Portugal will lower the VAT on electricity to 13%
Portugal has decided to lower the VAT rate on electricity, currently at 23%, for homes with low consumption. This is a measure that has been expected for several years and which is intended to favor households that consume little. The total estimated cost of the measures is 150 million euros and "will cover around 5.2 million contracts (86% of low voltage customers)", details the press release from the Portuguese Council of Ministers. The drop should be implemented in December. Lisbob, the # 1 expatriate assistant, tells you all about the drop in Portuguese electricity VAT.
Portugal will lower the VAT on electricity to 13% for families who consume little - Photo © pexels
Energy is expensive in Portugal, but its price will drop a little from December for some households. Indeed, the Portuguese Council of Ministers announced on Thursday the reduction of VAT on electricity, depending on household consumption. The total estimated cost of the measures is 150 million euros and "will cover about 5.2 million contracts (86% of low voltage customers)", details the press release from the Council of Ministers.
“All contracts included in the“ Normal Low Voltage ”(BTN) up to a subscribed capacity of 6.9 kVA (limit of the social energy tariff) will be applied the rate of 13% VAT up to 100 kWh consumption (for a period of 30 days), applying the normal rate of 23% for the rest ”, indicates the Portuguese government note. For large families (with five or more elements) "this consumption threshold, for the purposes of applying the 13% VAT rate, is increased by 50% (ie up to 150 kWh per month)".
The Portuguese government estimates that reducing VAT on electricity consumption up to the first 100 kWh will save households with up to four people 18 euros per year and large families an average of 27 euros. The measure will come into force on December 1, 2020, but "for operational reasons, the part relating to the 50% increase in consumption for large families will enter into force on March 1, 2021".
Portuguese Finance Minister João Leão said Thursday at a press conference that large families are counted as having at least five elements, and that this new rule covers both the regulated and liberalized market.
The measure consisted of legislative authorization in the state budget for 2020 (OE2020) which expires on December 31. In practice, the government's proposal to lower VAT on electricity provides that households that consume the least can benefit from a minimum tax rate of 6%, or an intermediate rate of 13%, while Higher levels of consumption would remain at the current maximum tax rate of 23%. Once again, this is a half-implemented measure, which is not surprising in Portugal.