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Portugal's fragile restaurant sector is close to collapse

plateMore than half of Portugal’s restaurants and hotels still are at a “high risk of failure,” according to a report by the European Commission.

According to Pedro Carvalho from Portugal’s association for hoteliers and restaurateurs, the blame lies fair and square with the high tax increase that his members were subject to after the Troika arrived in the country and IVA for meals shot up from 12% to 23%.

Carvalho says, "there was a brutal tax increase,” and many service providers simply could not pass on the VAT increase to their customers, thus reducing their margins further with many going out of business losing everything.

The result has been the net loss of 44,000 official jobs in the sector since 2008 with tens of thousands part time and temporary jobs also affected.

The EC report states that of those companies that have managed to remain in business, 60% currently are at risk of failure despite the adjustment programme having been followed.

The VAT increase was the main cause of the sector’s poor financial health and despite calls from restaurateurs to return to the 13% rate, the government “does not seem receptive to the idea,” according to the EC report which is as toothless as it is ironic.

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