Practice Areas: Tax

COVID-19 | Tax and Social Security Measures

Abreu Advogados Tax Law team shares the set of measures launched to mitigate the economic impact of the coronavirus epidemic.

In order to mitigate the economic impact of the COVID-19 pandemic, a series of measures covering tax as well as social security matters were agreed upon. From these, we highlight the following:


I. Measures targeting enterprises

1. Extension of tax reporting obligations

Ministerial Order 104/2020-XXII from the Secretary of State for Tax Affairs provides that:

  • The Special Payment On Account, due in March, can be made until June 30, 2020;
  • The Corporate Income Tax Returns – “Modelo 22” – for the fiscal year of 2019 may be submitted until July 31, 2020;
  • The first instalments of the Payment On Account and the Additional Payment on Account to be made by 31 July can be made until August 31.


Furthermore, it was determined that, for purposes of compliance with tax obligations by taxpayers or certified accountants, situations of infection or prophylactic isolation declared or determined by the competent health authorities are considered justified motive.


2. Measures relating to tax and contribution obligations

In addition, and following today's (March 18) press conference, new measures were announced by the Minister of State, Economy and Digital Transition, Pedro Siza Vieira and the Minister Finance, Mário Centeno. These new measures aim at ensuring the relaxation of tax and contribution obligations, notably:

  • concerning the payment of taxes by companies and self-employed workers, in respect of payments of Value Added Tax ("VAT") on a monthly and quarterly basis and withholding of Personal Income Tax ("IRS") and Corporate Income Tax ("IRC"):


This announced relaxation shall allow the payment obligation to be met at the due date by one of the following means:

  1. Immediate payment (through online means and under the usual terms);
  2. Staggered payment in 3 monthly interest-free instalments; or
  3. Staggered payment in 6 monthly instalments, default interest accruing on the 3 last monthly instalments.


In order for any of these staggered payment situations to apply, workers and companies need not provide any guarantee.

It should be noted that this measure applies to self-employed workers and companies with a turnover of up to 10 million EUR in 2018, or that have initiated activity after 1 January 2019.

Other companies or self-employed workers may request the same flexibility in the payment of such tax obligations for the second quarter of 2020, in cases where there has been a decrease in their turnover by at least 20% in the average of 3 months prior to the month in which the obligation must be complied with, compared with the same period last year.

On the other hand, it was also announced that social security contributions will decrease by 1/3 in March, April and May.

The remaining amount, for the months of April, May and June, is due as of the third quarter of 2020, under the same terms as those set forth for payment of taxes by instalments. This means that contributions can be paid in instalments from July onwards, in three monthly instalments, without interest; or in six monthly instalments with interest accruing on the three last instalments.

This announced measure will apply to companies with up to 50 employees, effective immediately, and companies with up to 250 employees can benefit from this mechanism that will reduce and stagger payment of social security contributions in the second quarter of 2020, should they suffer a drop in turnover by 20% or more.


3. Other Measures

Regarding companies’ cash flow, the Government decided:

  • To ensure the possibility to deduct the expenses demonstrably borne in initiatives or actions that have been cancelled or postponed due to COVID-19, set forth in projects approved by Portugal 2020 or other operational programmes, notably in internationalisation and professional training, and by Instituto do Vinho e da Vinha, I.P., within the scope of the support measure for promoting wines in foreign countries.


4. Social security: immediate extraordinary support measures for employers

Subsequently, and based on Council of Ministers' Resolution 10-A/2020, Ministerial Order 71-A/2020 was published on March 15, 2020 (entering into force on 16 March 2020), setting out extraordinary, temporary and transitory measures for employees and employers affected by the COVID-19 virus outbreak, aimed at securing jobs and mitigating corporate crisis situations.

The companies covered by these measures are those in business crisis due to (i) total stoppage of activity as a result of the interruption of global supply chains, suspension or cancellation of orders; or (ii) abrupt and sharp drop in invoicing by at least 40%, in the same period of 3 months (or, for those who have initiated activity less than 12 months ago, the average for that period).


4.1. Extraordinary support for maintaining employment contracts in business crisis situation (with or without training)

The Government, inspired by the layoff regime set forth in the Labour Code, has decided to provide out financial aid per worker, to be allocated to the company exclusively for payment of remunerations, by an amount equal to 2/3 of the gross remuneration of the employee to a maximum of 3 Guaranteed Minimum Monthly Wage or GMMW  (EUR 1,905.00), 70% of which is guaranteed by the Portuguese Social Security and 30% by the employer, with a duration of one month extendable by monthly periods, to a maximum of 6 months.

This measure can also be combined with a training plan approved by the IEFP (Professional Job and Training Institute), with a grant to be given by this Institute of 30% of the IAS (Social Support Index) (EUR 131.64), divided equally between employee and employer (EUR 65.82).


4.2.Temporary exemption from the payment of Social Security contributions by the employer

A temporary exemption from the payment of social security contributions by the employer is envisaged for the companies covered by Ministerial Order 71-A/2020.

As such, employers are entitled to a full exemption from payment of social security contributions for workers and members of statutory bodies for the duration of the exemption measure.

This right to exemption also applies to the self-employed and spouses.


II. Measures targeting workers

As far as workers are concerned, and in accordance with Council of Ministers' resolution 10-A/2020 of 13 March (coming into force on 14 March), we underline the following measures:


  1. Social Security: immediate extraordinary aid for employees

In situations where workers need to be absent from work due to unavoidable assistance to a minor under 12 years of age or dependent due to the closure of an educational establishment or early childhood or disability support, they are entitled to receive an extraordinary financial aid of 66% of their base salary (33% to be paid by the employer, 33% to be paid by the Social Security).

This aid has a minimum limit of 1 GMMW (EUR 635.00) and a maximum limit of 3 GMMW (EUR 1,905) and it is calculated with reference to the number of days of absence from work.

This aid does not include school holidays and it will be allocated between 16 and 27 March. In case of children attending early childhood or disability social support facilities, the aid will be granted by 9 April.

There can be no overlapping periods between parents.

If the worker is teleworking, this support aid will not apply.


  1. Social Security: immediate extraordinary aid for self-employed workers

Self-employed workers, who are not pensioners and subject to social security payments for at least 3 consecutive months in a period of not less than 12 months, may defer such payments in case of full stoppage of their activity or of stoppage of the activity of the respective sector, due to the COVID-19 outbreak. Stoppage of activity can be evidenced by any means permitted by law.


  1. Social security: allowance equivalent to sickness benefit in the event of prophylactic isolation

The temporary impediment to work (prophylactic isolation), ordered by the health authority on the ground of risk of infection by COVID-19, is deemed equivalent for social security purposes, to hospitalization, and the worker’s remuneration will be paid by the Social Security.

In this case, employees and self-employed workers under the general social security system are entitled to receive an allowance equivalent to the sickness benefit by an amount corresponding to 100% of their base remuneration.

The sickness benefit will not be subject to a waiting period.


III. Other extraordinary measures

  1. Concerning the functioning of tax departments

In order to minimize the impacts of COVID-19 on the functioning of the Tax and Customs Authority, as well as on the service provided to taxpayers, it was stipulated that telephone assistance should preferably be used in order to avoid visits to tax departments.

However, in situations where the electronic means cannot be used, it is possible, through prior appointment, to request a face-to-face service.


  1. Relating to administrative offence proceedings

In the event of notification in the context of administrative offence proceedings, taxpayers who are under isolation measures decreed by the health authorities and prevented from complying with their tax obligations will not be fined for the respective offences.


  1. Concerning the tax enforcement proceedings in the tax and contributory area

It was also announced today (March 18) that the Government decided to suspend pending tax enforcement proceedings for debts to the Tax Authorities and Social Security, as well as proceedings to be initiated in the meantime.




The measures announced today by the Minister of Finance, Mário Centeno, and the Minister of State, Economy and Digital Transition, Pedro Siza Vieira, are targeted to self-employed workers and companies, and aimed at ensuring the flexibility of tax and contribution obligations.


However, as mentioned by those Ministers, it is likely that other measures will be announced within the next few days, aimed at easing the compliance with several obligations of companies before the public administration, both in terms of administrative procedures and certifications, in order to ensure that companies focus on the essentials, and in order to alleviate the demands that under normal circumstances would be placed on the business sector.

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