VAT rises

VAT on gas and electricity is to rise from 6% to 23% from September.

By raising VAT on energy, the Government hopes to net an extra €400 million a year.

According to the Ministry of the Economy’s Directorate-General of Energy, the pre-tax price on natural gas in Portugal paid by domestic consumers last year was higher than the average pre-tax price paid by consumers in the European Union (between 27.5% and 37.4%).

In 2011, despite such a large difference in prices, the price of gas consumed by families increased on July 1 by 3.9%, which added to VAT increases from September will force families to fork out an extra 20.5% more than they had to pay in 2010.

In terms of electricity, at the end of 2010, according to the Government’s agency, sales price for electricity (including taxes) for families was also higher than the European Union average from between 5.5% and 43.3% (depending on consumption).