EY Government Support Package_Portugal

COVID-19: 

Government 

Support Package 

Portugal 

3 April 2020

2 

COVID-19: EMEIA EY Government Support Package 

The purpose of this communication is to briefly describe a set of extraordinary and 

temporary measures approved by the Portuguese Government, aimed at employees and 

employers affected by the outbreak of the COVID-19, with the main objective of supporting 

the maintenance of jobs and mitigate situations of business crisis. 

The first challenge is to guarantee liquidity in the immediate future. The maintenance of the 

income and management of the responsibilities have become crucial aspects of the new 

management reality. 

Among the main measures and mechanisms currently available to companies to address 

shortfalls or treasury restrictions triggered by this period of crisis, and based on the 

legislation in force today, we highlight the following: 

Areas being addressed: 

1. Providing liquidity through financing schemes 

2. Business support through removal of fixed 

costs and provision of grants 

3. Helping employers to protect jobs 

4. Cash-flow support, including tax deferrals 

5. Administration and governance 

For more information 

Carlos Lobo 

Tax Policy Leader 

Carlos.Lobo@pt.ey.com 

Tel: +351 937 912 146 

Luis Marques 

Country Tax Leader 

Luis.Marques@pt.ey.com 

Tel: +351 937 912 214 

6 April 2020 COVID-19: EMEIA EY Government Support Package

3 

Portugal Government announced responses 

Liquidity and financing 

Sector Specific Credit Lines 

Helps micro companies, SMEs, small 

cap and mid cap companies operating 

in specific sectors (namely industry, 

tourism and restaurants) affected by 

COVID-19 to access bank lending if 

required. 

The total amount made available will 

be €3bn, with companies being able to 

apply for a maximum of €1.5m. 

Tourism Credit Line 

Helps micro companies operating in 

the tourism sector affected by COVID- 

19 to access bank lending if required. 


be €60m, with companies being able 

to apply for a maximum of €20k. 

Short-term financing Capitalizar 

2018 | COVID-19 

Aimed at companies to manage shortterm 

treasury and working capital 

needs. 


be €400m,with companies being able 

to apply for a maximum of €1.5m. 

Moratorium 

Allows borrowers (individuals and any 

size company not in the financial 

sector) to defer their payment 

obligations referring to outstanding 

financing. This includes payments of 

principal, interest, financial leases 

rents, fees and other payment 

obligations, including any margin calls 

or Lender right to enforce stop losses 

clauses, in whole or in part, for a six 

month period. 

Grants 

Employment support 

Cash flow support 

Advance payments of Financial 

Incentives and deferral of 

reimbursements 

The Portuguese Government has 

enacted regulation that enables 

companies to create liquidity reliefs on 

existing Financial Incentives and Grant 

contracts. 

R&D cash grant schemes 

deadlines were postponed 

Proposals concerning R&D cash grants 

are now available to host projects 

concerning R&D of systems and 

solutions targeting COVID 19. 

The cash grants will vary rom 25% to 

75%. 

Job retention measures 

Immediate extraordinary support for 

employers and employees affected by 

the outbreak of COVD-19, with the aim 

of maintaining jobs and to mitigate the 

economic crisis. 

Simplified lay off schemes, exemption 

of contributions to social security and 

financial incentives to support the 

normalization of activities are 

foreseen and may be applicable. 

Tax and social contributions 

deferrals 

First special payment on account, first 

payments on account, and CIT return 

are deferred. 

Payment of CIT and PIT withholding 

taxes, VAT and social security 

contributions can be made in partial 

instalments. 

Tax enforcement proceedings are 

suspended until 30 June 2020. 


4 

Liquidity and financing: Sector Specific Credit Lines 

The Sector Specific Credit 

Lines will provide financing 

up to €3,000M to support 

short-term treasury and 

working capital operations, 

although with a medium 

reimbursement scheme. 

The target sectors are: 

€1,300m, Industry 

(Textile, Clothing, Footwear, 

Extractive Industry and Wood & 

Cork) 

€900m, Tourism 

(developments and 

accommodations) 

€600m, Restaurants 

€200m, Tourism 

(travel agencies, animation and 

organization of events) 

Who is eligible? 

These measures are available to micro 

companies, SMEs, small cap and mid 

cap companies that operate within an 

eligible industry sector. 

Applicants will need to show: 

A statement of positive net situation 

in the last approved balance sheet or 

negative net situation and 

regularization in the approved 

interim balance sheet up to the date 

of the operation. 

Applicants should not be considered 

as companies in distress as of 31st 

December 2019 according to n.18 of 

article 2nd of EU Regulation 

n.651/2014 of 17th of June (i.e. 

considered as a non performing 

Exposure) 

Applicants will need to have: 

An absence of debts to Social 

Security and the Tax Administration 

as of 1 March 2020 and a 

declaration of regularization of 

subsequent debts within 15 days 

after the first disbursement; 

An absence of incidents not 

regularized with financial institutions 

and the Mutual Guarantee System 

(“MGS”) as at the issuance date; and 

A declaration of commitment to 

maintain all company jobs until 30 

June 2020. 

What does it cover? 

These credit lines will provide funding to 

businesses in sectors particularly 

affected by COVID-19. 

Maximum size of the loan is €1.5m. 

Maximum duration of loan is four years, 

with a grace period of one year from 

repayments of principal or interest. 

Spread rate will be from 1.0% to 1.5%. 

MGS will provide a guarantee to the 

lender for up to 90% of the facility 

value. Government will in-turn provide a 

counter guarantee of 100% in favor of 

MGS. 

How is it accessed? 

► 

► 

Full details will be published by the 

Portuguese Government on a specific 

website that is not yet operational. 

The credit lines will be made 

available by financial institutions. 

Practicalities 

All companies are subject to a risk 

assessment. Therefore, companies will 

need to demonstrate that other than 

for the COVID-19 disruption, they 

would be considered to be viable by the 

lender. 

Companies will need to demonstrate 

the purpose of the loan application and 

to ensure that it is directed to the 

necessity of cash management and 

working capital. 

As applications are made directly to the 

financial institutions, companies will 

need to consider which and how many 

lenders to approach in order to give 

themselves the best chance of success. 


Nuno Nogueira da Silva 

nuno.silva@pt.ey.com 

Tel: +351 914 898 793 

Tiago Ferreira da Silva 

tiago.silva@pt.ey.com 

Tel: +351 913 029 150 

Francisco Hamilton Pereira 

francisco.hamilton-pereira@pt.ey.com 

Tel: +351 937 912 749 

6 April 2020 

COVID-19: EMEIA EY Government Support Package

5 

Liquidity and financing: Tourism Credit Line 

The Tourism Credit Line will 

provide financing up to 

€60m to support micro 

companies that have been 

negatively impacted by 

COVID-19. 

The scheme will support 

companies for three 

months, being possible to 

reimburse it up to three 

years. Moreover, the loan 

will have no interest due. 


This measure applies to licensed micro 

companies registered on the ‘National 

Tourism Records’ and headquartered in 

Portugal. 


That they have not been subject to 

administrative or judicial sanctions 

or convicted for illegal dismissal; 

That they have an absence of debts 

to Social Security, the Tax 

Administration and ‘Tourism of 

Portugal’; and 

A company statement on the 

negative impact of COVID-19 on its 

activity. 

Applicants should also not be 

considered as companies in distress, 

meaning one of the following: 


The credit lines will provide funding to 

businesses operating in the tourism 

industry affected by COVID-19. 

The maximum loan amount is 

€750/month for each worker employed 

as at 29 February 2020, multiplied for a 

period of three months up to a 

maximum of €20k per company. 

Maximum duration of operation is three 

years with a grace period from the 

repayment of credit line for one year. 

Loan interest rate is 0%. 

One of the shareholders must be 

personally liable for the facility amount. 



that other than for the COVID-19 

disruption, they would be considered to 

be viable by the lender. 


that their business was negatively 

impacted by COVID-19. 

For companies in existence for at 

least 3 years, more than half of its 

subscribed capital has been 

consumed by accumulated losses; 

Has been the subject of insolvency or 

complies with the criteria that may 

lead its creditors to ask for 

insolvency; or 

Has received emergency aid and has 

not reimbursed the loan, finished the 

guarantee or has received a 

restructuring aid and is subject to a 

restructuring process 


Full details published by the Portuguese 

Government on the Republic Diary on 

the 25th of March 2020. 

The credit lines are managed by 

‘Tourism of Portugal’, being responsible 

for the assessment of applications 

during the maximum of five working 

days. 




Tel: +351 914 898 793 



Tel: +351 913 029 150 



Tel: +351 937 912 749 


6 

Liquidity and financing: Capitalizar 2018 | COVID-19 

Capitalizar 2018 | COVID- 

19 Line will provide 

financing up to €400m to 

support operations 

negatively affected by 

COVID-19. 

This line is managed by 

‘PME Investimentos’ in 

partnership with the 

Banking sector and the 

Mutual Guarantee System. 

The funds provided are 

targeted to: 

€320m, Working 

Capital Management 

(through medium-short term 

loans) 

€80m, Treasury 

Management 

(through the opening of credit 

on a current account) 


This measure applies to: 

Micro companies and SMEs certified 

by IAPMEI, or large companies 

headquartered in Portugal; 

Companies that within an eligible 

industry sector (this is a large list, 

and excludes the sectors with 

specific credit lines and financial 

institutions); 

For large companies, the business 

credit rating must be comparable to 

“B-”; and 

For individuals with organized 

accounts and companies without one 

year of activity, a risk rating of “C”. 


A statement of positive net situation 

in the last approved balance sheet or 

negative net situation and 

regularization in the approved 

interim balance sheet up to the date 

of the operation; 

An absence of debts to Social 

Security, the Tax Administration and 

FINOVA as of the date of the 

contractual agreement; and 

An absence of unsettled balances 

with the financial sector. 


The credit lines will provide funding to 

businesses to help manage treasury and 

working capital needs. 

Maximum loan amount is €1.5M. 

The period of utilization is one year for 

working capital and flexible for treasury 

management. 

The maximum period for repayment is 

four years for working capital (with a 

grace period for repayment of one year) 

and one to three years to treasury 

management 

The applicant can choose between a 

fixed rate scheme (Euribor swap + 

spread) or variable rate scheme 

(Euribor 1,3,6 or 12 months + spread), 

however the financial institution will 

define the spread interest rate, being 

between 1.928% for working capital and 

1.943% for treasury management to 

3.278% 

MGS will provide a guarantee to the 

lender for up to 80% of facility value. 


Full details were published by the 

Portuguese Government on 27 March 

2020. 

The credit lines are made available 

through financial institutions. 


All financial operations are subject to a 

risk assessment. Therefore, companies 

will need to demonstrate that other 

than for the COVID-19 disruption, they 

would be considered to be viable by the 

lender. 


the aim for the loan application, 

ensuring it is directed to necessity of 

cash management and working capital 

needs. 

Companies will need to review how to 

demonstrate their credit strength. 

Companies will need to consider which 

and how many lenders to approach and 

how to give themselves the best chance 

of success. 




Tel: +351 914 898 793 



Tel: +351 913 029 150 



Tel: +351 937 912 749 


7 

Liquidity and financing: Moratorium 

The moratorium allows the 

deferment of relevant 

payments referring to 

outstanding financing. 

The suspension will result in 

the rescheduling of the 

payment amounts without 

any costs or expenses 

(other than the applicable 

interest rate which shall 

accrue and be compounded 

by reference to the date 

these are not paid). 


This measure applies to: 

Micro-companies, SME’s and any 

other company, except any company 

integrated in the financial sector, 

operating in Portugal; and 

Individuals in relation to residential 

loans for primary residence. 

Applicants must: 

Not have an outstanding payment 

breach or default before an 

applicable lender for more than 90 

days as of 18 March 2020 or, if the 

borrower is under an outstanding 

default, the following conditions do 

not apply: 

i. the materiality criteria 

established in Notice no. 2/2019, 

of the Bank of Portugal and in 

Regulation no. 18/1845, of the 

European Central Bank is not 

satisfied; and 

ii. 

the borrower is not insolvent, in a 

situation of suspension of 

payments or already under 

enforcement by any of the 

lenders on such date; 

Have an absence of debts to Social 

Security and the Tax Administration 

as of 1 March 2020. 


The moratorium entitles eligible 

borrowers / beneficiaries to defer the 

relevant payment obligations (principal, 

interest, financial leases rents, fees and 

other payment obligations, including 

any margin calls or Lender right to 

enforce stop losses clauses), in whole or 

in part, during a 6 month period. 

It includes a special regime which 

foresees the possibility of the 

Portuguese State and other public 

entities to provide guarantees within 

the limits established in the budget law 

which may guarantee any financings. 

It also includes the possibility of the 

mutual guarantee companies to grant 

guarantees to the extent that the 

provision of this guarantee is authorized 

by the Government 


Full details published by the Portuguese 

Government on the Republic Diary on 

26 March 2020. 


The borrower will need to deliver to the 

Lender a letter of adherence to the 

regime, accompanied by declarations 

from the Portuguese Tax Authority and 

the Portuguese Social Security 

confirming the absence of amounts 

outstanding. 

Upon receipt of the letter, Lenders are 

required to apply the Decree-Law 

protection within 5 business days. If it is 

determined that the requirements have 

not been met, the Lender shall inform 

the borrower within 3 business days 

following the delivery of the 

documentation. 




Tel: +351 914 898 793 



Tel: +351 913 029 150 



Tel: +351 937 912 749 


8 

Existing Financial Incentives and Grants 

Financial Incentives include 

non reimbursable incentives 

(i.e. grants) and interest 

free reimbursable loans for 

companies. 

The COVID-19 crisis is 

causing a liquidity shortfall 

in companies and the 

Portuguese Government is 

mitigating such impact by 

reducing the pressures on 

existing grants and interest 

free loans. 

Moreover, the KPIs of 

existing projects may be 

adjusted in order to 

discount the effects of the 

COVID-19 crisis. 

New packages of grants for 

COVID-19 related activities 

may be enacted. 

Government Advance payments 

of Financial Incentives 

Settlement for the payments of financial 

incentives will be carried out in shortest 

possible timeframe, after the 

submission of the relevant request by 

the companies. In addition, companies 

may also request advance payments of 

financial incentives, i.e., before the 

financial incentive is computed. 

Deferral of financial incentives 

reimbursements 

It is now possible to defer upcoming 

payment instalments due until 30 

September, with respect to the 

reimbursement of non interest bearing 

loans for a period up to 12 months. 

Impacts on the evaluation of 

KPIs 

The negative impacts to projects 

under the “Portugal 2020” program 

resulting from the COVID-19 outbreak, 

may be considered a force majeure 

reason for non-compliance with the 

project’s objectives. 

Practical considerations 

These measures do not require 

additional formalities to pre-existing 

procedures and may be implemented 

with the existing mechanisms. 


This deferral can be made without 

penalties or sanctions. 


This measure enables the beneficiaries 

to re-negotiate the financial incentives 

agreement, provided that the company 

informs the responsible entity of 

relevant disruptions due to the virus 

outbreak. 

Expenses on cancelled events 

The expenses already incurred with 

respect to cancelled or delayed events 

due to the COVID-19 outbreak would 

continue to be eligible. 


Such expenses will only be granted if 

they were already included in the 

investment approved 




Tel: +351 937 912 749 


9 

Grants: R&D projects 

Portugal has a very 

competitive R&D cash Grant 

scheme under the program 

“Portugal 2020”. 

Several proposals have 

been extended in order to 

included R&D projects that 

may target solutions to help 

health services to use 

against COVID-19. 

These Grants are funded 

through EU programs 

managed by the local 

entities and partially by the 

Portuguese Government. 

R&D Cash Grant Consortium 

Projects – All territory 

Companies 

25%-75% cash grant on eligible R&D 

expenses (note that entities located 

in Lisbon will be limited to 50%). 

Universities and Tech centers 

75% cash grant 

R&D Cash Grant Consortium 

Projects – Low density areas 

Companies 


expenses. 

Universities and Tech centers 

75% cash grant. 


To obtain the Grant, Consortiums need 

to prepare and submit an application. 

The deadline for the call for proposals 

was extended to 19 May 2020. 

Special attention will paid to projects 

developing solutions that may be used 

to fight against COVID-19. 



to prepare and submit na application. 

There are 3 deadlines for these 

proposals, benig 15 May, 15 July and 

15September 2020. 




R&D Cash Grant European 

Consortium Projects 

Companies 


expenses (note that entities located 

in Lisbon will be limited to 50%). 

Technical Universities 

75% cash grant 


Consortiums between Companies in 

Portugal and European technical 

universities. 


to prepare and submit na application. 

The deadline for the proposals was 

extended to 30 April 2020. 







Tel: +351 937 912 749 


10 

Employment support: Exceptional measures to 

protect employment 

Companies facing a 

business crisis situation are 

entitled to the following 

benefits: 

 

 

 

 

Financial aid, per 

employee, aimed to 

support the payment of 

wages and the 

continuity of the 

employment contracts, 

with or without training; 

Exceptional training 

plan; 

Exceptional financial aid 

to support the 

normalization of 

business activity; and 

Temporary exemption 

from SS contributions 

(on the employer part). 

During the period of validity 

of these measures as well 

as in the 60 following days, 

employers are not allowed 

to dismiss employees under 

a collective dismissal or an 

extinction of the labor 

position. Several other 

requirements need to be 

met. 


The scheme will be open to companies 

facing a business crisis situation, which 

can include: 

Situations of complete or partial stop 

of the business activity of a company 

or establishment, due to the 

lockdown enforced by Decree-Law 2- 

A/2020, or by legislative or 

administrative decision; 

By means of a statement issued by 

the employer and certified by its 

Certified Accountant, in the following 

situations: 

(i) Complete or partial stop of the 

business activity of a company or 

establishment, due to 

interruption of the supply chain 

or cancelation of purchase 

orders; or 

(ii) Sudden reduction of at least 40% 

of turnover in the 30 days period 

prior to the request, with 

reference to the monthly average 

of the two previous months or the 

same period of the prior year or, 

for taxpayers that have began 

their activity less than 12 months 

ago, to the average of the period 

of activity. 


Financial aid to keep employment 

contracts: 

Employees are entitled to 

remuneration corresponding to 2/3 

of the employee’s gross salary, 

capped at €1,905 (equivalent to 3 

times the national minimum wage). 

Term: 1 month, extendable for 

additional months (up to 3 months). 

Exceptional training plan: 

The exceptional support to be 

granted to each employee is 

supported by IEFP, I. P. and takes 

into consideration the hours of 

vocational training attended by the 

employee, up to the limit of 50% of 

the employee’s remuneration, up to 

a maximum of €635. 

Note that the exceptional training 

plan aid cannot be applied for by 

those entitled to apply for the 

financial aid to keep employment 

contracts. 

Financial aid for the support of the 

normalization of business activity: 

Financial aid paid in one single 

instalment in the amount of €635 

per employee; 

To access to this incentive, the 

employer shall file a request to IEFP, 

I.P., together with a declaration from 

the employer that certifies the 

situation of business crisis and a 

certificate issued by the certified 

accountant of the company. 


The employer must have its 

obligations and debts towards the 

Social Security and Portuguese Tax 

Authority settled; 

The employer must communicate to 

the employees, in writing, on the 

decision to obtain the financial aid, 

including the expected duration; 

The employee representation body 

(if one exists) should be notified and 

their position taken into account; 

An application must be immediately 

sent to the Social Security 

Authorities (Form RC3056-DGSS), 

together with a statement from the 

employer with a conclusion from the 

Certified accountant on the existing 

business crisis, and a list of 

employees and their social security 

numbers. 


Anabela Silva 

Anabela.silva@pt.ey.com 

Tel: +351 936 079 620 


11 

Employment support: Deferral of Social Security 

Contributions 

Possibility to apply the 

deferral of the payment of 

Social Security 

Contributions (employer’s 

part) for the months of 

March, April and May 2020. 

In case of employers that 

have already paid in full for 

the month of March, the 

deferral is applicable for the 

period from April to June 

2020. 


The scheme will be open to the 

following: 

Self-employees. 

Employers with less than 50 

employees; 

Employers with 50 up to 249 

employees, as long as they have 

suffered a loss of at least 20% in the 

amount of revenues invoiced by the 

company as reported in the E-invoice 

system in the months of March, April 

and May 2020, or in the same period 

of the previous year or, in case of 

employers that have began their 

activity less than 12 moths ago, to 

the average of the period of activity; 


The social security (“SS”) contributions 

(on the employer part) of eligible 

entities due for the months of March, 

April and May 2020 can be paid in the 

following terms: 

 

 

1/3 of the SS contributions in the 

month they are due; 

The remaining 2/3 in equal 

instalments in the months of July, 

August and September 2020 or in 

the months from July to December, 

without interest. 


The deferral is automatic (i.e. the use of 

the benefit is notified by the employer 

in the Social Security Website – 

“Segurança Social Direta and must be 

made before the payment is due). 

Companies need to pay 1/3 in the 

month they are due. 

The proof of loss in the amounts 

invoiced by the company should be 

certified by a Certified Accountant. 

The number of employees is determined 

by reference to the Monthly income 

Statement for February 2020. 

Employers with 250 or more 

employees, as long as they have 

suffered a loss of at least 20% in the 

amount of revenues invoiced by the 

company as reported in the E-invoice 

system in the months of March, April 

and May 2020, or in the same period 

in the previous year or, in case of 

employers that have began their 

activity less than 12 moths ago, to 

the average of the period of activity, 

and the company falls into one of the 

following categories of taxpayers: (i) 

private welfare institutions or 

equivalents; (ii) employers operating 

in sectors covered by the lockdown 

(i.e. leisure, cultural, artistic, sports, 

open space, games and gambling, 

and restoration activities), or in the 

sectors of aviation or tourism; (iii) 

the activity of the employers has 

been suspended by legislative or 

administrative decision; 


Anabela Silva 


Tel: +351 936 079 620 


12 

Employment support: Deferral of Personal Income 

Tax withholdings 

Possibility to apply the 

deferral of the Personal 

Income Tax (“PIT”) 

withholdings due in the 

second trimester of 2020. 


The scheme will be open to the 

following: 

Taxpayers with a turnover up to 

€10m in 2018; 

Taxpayers who operate in sectors 

covered by the lockdown (i.e. leisure, 

cultural, artistic, sports, open space, 

games and gambling, and 

restoration activities); 

Taxpayers who have began their 

activity in or after 1 January 2019. 

Note that taxpayers not mentioned 

above may also benefit from this 

deferral, in instances where they report 

and demonstrate a loss of at least 20% 

(compared to the averaged of the 3 

months prior to the month at stake, 

versus the same period in the previous 

year), in the amount of revenues 

invoiced by the company as reported in 

the E-invoice system. 


For eligible entities, the taxpayer may 

elect for the payment of PIT 

withholdings, due in the second 

trimester of 2020, to be fulfilled in one 

of the following ways: 

Immediate payment, under general 

terms; or 

Payment in instalments (in three or 

six monthly instalments) without 

interest. 


The requests for payments in 

instalments should be performed 

electronically, up to the legal deadline 

for payment (being the 20th of the 

following month). 

The proof of loss in the amounts 

invoiced by the company should be 

certified by a Statutory Auditor or by a 

Certified Accountant. 


Anabela Silva 


Tel: +351 936 079 620 


13 

Other employment issues 

A “State of Emergency” 

was announced on 18 

March, with a call for 

everybody to stay at home 

and only to leave for 

specific reasons. Travelling 

to and from work is only 

allowed if it is “absolutely 

necessary”. Government 

advice is that employees 

who can work from home 

should do so. 

Closing of schools 

Absences shall be deemed justified for 

employees who have to stay at home 

due to the closing of schools and who 

cannot resort to teleworking, where the 

children are: 

Under 12 years of age; or, 

If regardless of their age, they have a 

disability or chronic disease. 

In this case, exceptional financial 

support will be granted to employees in 

the amount of 2/3 of their base salary. 

This amount will be supported by the 

employer and Social Security in equal 

parts (i.e. 33% by the employer and 33% 

by Social Security). 

This financial support has a minimum 

limit of €635 and maximum of €1,905. 

The financial support is automatically 

granted, at the request of the employer. 

This financial support cannot be 

received by both parents regardless of 

the number of children they care for. 


Employees need to send to their 

employers a statement with the: 

Identification of their children; 

The period of absence from work; 

and 

Confirmation that the other parent 

did not benefit from the same 

allowance. 

Employers will need to file an 

application on-line through the Social 

Security’s webpage. 

Impediment to work due to the 

risk of contagion 

If the employee possesses a notice of 

prophylactic isolation issued by the 

Health Authority, he/she is entitled to 

receive: 

An allowance corresponding to 100% 

of their salary, for the initial 14 days; 

An allowance between 55% and 75% 

(depending on the duration of the 

sick leave) of their salary in the 

subsequent periods. 


This benefit is not applicable to 

employees who are able to perform 

their duties through teleworking or 

distance learning. The payment of this 

allowance is not subject to a guarantee 

period, job index or waiting period. 

Employees should send a notice of 

prophylactic isolation issued by the 

Health Authority to their employer and 

the employer should send it to the 

Social Security Authorities within 5 

days. 


Anabela Silva 


Tel: +351 936 079 620 

Rodrigo Lourenço 

rodrigo.lourenco@rrp.pt 


14 

Other employment issues 

A “State of Emergency” 

was announced on 18 

March, with a call for 

everybody to stay at home 

and only to leave for 

specific reasons. Travelling 

to and from work is only 

allowed if it is “absolutely 

necessary”. Government 

advice is that employees 

who can work from home 

should do so. 

Sickness due to COVID-19 

If an employee is infected with the virus 

and has a certificate of temporary 

incapacity for work (commonly known 

as “sick leave”), he/she is entitled to a 

sickness allowance paid by Social 

Security, ranging from 55% to 75% of 

their salary (depending on the duration 

of the sick leave). 

Justified absences 

These include absences for the support 

of: 

Children under 12 years old or, 

independently from their age, in case 

they have a chronic disease or 

disability, as well as grandchildren (in 

certain cases), during Easter break. 

A spouse or partner, parent or other 

dependent living with the employee 

(in case these individuals are living in 

an elderly care home that is closed 

by decision of the Health Authority of 

the Government; and 

Firemen involved in rescue and 

transportation activities in the 

subsequent periods. 

Working from home 

Both the employer and the employee 

can unilaterally decide to work from 

home, without the need for consent 

from the other party, as long as this is 

compatible with the job. 


The temporary incapacity certificate is 

issued by the hospital where the person 

who is infected with COVID-19 virus is 

hospitalized. 


These absences are not paid for by the 

employer, but are also not included 

within the maximum yearly limit of 

justified absences for family support. 

As an alternative to unpaid justified 

absences, employees (except those 

drafted to essential services, pursuant 

to art. 10.º of Decree-Law 10-A/2020, 

of 13/03) may unilaterally schedule 

unused paid vacations for the days in 

question, by giving two day written 

notice to the employer before the 

vacation. In such cases, holiday 

allowance may be paid until 4 months 

after the start of vacation use. 


Employers should ensure working from 

home (“teletrabalho” ) is reported to 

Social Security and to the insurance 

company for purposes of occupational 

accidents. 

Employers should be mindful of the duty 

to protect employees privacy. 


Anabela Silva 


Tel: +351 936 079 620 




15 

Employment support: Extraordinary training plan 

The Government will 

provide grants based on the 

quantity of training hours 

provided, limited to 50% of 

the gross employees’ 

remuneration, capped at 

Euro 635. There is no limit 

on the funding available. 

Exemption of social security 

contributions due by the 

employer during the 

extraordinary training plan 

period. 

The scheme will be in place 

for at least three months, 

until 30 June 2020, but 

may be extended if deemed 

needed by the Government. 

If the measure is applied, 

there are severe 

restrictions to the dismissal 

any of its employees 

(covered or not by the 

measure). Distribution of 

profits under any form is 

also forbidden during the 

term of the measure. 


Employers in situation of crisis and 

respective employees, when one of the 

following conditions applies: 

► 

► 

Complete or partial mandatory close 

down of the company or 

establishment, as determined by 

legal or administrative order; 

Complete or partial closing down of 

the company or establishment, as a 

result of (i) the interruption of global 

supply chains; or (ii) the 

suspension/cancelation of orders or 

reservations (duly documented) that 

leads to a reduction of at least 40% 

on production or occupation capacity 

in the month following the one of the 

request for support; 

► Turnover reduction of at least 40% 

on the 30 days prior to the filing of 

the request when compared to: 

► 

► 

Monthly average of the 2 months 

prior to the one of the request; 

The corresponding period of the 

previous year; 

► For companies with less than 12 

months of activity, the average of 

the activity period. 

It should be noted that the support for 

the existence of a crisis situation may 

be inspected by the State services and 

official bodies. 


► 

► 

Financial support: The total amount 

of the financial aid is computed 

based on the quantity of training 

hours provided, limited to 50% of the 

gross employees’ remuneration, 

capped at €635. 

Period: 1 month, non-extendable. 

The funds provided will be grants, not 

loans. 

Which complementary measures 

are in place? 

► 

► 

Financial support to the 

normalization of companies’ 

activities (single contribution of Euro 

635 per employee); 

Exemption of social security 

contributions due by the employer 

during the extraordinary training 

plan period. 

The funds provided will be grants, not 

loans. Exemptions are definite, not 

deferrals. 


Pedro Paiva 

pedro.paiva@pt.ey.com 

Tel: +351 936 615 043 


Companies benefitting from this aid 

must communicate to the employees, in 

written, on the decision to implement 

an employees’ training program, 

subject to approval of IEFP, IP. The 

financial aid entails the continuity of 

employment agreements and is paid by 

IEFP, IP. 

Simplified lay off and extraordinary 

training plan financial support 

measures are mutually exclusive. 

Failure to comply with any conditions 

implies an immediate annulation of the 

support and the obligation to repay the 

amounts already received or exempted. 



Tel: +351 937 912 749 


16 

Cash flow support: Corporate income tax deferrals 

No application needs to be 

made for the envisaged 

deferral of corporate 

income tax (“CIT”). 

Tax payments 

The set of measures and mechanisms 

that facilitate the compliance with the 

tax reporting obligations payments 

include: 

Deferral of the deadline for the first 

instalment of the Special Payment on 

Account ("Pagamento Especial por 

Conta"), from 31 March 2020 to 30 

June 2020; 

Extension of the deadline to file the 

CIT return ("Modelo 22") for FY19, 

from 31 May 2020 to 31 July 2020; 

and 

Deferral of the deadline for the first 

instalment of the Payment on 

Account ("Pagamento por Conta") 

and Additional Payment on Account 

of the CIT ("Pagamento Adicional por 

Conta"), from 31 July 2020 to 31 

August 2020. 


It should be noted that there are still no 

specific measures with respect to 

entities that adopt a fiscal year different 

from the calendar year. We expect 

further clarifications on this matter to 

be issued soon. 

For companies that, despite the 

envisaged measures, continue to face 

treasury restrictions that do not allow 

the full settlement of CIT and PIT due in 

2020, it will be possible for them to 

apply for the payment of taxes in 

instalments under a general regime 

already available and enacted within the 

terms defined in Decree-Law no. 

492/88. 

In general terms, this option is available 

for taxpayers whose economic position 

does not allow them to settle their 

liabilities within the legally established 

deadlines or, in certain situations, if 

justified by exceptional circumstances 

or public interest. 


Pedro Paiva 


Tel: +351 936 615 043 

João de Sousa 

joao.sousa@pt.ey.com 

Tel: +351 937 949 305 


17 

Cash flow support: Flexibility on the payment of 

taxes 

The Government has 

decided to make the 

payment of taxes and social 

security contributions more 

flexible, as well as to 

determine the suspension, 

until 30 June 2020, of tax 

enforcement proceedings in 

progress or that may be 

performed by the Tax 

Authority and Social 

Security. 


These measures are available to: 

Taxpayers with a turnover of up to 

€10m in 2018; 

Taxpayers whose activity falls within 

the sectors closed under the 

Government decision (i.e. leisure, 

cultural, artistic, sports, open space, 

games and gambling, and 

restoration activities); 

Taxpayers who started their activity 

on or after 1 January 2019; 

Taxpayers who have resumed 

activity on or after 1 January 2019, 

when no turnover was obtained in 

2018; and 

Other taxpayers, not covered by the 

general conditions, that declare and 

demonstrate a reduction in the 

revenue turnover as per invoicing 

communicated through the official 

platform of the Portuguese Tax 

Authority (“E-Fatura”) of at least 

20% in the average of the three 

months preceding the month in 

which this obligation exists, 

compared to the same period of the 

previous year. 


This measure covers: 

VAT payments (either on a monthly 

or quarterly basis); 

Payments to the State of both 

personal and corporate income 

withholding taxes. 

How does it apply? 

In April, May and June, on the due date 

of the obligation, the taxpayer may 

choose to make the payment in one of 

the following ways: 

Immediate payment, as normal; or 

Payment in three or six monthly 

instalments without interest. 

In case of payment in instalments, the 

payment schedule will be the following: 

First instalment is due in the ordinary 

due date for the respective payment; 

Remaining instalments are due in the 

same day of the following months. 

In case of payment made in instalments, 

there is no need to present guarantees. 

Also, no penalties will be applied. 


Requests for payments to be made 

in monthly installments can be 

submitted electronically to the 

Portuguese Tax Authority (through 

the taxpayers account on the official 

portal – Portal das Finanças), until 

the end of the voluntary payment 

period. 

The demonstration of the reduction 

in the turnover, when applicable, 

must be carried out by certification 

of statutory auditor or certified 

accountant. 

When the automatic communication 

of invoice elements through the 

official platform of the Portuguese 

Tax Authority (“E-Fatura”) does not 

reflect the totality of the 

transactions carried out subject to 

VAT, even if exempt, related to the 

transmission of goods and services, 

referring to the periods under 

analysis, the verification of the 

billing reduction must be carried out 

with reference to turnover and duly 

certified by the statutory auditor or 

the certified accountant. 


Pedro Paiva 




Tel: +351 936 615 043 

Tel: +351 937 949 305 


18 

Cash flow support: Cash tax management 

The Government’s 

announcements are not the 

only ways to manage cash 

tax. There are other tax 

related measures, which are 

not specific to COVID-19, 

which can be used to 

manage liquidity. 

Tax payments 

Taxpayers can review tax instalment 

payments for the current year and if 

appropriate, claim repayments. 

They can also review payments already 

made to see if repayments can be 

generated. In particular, they can 

consider revisiting applicable tax 

benefits and incentives for both current 

and prior periods that may generate tax 

repayments. 


Taxpayers should contact the 

Portuguese Tax Authority and look to 

submit amended returns and claim 

refunds of overpayments as soon as 

possible. 

They will need to model the impact of 

withholding taxes on any cross-border 

flows and consider the tax impact of 

changes to operating models or supply 

chains. 


Pedro Paiva 


Tel: +351 936 615 043 



Tel: +351 937 949 305 

Research and development tax 

credits 

Where appropriate, Taxpayers should be 

optimizing and accelerating the 

submission of R&D claims in order to 

receive cash back as soon as possible. 


Research and development expenditure 

credit (“RDEC”) claims can be reviewed 

and repayments authorized separately 

from a company’s overall tax affairs. 


Pedro Paiva 


Tel: +351 936 615 043 



Tel: +351 937 912 749 

VAT 



Taxpayers should look to recover VAT 

as quickly as possible by streamlining 

processes or introducing accruals to 

create immediate cash flow benefits. 

They can also take advantage of reliefs 

where customers are delaying payment. 

By unlocking process and systems 

limitations, taxpayers can improve 

ongoing VAT recovery as well as a 

create an opportunity to reclaim VAT 

not recovered in the past. 

Amilcar Nunes 

amilcar.nunes@pt.ey.com 

Tel: +351 937 912 218 


19 

Administration and governance 

Businesses will have to 

consider the practicality of 

holding board, shareholder 

and annual general 

meetings along with issues 

raised by isolation of key 

officers. 

A review of constitutional 

documents may be needed 

to allow remote meetings 

and electronic signatures as 

well as giving consideration 

to alternates and powers of 

attorney to check who has 

authority to take necessary 

actions at short notice. 

Businesses will also need to 

monitor and review 

communications, including 

social media, to reduce 

reputational and brand risk. 

Regulatory expectations and 

filings 

The challenge for business is 

maintaining compliance with guidance 

from regulators. Certain regulators 

(e.g., Information Commissioner’s 

Office, Financial Conduct Authority) 

have issued specific guidance but 

generally basic compliance 

requirements will remain. 

Listed companies announcement 

requirements for material change; 

financial reporting requirements; 

increased access to confidential market 

sensitive data about COVID-19/insider 

information risk. 

Director’s duties 

Directors will be making decisions at 

short notice, against an uncertain 

background. There are legal exposures, 

both corporate and personal. 

Businesses will also need to consider the 

impact of travel restrictions on 

residency arrangements from tax and 

other perspectives. 


Businesses should consider who should 

be responsible for monitoring 

regulatory/government announcements 

and guidance, as well as ensuring that 

COVID-19 business impacts can be 

quickly escalated to directors. 

Consideration should also be given to 

monitoring reporting deadlines, 

applying for relief from filing certain 

reports if appropriate and reviewing the 

potential impact on all information due 

to be reported. 

Where appropriate, consider strategy 

for engagement with sector specific 

regulators. 


Business should consider how to protect 

directors against wrongful trading and 

other insolvency-linked liabilities, 

including taking best practice 

governance actions to protect against 

liability and the potential unwinding of 

transactions. 

Duties to creditors may be especially 

key in difficult trading scenarios and 

seeking advice here may be important. 


Miguel Amado 

Partner 

Advisory Services 

miguel.amado@pt.ey.com 

Tel: +351 217 912 058 

Alternative ways of taking board 

decisions may be appropriate as may 

limiting the involvement of particular 

board members if they cannot attend 

meetings. 


20 

Global EY COVID-19 Stimulus Response Tracker 

Our tracker provides a 

snapshot of the policy 

changes that have been 

announced in jurisdictions 

around the world in 

response to the COVID-19 

crisis. 

Policy changes across the 

globe are being proposed 

and implemented on a daily 

basis. 

The document will be 

updated on an ongoing 

basis but not all entries will 

necessarily be up to date as 

the process moves forward. 

Key jurisdictions covered by the Response Tracker include: 

► 

► 

► 

► 

► 

► 

► 

► 

► 

Australia 

Austria 

Belgium 

Brazil 

Canada 

China 

Colombia 

Cyprus 

Czech Republic 

► 

► 

► 

► 

► 

► 

► 

► 

► 

Denmark 

France 

Germany 

Greece 

Hong Kong 

Indonesia 

Italy 

Japan 

Luxembourg 

► 

► 

► 

► 

► 

► 

► 

► 

► 

Malaysia 

New Zealand 

Norway 

Puerto Rico 

Singapore 

Slovak Republic 

Slovenia 

South Korea 

Spain 

► 

► 

► 

► 

► 

► 

► 

Sweden 

Switzerland 

Taiwan 

Thailand 

Ukraine 

United Kingdom 

United States 

To download the latest Response Tracker visit: 

ey.com/en_us/tax/how-covid-19-is-causinggovernments-to-adopt-economic-stimulus-- 


21Contact 

Carlos Lobo 

Partner 

Tax Policy Leader | Other 

Tax 

carlos.lobo@pt.ey.com 

Luís Marques 

Country Tax Leader 

luis.marques@pt.ey.com 

Anabela Silva 

People Advisory Services 

Leader 

anabela.silva@pt.ey.com 

Pedro Paiva 

Partner 

Business Tax Services 



Partner 

Business Tax Advisory 


Miguel Amado 

Partner 

Advisory Services 

miguel.amado@pt.ey.com 

Francisco Hamilton 

Pereira 

Associate Partner 

Business Tax Services 

francisco.hamiltonpereira@pt.ey.com 

Nuno Silva 

TAS - Restructuring & 

Debt Advisory 


Tiago Silva 

TAS - Restructuring & 

Debt Advisory 



Senior Manager 

RRP Advogados (EY Law) 



EY | Assurance | Tax | Transactions | Advisory 

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EY Government Support Package_Portugal

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