March 27, 2020 by Ellis Dixon
What Commerce in Lisbon Looks Like Under Lockdown
Updated April 22, 2020
Last month, the Portuguese government announced a 9.2-billion-euro package to provide liquidity for companies and support workers affected by the COVID-19 outbreak. But what does that mean exactly, and what are the rules?* Here’s an infographic .pdf on new tax deadlines and basic obligations.
Let’s start with the companies that are staying open. Here’s the most recent list of them. The government has expressly decreed that publicly accessible spaces in retail establishments and large commercial areas can only welcome 0.04 people per square meter of area. That is the equivalent of four people per 100m2. You can see this rule in effect especially at grocery stores where long lines of people spaced at least a meter apart wait to get in and do their shopping.
Once inside the grocery, you’ll see cashiers wearing masks and gloves, and at times a very different impulse-buy section near the checkout counter. Where once Twix bars, Mentos, Chicklets, and Snickers sat tempting you, now sit bottles of alcohol, aloe gel, boxes of rubber gloves, and other coronavirus survival items like fresh-baked bread (thank you for keeping it classy, Portugal!), eggs, and chouriço. “Now is the time to combat the pandemic, but also to keep our economy functioning,” Finance Minister Mario Centeno said. Indeed.
Now, the cafés and restaurants that have stayed open are getting creative in order to survive. If you want your morning coffee and pastry, you can still find a few cafés that can help you out, but don’t expect to go in and stand at the counter as is customary here in Portugal. You will need to stand at the entrance and they will bring you your order and you’ll need to stand outside (usually at a makeshift table) to enjoy your snack. Restaurants are now offering take-away and delivery service by providers like Glovo, UberEats, and Takeaway.com, who are clearly making a small fortune off the pandemic. Our advice is to pick it up or support local businesses who are offering to deliver your order themselves.
Just over a week ago, the government released its COVID-19 contingency plan offering “extraordinary support” in times of “business crisis.” Its purpose is to help employees maintain their contracts while giving employers the chance to try to stay open. But what does it offer, exactly? We’ve battled all the legal mumbo-jumbo and clarified. You’re welcome.
Assistance for Businesses
To help businesses, if the interruption of their global supply chain or the suspension or cancellation of orders has caused the company to suspend its activity (i.e., close its doors) they can claim benefits from Social Security. They can also claim benefits if the company loses all or more than 40% of its turnover over a three-month period. Businesses claiming these benefits can, of course, be inspected at any time and must show the right accounting paperwork.
Companies benefiting from extraordinary support are also entitled to temporary exemption from paying their monthly Social Security contributions. They do still have to submit their own paperwork, and they will have to pay their contract workers’ contributions, but the rate is far lower than usual, depending on the company.
Assistance for Workers
To help employees, the definition of being laid off has now been expanded to include having your contract frozen during this period. That means you can now collect Social Security benefits while you stay home if your employer has had to let you go. You’ll have to show that you are up to date with all payments to the AT (Authoridade Tributária) and a letter from your employer that requests “extraordinary support” for you and states how long said employer expects to be in crisis. This period may be extended monthly for up to six months; it can go into effect once your entire paid vacation period has been used up.
How much can a laid-off employee stand to earn from Social Security, you ask? According to the amendment, workers are entitled to 2/3 of their gross monthly income with a minimum of € 635.00 and a maximum of € 1,905.00. This amount is split 30%/70% by the employer and Social Security. During the support period, your employer can still ask you to do stuff on or off-site as long as its “oriented towards the company’s viability,” whatever that means. My guess is companies will be getting a little creative to cover that 30%. Added to this are stipulations in cases where employees want to seek vocational training, but that’s getting a little technical, so we’ll just leave it there.
The most far-reaching amendment made especially to alleviate the financial crunch of the crisis is for both laid-off and self-employed workers (i.e., workers on green receipts) and their spouses. Everyone is now exempt from Social Security contributions. However, don’t think for a second the taxman will let you off the hook that easily. You’ll still need to submit your quarterly declaration at the Social Security headquarters, but at least you’ve got plenty of time now to get your papers together.
After this mess is all over, the government wants to be sure people can get back to work. To this end, companies are being incentivized to resume their activity once the lockdown period ends: they will be given one monthly minimum wage payment per worker all in one go. The business will need to show all its accounting paperwork and comply with a whole host of stipulations of course, but hey, it’s a pretty sweet deal to get businesses back up and running.
*Always check with your accountant for ongoing updates on how the government is handling the crisis and what paperwork you’ll need to make any claims, abstain from payments, or file for extensions etc..