Following the outbreak of COVID-19 in Portugal, and considering the adverse economic impacts that may arise, the Portuguese Government, through the Secretary of State for Fiscal Affairs ("SEAF"), made public, on 13 March, the Order no. 104/2020 - XXII, which sets out measures to mitigate such impacts in companies’ current business.

Regarding tax matters, the SEAF has postponed the deadlines of some tax obligations to which companies are subject and has required the Portuguese Tax Authorities ("PTA") to enhance communication with the taxpayers through IT/telephone channels which should be the preferred way to contact the PTA.

Specifically, the measures to support companies enacted by the SEAF regarding tax compliance are as follows:

• Postponement of the deadline regarding the 1^st instalment of the special payment on account – which should be made in March, in accordance with article 106(1) of the Corporate Income Tax (CIT) Code – to 30 June 2020, without any penalty;
  
• Postponement of the deadline for submission of the Corporate Income Tax return (“Modelo 22”) for the 2019 tax period from 31 May 2020 to 31 July 2020, without any penalty;
• Postponement of the deadline regarding the 1^st instalment of the payment on account and the 1^st instalment of the additional payment on account – which should be made in July in accordance with articles 104(1)(a) and 104-A (1)(a), both of the CIT Code – to 31 August 2020, without any penalty;
• The situations of infection or prophylactic isolation declared by health authorities shall be considered reasonable delay to the fulfilment of tax reporting obligations, in relation to taxpayers or certified accountants;
• In order to avoid face-to-face visits to the PTA, additional information on electronic and telephone services will be provided on the PTA’s Portal, as these should be the preferred way of interaction with the PTA.

It should be noted that these are the measures introduced so far by the SEAF, but others are expected to be adopted in the course of the next few days.

In this respect, we will continue to monitor any developments and will inform our clients whenever appropriate.

Additionally, in order to mitigate the negative effects of the impact of the new coronavirus in Portugal, the Government created a package of other measures in several different areas whose general framework is included in the Resolution of the Council of Ministers no. 10-A/2020, of 13 March and in the Decree-Law no. 10-A/2020, of March 13.

We highlight below some of the most relevant measures:

Financial Incentive Programs

• Measures to accelerate incentives advance payments or reimbursements: according to IAPMEI, requests for incentive reimbursement submitted by companies will be settled as soon as possible, using, if necessary, a transitional upfront payment up to 80% of the incentive.
• Extension (for 12 months) and without interest, of the repayment term of loans granted under QREN or Portugal 2020, in situations of decrease in turnover or reserves or orders over 20% in the two months prior to the request for modification of the repayment plan, compared to the same period in the previous year. 
• Eligibility of the expenses incurred with cancelled or postponed initiatives or events, foreseen in projects approved by Portugal 2020 and other funding programmes.
• Consideration of the negative impacts of COVID-19 in case of insufficient implementation of actions or objectives established in the grant agreements of Portugal 2020.
• Extraordinary financial incentive to ensure the normalization phase, in order to prevent the risk of unemployment and the maintenance of jobs (up to one minimum wage per worker).
• Strengthening of the response capacity of IAPMEI and of Turismo de Portugal for the assistance to the impact caused by COVID-19.
• The “Capitalizar” Financial Facility – Covid-19 was created, worth 200 million Euros, in order to support companies whose activity is affected by the economic effects resulting from the outbreak. This Financial Facility is aimed at companies whose sales have decreased by at least 20% in the last 60 days (compared to the same period last year) preceding the submission of the application to this Financial Facility.
• Extension of the deadline for the submission of applications to calls under Portugal 2020.

Measures for social protection and parenting (Decree-law no 10-A/2020, of 13 March)

• Teleworking – When compatible with the job function, teleworking can be determined by the employer or requested by the employee (the agreement between the employer and the employee is not required).
• Prophylactic isolation – In situations where the employee is in a prophylactic isolation declared by health authorities (14 days of isolation), a special sickness leave will apply and an allowance corresponding to 100% of the reference remuneration – “RR” will be paid by the Portuguese social security. As a rule, RR=R/180, where, R corresponds to the sum of the remuneration of the six first months immediately preceding the second month prior to the prophylactic isolation) – special rules apply for shorter period of employment. No minimum contribution period will apply for the attribution of this allowance. This measure also applies to self-employed individuals.
• Sickness leave – In situations of COVID-19 infection, a sickness leave will apply. The allowance to be paid by the social security will be based on the general rules applicable for sickness leaves. No minimum contribution period will apply for the attribution of this allowance. This measure also applies for self-employed individuals.
• Assistance to dependents within prophylactic isolation – In situations where the employee‘s dependent is in a prophylactic isolation declared by health authorities (14 days of isolation), the absence from work of the employee is deemed as justified absence without remuneration. In such case, the social security will grant a monthly allowance corresponding to 65% of the RR. This situation applies with regards to dependents aged less than 12 years, or regardless of the age in cases of disable dependents or dependents with chronic disease. No minimum contribution period will apply for the attribution of the allowance. This absence is not accounted for the general absence period allowed within the general labour law rules.
• Assistance to dependents during the mandatory suspension of educational activities (Employees) – During the period of the mandatory suspension of educational activities, the absence from work of an employee who needs to stay at home for children’s assistance is deemed as justified absence without remuneration. This justified absence must be required by the employee to the employer, through the filing of a special form and is subject to the following:

– it is not applicable in situations where the employee’s activity can be performed by other means, including by teleworking;

– it applies only with regards to dependents aged less than 12 years, or regardless of the age in cases of disable dependents or dependents with chronic disease;

– it does not apply during the official school holidays;

– the absence is not accounted for the general absence period allowed within the general labour law rules.

During the “justified absence”, an extraordinary allowance is paid to the employee. Such allowance corresponds to 2/3 of the employees’ remuneration, with the minimum monthly value of EUR 635 and the maximum of EUR 1.905, to be paid by the employer to the employee, of which:

– 50% is borne by the employer and subject to social security contributions;

– 50% is borne by the social security (payment from the social security to the employer) and is not subject to social security contributions.

For the granting of this allowance the employer is required to file a request within the social security platform (Segurança Social Directa) and confirm that the employee’s activity cannot be performed by other means. This allowance can only be granted to one of the children’s parent (employee or self-employed individual) and is only granted once regardless of the number of dependents. 

• Assistance to dependents during the mandatory suspension of educational activities (self-employed) – The self-employed individuals can also benefit from an allowance (under the conditions above) corresponding to 1/3 of the monthly social security contribution base of the first trimester of 2020 (total contribution based divided by three), with a minimum of EUR 438,81 and a maximum of EUR 1.097,03. This allowance must be required within the social security platform (Segurança Social Directa). 
  

This allowance can only be granted to one of the children’s parent (employee or self-employed individual) and is only granted once regardless of the number of dependents. 

Support for companies in business crisis and maintenance of employment contracts (Council of Minister’s resolution no. 10-A/2020 of 13 March; Ministerial Order no. 71-A/2020, of 15 March and Ministerial Order no. 76-B/2020, of 18 March)

• Extraordinary measures for the maintenance of employment contracts for companies in business crisis (simplified Lay off) – financial support granted by the social security to the company, equivalent to 70% of 2/3 of the employee’s gross remuneration up to EUR 1.905, for the duration of one month, renewable on a monthly basis up to a maximum of six months (the remaining 30% being borne by the employer). This financial support can be added by a training scholarship, with a maximum amount of EUR 131,64 (half of which to be granted to the employee and the remaining part to the employer).
• Company in business crisis: suspension of distribution chains or suspension of orders that lead to the shutting-down of the company’s activity or reduction of the company’s sales of, at least, 40%, during the 60 days prior to the application to the social security, with reference to the same period.
  
• Extraordinary professional training measures – companies who have not benefitted from the previous measure, can benefit from a financial support for the implementation of professional training (one month duration). The financial support is granted depending on the training hours for each employee and is limited to 50% of the employee’s gross remuneration with a maximum limit of EUR 635.
• Extraordinary financial support to ensure the normalization phase of the activity (companies covered by the “simplified Lay off”) – Extraordinary incentive corresponding to a maximum of EUR 635, per employee, to support the payment of wages in the activity normalization phase. 
• Social security contributions – Exceptional and temporary regime of exemption from the payment of social security contributions during the “simplified lay-off” period by employers (and self-employed workers who are employers).