As of January 1, 2025, a measure provided for in Law No. 38/2024 comes into force, which significantly changes the VAT regime applied to electricity consumption in Portugal. This change, which seeks to alleviate financial pressure on families and small businesses, translates into the expansion of consumption limits covered by the reduced VAT rate of 6%, according to .
Currently, the reduced ICMS rate only applies to the first 100 kWh consumed monthly by families with contracted electricity of up to 6.9 kVA. However, with the new rules coming into force, this limit will be doubled to 200 kWh per month. Thus, families within this criterion will be able to benefit from greater tax relief on their electrical consumption.
For large families – defined as those made up of five or more people – the consumption limit covered by the reduced rate will also increase. From 2025, these families will be able to consume up to 300 kWh per month with the application of ICMS at 6%.
It is important to highlight that this measure does not change the application of the normal ICMS rate of 23% for consumption that exceeds the established limits. For example, a family that consumes 250 kWh in a month will see the first 200 kWh charged at 6%, while the remaining 50 kWh will be subject to the 23% rate.
Another relevant point is that this VAT reduction applies exclusively to electricity consumption. The fixed components of the bill, such as network access charges, will remain unchanged.
According to estimates, the measure should benefit around 3.4 million consumers, a significantly greater number than the 300,000 families that currently benefit from the reduced rate. The application of the new rate will be automatic, with no registration or request from consumers required. It will be up to the electricity supply companies to implement changes in eligible consumption from the stipulated date.
With this initiative, the Government intends to mitigate the impact of energy expenses on family budgets and encourage greater sustainability in electrical consumption.
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