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Restaurants must wait until July for IVA cut

A report in Jornal de Notícias has revealed that Portuguese restaurants will have to wait until July before crippling IVA (VAT) rates will drop 10 percentage points to pre-austerity levels.

Citing government sources, the newspaper says the decision is designed to reduce Portugal’s deficit levels in 2016 and keep Brussels happy.

In simple terms, reducing IVA halfway through the year instead of now means the government won’t lose as much money (€175 million as opposed to €350 million, explains JN).

Portugal’s hoteliers and restaurant association (AHRESP) is not unduly bothered. Spokesperson Ana Jacinto told Expresso she has met with Prime Minister António Costa, who “reaffirmed his commitment to lowering the sector’s IVA”.

She added it’s just a matter of figuring out when to apply the reduction – “either after the first or second trimester of 2016”.

As the Resident reported, a study last week found that two thirds (77%) of Portugal’s restaurants plan to hire more staff when the sector’s IVA (VAT) goes back to 13% (click here).

This is one of many measures to be included in Portugal’s 2016 State budget, a draft of which should be approved this afternoon in the Council of Ministers.

Expresso explains Portugal’s Socialist government is caught between demands from the EC to lower its deficit, and its agreements with left-wing parties Bloco de Esquerda and PCP to make life easier for families and companies.
Says the paper, the country’s draft budget should set a 2.8% deficit goal – though the EC wants 2.5%.

michael.bruxo@algarveresident.com