Government and institution measures in response to COVID-19.

Government and institution measures in response to COVID-19.

Return to homepage  |  Last updated: 18 November 2020

General Information

Following the outbreak of COVID-19 in Portugal, several Orders were issued by the Portuguese Government to provide tax relief as well as to address other challenges that companies may encounter.

Additionally, numerous legislative acts are being published as a way of mitigating the effects of the pandemic caused by COVID-19.

On March 18, the government announced a EUR 9.2 billion stimulus package. The government stimulus package consists of:

  • EUR 5.2 billion euros in fiscal stimulus
  • EUR 3 billion in state-backed credit guarantees
  • EUR 1 billion related to social security payments, and will include soft loans, and a delay in some tax payments to support businesses

Employment-related measures

(e.g. state compensation schemes, training…)

Specific health guidance for companies has been issued

  • On 9 March, the government announced it was earmarking EUR 200 million in loans to support SMEs. This was followed on 10 March by the announcement of the launch of a credit line to support treasury to companies affected by the outbreak, in the initial amount of EUR 100 million. The package includes measures to support liquidity, but also to support of wages.
  • The announced measures also include a special budget to allow people who are out of a job to get training, as well as the employees covered by the simplified layoff.
  • An extraordinary financial support was created to ensure the gradual resumption of activity in companies in a business crisis situation (decrease of invoicing in at least 40%), with temporary reduction of the normal working period (“NWP”) – in force until 31 December 2020 – with the following specificities:
  • During the reduction of the NWP, the employee receives the remuneration for the actual hours worked, plus an additional compensation (up to €1.905) corresponding to 4/5 of the regular remuneration related to the hours not worked, in the months of November and December (if such amount is lower than €635, the compensation is adjusted to match such minimum amount).
  • During the reduction of the NWP, the employer receives an extraordinary financial support – paid by the SS – to compensate 70% of the additional compensation payable to the employee (as described above), being responsible for the remaining 30%.
  • Whenever the decrease of the company’s invoicing is at least 75%, the employer is entitled to receive an additional support, corresponding to 35% of the remuneration correspondent to the hours worked by the employees in reduction of the NWP (this additional support, when added to the financial support mentioned above, cannot exceed €1.905).
  • The employer benefiting from the regime of reduction of the NWP period is entitled to an exemption of 50% of the SS contributions due in November and December (assuming that the reduction applies in those months) in relation to the employees covered by this measure, whenever the company is defined as a micro, small or medium-sized company.
  • The application for this extraordinary financial support is made at “Segurança Social Directa”, via an online form.
  • The above supports are subject to additional limitations and duties for the employer, as better described in the law, and this measure is not cumulative with other financial support, namely, the extraordinary financial support to ensure the normalization phase of the activity (companies covered by the “simplified Lay off”).
  • 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 (if paid in one-shot) or EUR 1.270, per employee (if paid in 6 monthly installments), to support the payment of wages in the activity normalization phase, with the following specificities:
  • In the latter case (payment in 6 months), companies are entitled to a partial exemption of 50% of the employer social security contributions, in relation to the employees covered by this measure, or a total exemption, in case of net job creation within the 3 months period following the grant of the above support measures (such exemption is limited to the net created jobs);
  • In cases where the "simplified lay-off" or the extraordinary training plan has lasted for more than 1 month, the amount of the benefit is determined according to the average number of employees covered by each month of application of that support. In case the duration was of less than 1 month (or less than 3 months for the support mentioned in (ii)), the amount of the support shall be reduced proportionally.
  • The above supports are subject to additional limitations and duties for the employer, as better described in the law.
  • Some further measures have been implemented, concerning to the benefits attributed to the employees/self-employees, as a result of the COVID-19 pandemic, namely, a set of allowances to be paid by the Social Security in case of (i) prophylactic isolation, (ii) infection by COVID, (iii) assistance to child/grandchild (when not possible to work remotely), (iv) employee covered by the simplified layoff, or (v) self-employees with a decrease of activity.


  • Same measures applies to start-ups (Health Guidance, Training).

Financial Incentive Programs

  • Measures to accelerate incentives advance payments or reimbursements
  • Extension (for 12 months) and without interest, of the repayment term of loans granted under QREN or Portugal 2020, for certain situations.
  • 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).
  • 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 subject to the fulfillment of certain conditions.
  • Extension of the deadline for the submission of applications to calls under Portugal 2020.


  • EUR 400 million in loans to support SMEs.
  • Launch of a credit line to support SMEs and other types of entities’  treasury, in the initial amount of EUR 80 million. Including measures to support liquidity and temporary layoff.
  • Businesses will be able to withhold interest and capital payments on bank loans for 6 months.
  • State grants mutual guarantee up to  90%.

Postal formalities and notifications

Exceptional and temporary regime regarding postal formalities and notifications and the sending of postal parcels

  • The signature collection in the delivery of registered mail and postal parcels is suspended.
  • The collection of the signature is replaced by the receptor’s verbal identification and collection of the number included in a reliable means of identification (such as, the ID card).
  • In case of non-compliance, an act certifying the occurrence will be drawn up and the receptor will be considered as cited/notified, as the case may be.
  • This exceptional regime applies, with the necessary adjustments, to citations and notifications made by in person.

SIFIDE II - Tax Incentive System for Business R&D

  • The deadline for submitting applications to SIFIDE II is suspended indefinitely and until the end of this exceptional situation is declared by Decree-Law. 

Economic stimulus measures

(e.g. loans, moratorium on debt repayments…)

  • The announced measures also include a credit line of EUR 60 million for micro-companies in the tourism sector.

Customs Measures

Duty relief

  • Permission granted to the Portuguese state agencies or other philanthropic organisations to import protective equipment and relevant medical equipment on this COVID-19 pandemic situation with the exemption of payment of customs duties according to Articles 74 to 80 (material distributed free of charge to disaster victims) of Council Regulation (EC) 1186/2009 of November 2009, as well as the exemption of VAT payments on those products according to Articles 51 to 57 of Council Directive 2009/132/EC of October 2009 (transposed into domestic law trough Articles 49 to 55 of Decree-Law no. 31/89 of 25 January).

Recovery Plan Overview

  • Recovery plan : Recovery and Resilience Plan (“Plano de Recuperação e Resiliência”)
  • Budget : 13.944 billion euros
  • Announcement : October 15th 202
  • Main orientations : Resilience, climate transition and digital transition

Main measures


  • 8.198Bn euros will be allocated to boosting Portugal’s competitiveness and economic resilience, including support of “social vulnerabilities”, increasing of productivity and employment and promoting competitiveness and territorial cohesion.

Key Measures

  • 3.504 Bn euros will be focus on “social vulnerabilities”, namely 1.038Bn euros to improve the Portuguese national healthcare system, 1.633Bn euros to restructuring social housing and 833M euros allocated to programs aimed at relieving inner-city (including the Portuguese autonomous regions) poverty.
  • 2.755 Bn euros will be  , from which 1.386Bn euros will go towards the support of industrial and technological development and 1.369Bn euros to modernization of education and professional training.
  • 1.939Bn euros will be dedicated to improve the territorial cohesion, namely 833M euros allocated to the enhancement of accessibilities in urban centers, improve the socio-economic competitiveness of regions, 665M euros to improve the progress on the fire fighting and 441M euros to water management.
  • Implementation of “Banco Português do Fomento, S.A.” which is foressen as a promotional bank for development and support to companies and projects with a strong innovative content.

Sectors/Industries/Areas affected

  • Healthcare, support to people in precarious situations, research & development, professional training, infrastructure, forests, water management.

Climate transition

  • 2.888 million euros will be earmarked to speed up the greening of the economy, for investments in energy performance renovations for buildings, in “green” infrastructure and mobility, to reduce the carbon-intensity of manufacturing processes, and in the development of new green technologies (hydrogen, biofuels, recycling).

Key measures

  • 1.032Bn euros to develop sustainable mobility on public transports thought the expansion of the underground public network and the adoption of decarbonization programs.
  • 865M euros to finance investments dedicated to the decarbonation of the circular economy, reaching measures and objectives set out on “Plano Nacional Energia e Clima 2030” and “Roteiro para a Neutralidade Carbónica 2050”;
  • 991M euros to the adoption of programs to promote renewable energies and energetic efficiency.

Sectors/Industries/Areas affected

  • Energy, public transportation, technology and infrastructure, bio-economy.

Digital transition

  • 2.858Bn euros will be allocated to develop digital education, to enhance the adoption of digital measures whitin the companies’ business activity (“Empresas 4.0”) and into modernising the Public Administration in the same way.

Key Measures

  • 538M euros committed to develop the technological infrastructure of schools regarding equipment, Internet access and digital skills of teachers, as well as the development of digital educational content;
  • 650M euros will be consigned to promote the digital switch-over within the companies business activities
  • 1.670Bn euros will go towards the transformation of public financial management, including digital transition of social security, digital transition of health, digital transition of justice and safety and emergency communications networks.

Sectors/Industries/Areas affected

  • Healthcare, school digital transition, public infrastructures, technology.

Contact us

Tax: Pedro M Alves – pmalves@kpmg.com
Restructuring: Ines Dourado – idourado@kpmg.com