Portugal government considers VAT reduction for restaurant sector

The Portuguese government has indicated it is open to discussing a reduction in the intermediate VAT rate for the restaurant and catering sector during the current legislative term, which extends to 2029. Pedro Machado, the Secretary of State for Tourism, stated during the AHRESP congress in Lagoa that such a discussion is necessary to support a sector struggling with rising costs and recruitment difficulties.

Industry representatives from AHRESP highlighted the sector's economic importance, noting it generates €23.4 billion annually and supports approximately 523,000 jobs. However, the association warned that profitability is critically low, with an average net margin of only 3%. This thin margin limits the ability of the 91% of businesses that are micro or small enterprises to invest or absorb cost fluctuations.

Beyond tax relief, officials emphasized the need for structural improvements, including increased digitalization, management training, and better access to credit to enhance business competitiveness.