the limit of 1,000.00 euros for 3 years, the first being that of the conclusion of the contract, in case the charges foreseen result from the transfer of permanent residence to an interior territory. "
VAT reduction of the shows to 6%
The VAT on shows will reduce from the current 13% to 6%, BE announced. "This is a claim of the sector, which has been asking for this VAT reduction because it [a manutenção nos 13%] is unfair and because it thinks it penalizes the culture sector, "explained Mariana Mortágua. For the MP, "the reduction of VAT to 6% is an important incentive for the arts, for the show and for culture".
Tauromachy will have 13% VAT.
Taxation of non-residents' capital gains on real estate sales
The Tax Benefits Statute will be amended, excluding exemptions from IRS and IRC, the capital gains realized by non-residents, when these are obtained in more than 50% of real property or rights in real estate based in Portugal.
It is introduced, according to the preliminary version of OE2019 to which the Economic Journal had access, "that" to capital gains resulting from the transfer of onerous shares of capital or similar rights in companies or other entities that do not have headquarters or effective direction in territory Portuguese, when, at any time during the previous 365 days, the value of these shares or rights results, directly or indirectly, in more than 50% of real property or rights in rem in real estate located in Portuguese territory, with the exception of property immovable property to an activity of an agricultural, industrial or commercial nature other than the purchase and sale of immovable property ".
IRS relief for those who work overtime
The Government will create a new way of enforcing the withholding tables so as to prevent workers who work overtime from seeing the tax burden rise. To prevent the rise in IRS income of overtime workers, the Government will create a new way to apply the withholding tables. According to the social partners, the measure was presented by the Minister of Finance and aims to prevent citizens from paying more taxes for this type of income. Objective: To prevent taxpayers from climbing up through retention tables when they receive overtime. It remains to be seen whether the income obtained through supplementary work will be taxed independently or whether the withholding tax will be made on the basis of an average monthly income.
Maximum tips ceiling at 856 euros
The BE announced that it has reached an agreement with the Government so that the maximum ceiling of the kickbacks will be in the 856 euros, less 212 euros of the value applied today next year. At this moment the maximum ceiling of the tips is of 1068 euros, registering a decrease of 212 euros per year.
Green receipts with higher refunds
At the beginning of next year, the index of social support is expected to increase around seven euros and with it also rises the minimum of existence, which will increase from the current 9,006.9 euros to 9,156 euros. A measure that benefits about 57,000 green receipts because they are covered for the first time by this minimum tax-free income. In practice, the upgrade means that whoever earns up to nine thousand euros per year (about 642 euros per month) is exempt from IRS. The application of the minimum of existence has been extended to the self-employed in the EO / 18, but its practical application will feel next year. In this fiscal relief situation there are around 54 thousand households, to which are added another 3 thousand, whose income is located in a "border area" of the minimum limit of existence and will pay less tax.
Government to extend VAT reduction to 13% on other beverages
The government plans to extend the VAT reduction on the provision of services for some beverages that last year were not covered by the tax cut to 13%. In issue is a legislative authorization included in a draft version of the State Budget proposal for 2019, where the Executive indicates that it may "extend" the tax relief to other services, namely alcoholic beverages, soft drinks, juices, nectars and waters which fell outside the 23% lower VAT rate for the interim rate and which only covered the coffee beverage service portion of the service and natural water. But it is still unknown what will happen in January or July next year, when two years have passed since the partial reduction of the tax.
End of Special Payment on Account
The Minister of Finance, Mário Centeno, made the will to the employers confederations and announced, at the end of September, in a social agreement, the end of the special payment per account (PEC) for the companies with the regularized tax situation. The measure will be included in the State Budget for the next year. The Government intends to replace this obligation with a set of other instruments so that companies can comply with their tax obligations. The PEC is an advance of IRC that the companies do to the State and was created in 2003 by then Finance Minister Manuela Ferreira Leite. The EO / 17 already foresaw that the minimum SCP threshold would fall to 850 euros with further progressive reductions by 2019. Last year, it was estimated that 122,000 companies benefited from this reduction. The reduction of the SGP was the alternative found by the Government when the cut of the TSU for companies with minimum wages was blocked in the Parliament. According to the law published in March 2017, the amount that results from the calculation of the PEC is reduced by 100 euros and, in the amount that results, there is an additional cut of 12.5%. The benefit was applied only to companies that, during 2016, had paid at least one minimum wage, but in 2018 this last restriction ceases to exist, according to the law.
Encompass income over 100 thousand euros
The communists also want to cover all incomes in excess of 100,000 euros on the IRS. The goal is to ensure greater progression of the IRS, because by including all incomes, the rate calculated for all income makes those who have more income pay more and those who have less pay less. A proposal, according to the PCP, that ends up being more comprehensive than the "Robles rate" of the BE and also fights real estate speculation. The PCP therefore advocates the end of the tax on capital income (at the highest yield of 28%), and the property tax will be taxed. The communists want "more fiscal justice", which will also translate into more tax revenue through the taxation of movable assets (for example, shares, shareholdings, dividends).
New rank of AIMI
The PCP is negotiating with the Government a new step in the additional to IMI to tax properties worth over 1.5 million euros, applying a rate between 1.5% and 2%. An increase in the tax burden on real estate, which represents an increase in tax revenue for the next year of 20 million euros. According to Paulo Sá, MP of the PCP, the objective of the measure is "to improve the progressiveness of the additional to IMI". With the increase in estimated revenue, AIMI's revenue in 2019 would amount to 150 million euros, compared to the 130 million forecast in OE / 18. The AIMI was created in 2017 and focuses on the sum of the tributary assets (VPT) of the urban buildings located in Portuguese territory. A tax rate of 0.7% is applied to single taxpayers with real estate worth between 600,000 and 1 million euros, while for businesses the rate is 0.4% of the total of the VPT (without the deduction of 600 thousand euros ).
Minimum of existence and higher reimbursements
Taxpayers whose salary does not exceed 653.85 euros will not pay IRS next year, due to the increase in the minimum existence (amount up to which taxpayers do not pay IRS) provided through the update of the Index of Social Support (IAS). It is expected that the IAS will increase by 1.65% in 2019, about seven euros, from 428.90 to 435.90 euros. The expected increase will raise the minimum of existence to 9,153.90 euros, thus exempting from the IRS payment the taxpayers who receive this amount annually. The effect of this measure will arrive next year with the delivery of the annual IRS statement, meaning for many (dependent and independent) taxpayers not to pay any tax and, for others, larger tax refunds. The increase in the minimum of existence combined with the change in the levels will cause a worker who passes green receipts of around 750 euros per month to pay zero euros of IRS this year, against the level of 728 that was previously called to pay. In the case of green receipts, the EO / 18 determined that this minimum is equal to 1.5 times the IAS (considering 14 months of remuneration) and that a net income tax "less than the annual value of minimum monthly remuneration ". This year, the new salary level without retention of IRS was 632 euros, amount from which there is withholding of IRS for dependent workers and pensioners.
Extended IRS delivery deadline through June
The Government intends to extend the deadline for submitting the IRS declaration by electronic means by June 30, according to a preliminary version of the State Budget proposal for 2019 (OE2019).
According to the document, which was being debated in the Council of Ministers, the IRS declaration should be "delivered by electronic transmission of data from April 1 to June 30, regardless of whether this day is useful or not useful." Currently, the IRS statement is delivered from April 1 to May 31.
* With Lusa