Welcome to the Week em Breve, a wrap-up of important Portuguese news to keep you up to date and in the know.
House prices hit record high
Portuguese house prices grew 17.2% in the second quarter compared with last year, according to data from the National Statistics Institute (INE), reported by The Portugal News.
Between April and June, prices for existing housing stock and new builds grew 18.3% and 14.5%, respectively.
Nearly 43,000 homes were sold during this period, a 15% increase year-over-year, the paper reports.
This was partly driven by government measures to support young people in homeownership, The Portugal News writes.
Tax breaks for “moderate” house prices
The government intends to grant tax incentives to home owners who sell or rent their houses for “moderate” values, Público reports.
A “moderate” sale price is under €648,022, while “moderate” rents can’t exceed €2,300 per month and require a minimum lease of three years.
Private owners who rent under these conditions will be entitled to a 10% personal income tax rate on their rental income — considerably less than the current 25%, Público reports.
Companies would be entitled to up to a 50% reduction on corporate income tax on rental properties.
There would also be a reduced VAT rate of 6% for construction projects that sell or rent houses for “moderate” values, Público writes.
The government also intends to implement a capital gains tax exemption on money raised from a house sale if it is reinvested, within five years, in a new house that’s rented for “moderate” value.
Next year will also see the maximum personal income tax deduction for rent increase to €900, rising to €1,000 in 2027, Público reports. Currently, renters can deduct 15% of their rent, up to a maximum of €700, from their personal income tax.
Government in talks with Chega on foreigners’ law
Prime Minister Luís Montenegro confirmed that the ruling Social Democratic Party (Partido Social Democrata, PSD) is working with far-right party Chega on changes to the so-called “foreigners’ law.”
Montenegro said that “parliamentary groups must collaborate and cooperate” and that discussions around the proposed law are open to all, Expresso reports.
Speaking in Parliament, Hugo Soares, Deputy of the Portuguese Assembly of the Republic, told reporters that this kind of collaboration between parties is “normal,” the publication writes.
Portugal and Spain are the most vulnerable European countries to blackouts
The blackout that hit Portugal and Spain earlier this year could happen again due how their power grides are connected to other countries, according to a new report.
The study by Ember, a clean energy think tank, argued that “the Iberian Peninsula is more vulnerable to blackout risks than other European countries due to limited connections to the continental grid,” Euronews reports.
Ireland and Finland are also exposed due to a lack of support available from neighbours in case of grid incidents, the report says.
Portugal’s only real grid connections are with Spain, meaning it has few import alternatives in case of problems, according to Euronews.
Portugal’s national airline raided over “golden handshake”
TAP Air Portugal, the nation’s flag carrier, was subject to a police search over the €500,000 compensation package of former board member Alexandra Reis, according to Portugal Resident.
The Public Prosecutor’s Office confirmed that the raids, which also targeted a Lisbon law firm, were about payments made to Reis when she resigned from TAP in 2022, the publication writes.
The investigation comes at a time when Portugal is attempting to privatize TAP through a sale of at least 51% of its shares.
