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The Council of Ministers announced this Thursday that the reduction of VAT on electricity is approved. Measured between strength on December 1 of this year.
The VAT will go from 23% to 13% up to certain levels of consumption, explained the Minister of Finance, João Leão, stating that the measure corresponds to a commitment included in the 2020 State Budget.
In particular, the lowest intermediate VAT rate is applied progressively up to the first 100 kilowatts consumed per month, the VAT rate is reduced from 23% to 13%. For the highest consumption, the highest VAT rate, 23%
For larger households, a 50% surcharge is applied, so that families can benefit from a lower VAT rate, in this case up to 150 kilowatts per month. The increase for large families does not take effect until March 2021.
The VAT reduction applies to contracts with contracted power up to 6.9 kilowatt amperes, which is the existing limit for the social energy tariff. According to the Minister of Economy, more than five million contracts are within these values.
“It is a socially fair and environmentally and financially responsible measure. It is socially fair because it reduces the VAT rate to lower VAT levels, allowing significant savings for consumers,” João Leitão said at a press conference.
The Prime Minister, António Costa, had already guaranteed that the Government would use the “legislative authorization” that was granted “for the reduction of VAT” on electricity. On June 12, the European Commission’s VAT Commission did not come out against the change requested by the Portuguese Government to adapt this rate on the electricity bill to the level of consumption.
