The Portugal’s budget for 2012 was delivered to Parliament this Monday afternoon and includes the increase in VAT (value adeded tax) for restaurants that will now have to charge 23% instead of 13%, and on several ready-made convenience food items and renewable energy equipment.

Restaurants and entertainment activities are to be taxed at the maximum VAT rate which will be applicable to all cinema and football tickets, frozen foods and soft drinks. The 23% rate will be applicable to all “cultural events, sports competitions and other public events” as well as soft drinks, frozen foods and snacks from potato chips to pizzas.

The budget also increased taxes on financial operation gains. “The positive balance, between gains and losses (…), is to be taxed at 21.5%”, the document said, up from the current 20%.

The government also decided to impose a 10% limit on health expenses tax payers can write off from their personal income tax rather that the current 30%.

One seemingly good bit of news in the budget was that tax payers would be able to deduct 5% from VAT they pay up to a particular ceiling from their taxable income. Details have yet to be released.

And speaking to some of the people, VAT will be up from 5% to 23% on Electricity (this applies to holiday homes too I believe)if this hasnt already been implemented, they are losing some of the mid week bank holidays and some end of year payments in salary...all in all not too good a picture

I hope some of the other countries in the same boat take notice. Talk about "A hole in the bucket".

the vat increase on restaurants, cinemas etc is directly the opposite route ireland is going down to try and stimulate the economy. Vat in ireland was recently reduced to 9% on hotels, restaurants, hairdressers etc (ie labour intensive industries( to try and get some movement again in those sectors. All I know is that's it a lot cheaper to eat out in ireland now than 2 years ago, I accept that it is still cheaper to eat out in Portugal but the difference is not as significant as it once was. can't believe they are putting 23% on electricity (and probably gas and water too).

I have to say I feel sorry already for restaurant owners and hoteliers trying to stretch the season past the peak. won't be worth their while opening now from november to april.