These measures have been approved in Parliament as part of the support package designed to mitigate the effects of inflation on people in Portugal.

Increase in rents in 2023 limited to 2%

The brake on updating rents in 2023 was one of the measures approved by parliament. With this limit, landlords who intend to increase rents next year will only be able to do so up to a limit of 2%. This is a measure that will cover all tenants with lease agreements concluded until December 2022.

It should be remembered that if this support did not come into effect, landlords could raise rents up to 5.43%, a value indexed to inflation. This is because, according to the rules provided for in the Civil Code, the annual income update coefficient results from the total variation of the consumer price index, without housing, corresponding to the last 12 months, having as a reference the values ​​of August. This figure was confirmed at 5.43% by INE this Monday, the bulletin shows.

As a counterpart to this limitation on the increase in rents, landlords will receive compensation in terms of IRS or IRC, as provided for in the proposal, seeing a portion of the rent income be excluded from taxation. “The value of excluded income will be calculated in order to neutralise the impact of the rent limitation [by 2%] for landlords, depending on the tax rate to which their property income would be subject”, clarified from the Government.

VAT reduction on electricity from 13% to 6%

The other measure of the package that aims to mitigate the impact of inflation on household income included in the bill, now approved by Parliament, is the reduction of VAT on electricity from the current 13% to 6% for consumption of up to 100 kWh per month (150 kWh in the case of large families) for periods of 30 days and meters with a power of less than 6.9 kVA.

This measure to mitigate energy costs within households takes effect from 1 October 2022 and lasts until 31 December 2023.

Pensions update in 2023

The Government's proposal establishes a transitional pension update regime in 2023, with increases between 4.43% and 3.53% depending on the amount earned by pensioners, was also approved by Parliament this Friday. This after the Executive has already approved by decree-law the payment of an extraordinary supplement.