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Corporate Outlook 2024: Decoding Budget Alterations for Companies

Lisbon, November 2, 2023 The general approval of OE2024, on October 31, marked a decisive moment in the fiscal and economic panoramas in Portugal.

With the approval, the stage is now opened for a more in-depth and detailed discussion, starting this November, when the document is lowered to the Specialty in the Assembly of the Republic. This phase is extremely important, as it allows details and specificities to be addressed that could have major repercussions on the country's business fabric.

The business world, always attentive to these movements, is expectant. Leaders, managers, and investors try to better understand what is coming. After all, decisions made during this period will directly influence the business environment, investments, and company strategy for the next year.

The big question that hangs in the air and sounds in meeting rooms and corporate corridors is: what will be the real implications and what challenges will companies have to face with this new OE? And, furthermore, what opportunities could arise from this scenario we have at hand?

anticipates the most relevant points that could change the lives of companies in 2024.


→ Fiscal Consistency and Predictability: at first glance, the new Budget reveals a tendency towards continuity. Stability is crucial for companies to plan in the medium and long term, and, in this sense, the absence of radical fluctuations in fiscal policies is a positive sign.


→ Relief in Autonomous Taxation: within the tax universe, there is a reduction in autonomous taxation. The rates, previously set at 10%, 27.5%, and 35% for expenses with light passenger vehicles, were adjusted to 8.5%, 25.5% and 32.5%. Although this change may seem subtle, it represents financial relief, especially for companies with significant fleets.


→ A Boost for Startups: in the entrepreneurial ecosystem, the budget brought a stimulus that cannot be ignored. The reduction in IRC to 12.5% ​​for startups, especially those that qualify as micro or small companies and SmallmidCaps, is a tangible incentive for innovation and business creation in Portuguese territory.


→ Valuing Human Capital: with the recent discussion of OE2024, there is finally an update in support values ​​paid to workers. In this context, one of the most relevant decisions is the IRS exemption on balance sheet bonuses up to 5x the RMMG, equivalent to €4,100. This measure not only recognizes the importance of employees for the growth and stability of companies but also encourages fair and meritocratic remuneration.


Subsistence allowances and travel in your own vehicle: another significant change, which will certainly be welcomed by the business sector, is the readjustment of values ​​related to travel in your own vehicle and subsistence allowances. In response to market requests and the need for updating, the value for traveling in your own vehicle was updated, going from 0.36 to 0.4 per km.

In addition, allowances for national travel were established at €62.75 per day for general workers in public functions and 69.19 for Administrators, managers, members of the Government, and senior staff. For international travel, the amount set is €148.91 for workers in general in public functions and €167.07 for Administrators, managers, members of the Government, and senior staff. This subsistence allowance scheme and the applications of its rules are necessarily intended for the Public Service. However, most private companies use these values ​​as a reference, as the Public Service reference values ​​govern the maximum limits for exemption from IRS and Social Security. These changes demonstrate an approach more aligned with current realities, providing greater support to companies and their employees in their professional activities.


→ Encouraging Corporate Sustainability: in addition to these points, OE2024 demonstrates a commitment to strengthening corporate sustainability. New tax incentives aimed at increasing salaries and capitalization of companies appear as tools to stimulate growth and solidify the presence of companies in the national and international markets.


→ A Challenge to Competitiveness: Despite the various positive initiatives, there are aspects of OE2024 that raise concerns and deserve increased attention. One of them is, without a doubt, the end of the Non-Habitual Residents Regime. For years, this regime served as a true magnet to attract qualified professionals from different parts of the world, establishing Portugal as an attractive destination for international talent.

Especially in cutting-edge sectors, such as technology and innovation, the regime offered competitive advantages that positioned the country as a hub of excellence and innovation. Its extinction threatens to destabilize this balance, leading companies to face significant challenges to continue attracting and, more importantly, retaining the best talent in the global market.

More than ever, companies may now feel the need to increase their benefits packages, increase salaries or even consider relocating to regions with more favorable tax regimes. Furthermore, the move could trigger a brain drain, with qualified professionals choosing to migrate to more tax-competitive destinations.


Conclusion

OE2024 presents itself with varied themes, oscillating between opportunities and challenges.


For the attentive businessman, this is a time of analysis, adaptation, and, above all, strategy. With the changes presented, companies have the opportunity to revisit and rethink their business models, aligning themselves with new realities and preparing for a promising future.

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