Companies’ profits will finance Portugal’s Social Security
Government wants part of the income from IRC (Company Tax) to be allocated to the Social Security's Financial Stabilization Fund.
Starting next year, a part of income from the company tax (IRC) will be used to finance the Portuguese Social Security. The measure is included in the preliminary version of the 2018 State Budget, which anticipates that two percentage points from the rates inscribed in the IRC code will be allocated to the Social Security’s Financial Stabilization Fund (FEFSS).
“The amount corresponding to 2 p.p. of the rates foreseen in the Chapter IV of the Portuguese IRC Code will be part of the invoice from the Social Security’s Financial Stabilization Fund (FEFSS), incorporated in the welfare system of social security capitalization”, the document accessed by ECO stated.
This payment consignment will be made gradually, until 2021, and a part of it will start being enforced next year. This will be the phasing out:
- 0.5 percentage points in 2018;
- 1 percentage points in 2019;
- 1.5 percentage points in 2020;
- 2 percentage points in 2021.
“In 2018, 50% of the IRC income as laid down in the current article is to be transferred to FEFSS”, the document stated. Using income from IRC to finance Social Security was an idea long defended by a lot of politicians, but should only be enforced in the 2018 State Budget.
