Blog
Blog
Provide yourself with essential knowledge
Blog Covid Portugal

Measures taken following the coronavirus threats

04/06/2020

Some of the main measures adopted by Portugal for companies and families following the COVID 19 pandemic are:

Companies

Support measures for job protection

These measures can be applied to companies in a situation of demonstrated business crisis due to the total or partial closing of the company or an abrupt and sharp drop in turnover.

  • Simplified lay-off

Support for the maintenance of employment contracts, in case of temporary reduction of the normal working period or suspension of the employment contract. In the case of lay-off the employee will receive a retributive compensation in the amount equal to 2/3 of the employee’s gross remuneration. 70% of the compensation is provided by Social Security and 30% by the employer;

  • Establishment of an extraordinary training plan

Support for the implementation of a training plan to be attributed to each employee, paid by the Professional Training Institute (IEFP) and variable, up to a limit of 50% of gross remuneration, depending on the number of training hours attended by employees;

  • Extraordinary financial incentive to support the normalization of the company’s activity

Support equivalent to 1 x RMMG (€ 635), for employers who have benefited from one of the above measures (i.e., simplified lay-off or extraordinary training support), granted by IEFP.

  • Temporary exemption from the payment of Social Security contributions

Employers who benefit from the measures listed above are exempt from paying social security contributions in the part referring to the employer (23.75%), with employees’ contributions (11%) continuing to be due.

Facilitation of Tax and Social Security payments

  • Extension of deadlines for payment of taxes and social security payments
    • The first special on account payment is extended from 31 March to 30 June 2020;
    • The filing of the Corporate Income Tax Return and the payment of the Corporate Income Tax due is extended from 31 May to 31 July 2020;
    • The first corporate on account payment is extended from 31 July to 31 August 2020
  • Facilitation tax payments

At due date, personal and income withholding taxes and VAT and social security can be paid as follows:

Under the general terms (one single installment);

Withholding taxes and VAT can be paid in three or six monthly installments without interest;

Social security installments that are the responsibility of the employer is split into three parts, being 1/3 paid in the month it is due and the remaining 2/3 paid in three or six interest-free installments.

Access to credit lines

Around €4.5 million were made available for Covid-19 credit lines to support economic activity, which are intended only to finance needs of treasury.  The available amount was divided between micro and medium companies being applied more favorable terms and rates. This support was given to tourist activity companies and catering companies. To access to this credit lines companies must justify (in addition to other conditions) that they were not considered to be in difficulties at the date of 31/12/2019 and that they are subject to the lay-off regime, upon presentation of Social Security approval. They must also assume the commitment to maintain jobs until 31/12/2020.

Families

Credit protection

Exceptional measures have been taken for the protection of family credits:

All credit operations granted by credit institutions to Portuguese individuals for own housing  are covered, considering that they met one of the following conditions:

  • are not insolvent
  • have their situation regularized with AT and SS
  • are in a situation of prophylactic isolation or sickness
  • are providing assistance to children or grandchildren
  • have been placed in a lay-off regime
  • are unemployed
  • are independent workers considered as eligible for extraordinary support to reduction of economic activity
  • are employees from entities whose activity has been subject of a specific State closure

Moratorium

The exceptional support measures are (the diploma that approved these measures is effective until September 30):

  • Prohibition of the total or partial revocation of credit lines contracted and loans granted, in the amounts contracted on March 26 during the period in which this measure is in force;
  • Extension of all credits with capital payment at the end of the year contract in effect on March 26, including interest, guarantees, and
  • Extension of the period for payment of principal, rent, interest, commissions and other charges referred to above, without such extension giving rise to any:
    • Contractual breach;
    • Activation of early maturity clauses;
    • Suspension of interest due during the period of the extension, which will be capitalized in the loan amount with reference to when they are due to the contract rate in force; and
    • Ineffectiveness or termination of guarantees granted by entities beneficiaries of the measures or by third parties, namely the efficacy and of the validity of insurance and warranties.

Manuela Costa, Senior Tax Manager Auren Portugal