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Portugal extends duty cuts ahead of VAT reduction on petrol and diesel

10% inflation, including 24% energy inflation prompts extension of fuel duty cut

Whilst Portugal is still considering a Value Added Tax rate cut on petrol and diesel,  it will roll 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


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