On 13 September 2026, the Socialist Party (PS) parliamentary group accused the right-wing Chega party of effectively supporting the minority Government by rejecting an immediate VAT reduction on essential food items. The PS proposed lowering the VAT rate from 6% to 0% on a basket of basic foodstuffs effective 1 October 2026, arguing that waiting until January 2027 harms low-income families. The Government opposes the measure, citing budgetary constraints and EU fiscal rules.
Key Takeaways
- Political Dynamics: The PS needs Chega’s support to pass the measure; Chega’s abstention allows the Government to avoid defeat.
- Fiscal Impact: The proposed VAT cut would cost an estimated €350 million in 2026, rising to €1.2 billion annually.
- EU Constraints: The European Commission has warned that permanent VAT rate reductions below the 5% reduced rate floor require Council unanimity.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement