9% August inflation prompts energy VAT cut; follows extension of fuel duty cut
Portugal has cut the Value Added Tax rate on domestic electricity from 13% to 6% from 1 October 2022 until 31 December 2023.
In addition, there is a single payment of €125 euros employment-age people earning up to €2,700 per month, and €50 for every child to all families.
Petrol duties cut whilst VAT rate cut from 23% to 13% is pending
Whilst Portugal is still considering a Value Added Tax rate cut on petrol and diesel, it has rolled over an April cut duty on petrol by an amount equivalent to a 10% reduction in VAT. This latest measure was due to expire 31 August. It will now remain in place until at least 2 October.
It is likely that VAT on certain electricity supplies will be switched from the 13% rate to the 6% reduced rate. This will apply from 1 October 2022.
Portugal is seeking a reduction from the standard rate of 23% to the reduced VAT rate of 13%. Portugal is already providing refunds to consumers on the special ISP duty on petrol and diesel.
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A number of other EU states cutting VAT on basics and fuel.
The government has request permission from the European Commission for the cut given the VAT rate rules are governed by the EU VAT Directive. This does not generally allow petrol to be subject to a reduced or nil VAT rate. It does however give scope for emergency rate cuts at times of economic crisis.
On 6th April 2022, EU states ratified new reduced EU VAT rate setting freedoms
