Portugal Socialists promise restaurant VAT rate cut

Thu 30th Apr 2015

The opposition Socialist party has promised to reclassify food served in restaurants from the Portuguese VAT rate of 23% to the reduced VAT rate of 13%. The Socialists are currently ahead in the polls for this Autumn’s national elections.

Portugal has considered cutting VAT on restaurants a number of times. It originally moved supplies from the then reduced rate of 10% to the standard rate at the height of the Euro currency crisis in 2012 – Portugal received a financial bail out from the ECB, EU and IMF.

Growth returned to the sector in 2013 despite operating under the higher VAT rate, which had indicated that a reduction was unnecessary. Such a tax subsidy would cost over €300m per annum and would have to be approved by the Troika of the IMF, EBD and EU.

Countries such as Ireland and Greece have long claimed that their reduced VAT rates on tourism and restaurants have contributed directly to growth in their sector.