Wednesday, 14 October 2026

The government is set to announce the winning bidder for a minority stake of up to 49.9% in national airline TAP (Transportes Aéreos Portugueses), choosing between Germany's Lufthansa and Air France-KLM. Lufthansa is widely considered the favourite following an extraordinary meeting of the Council of Ministers (Conselho de Ministros). The winning bidder will enter final negotiations before submitting the transaction for European regulatory approval.

The government published regulations for the Simplified Affordable Rental Scheme (Regime Simplificado de Arrendamento Acessível), establishing maximum rent caps by municipality that allow property owners to qualify for full tax exemptions. Under the rules, landlords renting a studio apartment (T0) can charge up to €785 per month in Lisbon and €652 in Porto without paying taxes on the rental income. The scheme provides exemptions from both personal and corporate income taxes to encourage below-market residential leases.

Update: New Rules Set Nationwide Rent Ceilings and Scrap Effort Limit

Under the newly published ministerial order (portaria), rent ceilings across Portugal range between €224 and €2,066 depending on municipality and property type, with one-bedroom units (T1) in Lisbon capped at €1,000. The updated rules also eliminate the requirement that rents must not exceed a 35% household effort rate (taxa de esforço).

Chief Superintendent Pedro Moura was sworn in as the new national director of the Public Security Police (Polícia de Segurança Pública or PSP), pledging to make the force accessible to both Portuguese citizens and foreign residents. At the inauguration ceremony, Minister of Internal Administration (Ministro da Administração Interna) Luís Neves also promised to prioritize pay and working conditions for frontline patrol officers.

Former Prime Minister Pedro Passos Coelho prompted debate across the Portuguese political right after indicating his willingness to return to active public life. Prime Minister Luís Montenegro responded by reiterating that the Social Democratic Party (Partido Social Democrata or PSD) will not govern chained to André Ventura's Chega, rejecting calls for a formal legislative agreement.

Minister of Internal Administration (Ministro da Administração Interna) Luís Neves faces political scrutiny following the resignation of ministry secretary-general Ricardo Carrilho. The departure revealed friction over an unpublished ministerial order (despacho) concerning the management of the integrated emergency communications network (Sistema Integrado de Redes de Emergência e Segurança de Portugal or SIRESP). Chega leader André Ventura called for an investigation into the ministry's financial management.

The International Monetary Fund (Fundo Monetário Internacional or FMI) revised Portugal's gross domestic product (Produto Interno Bruto or PIB) growth forecast upward to 2.1% for this year and 1.9% for 2027 in its latest World Economic Outlook. However, the projections remain below the government's forecasts presented in the draft 2027 State Budget (Orçamento do Estado). The fund warned of persistent inflation and weaker growth among major European trading partners, complicating government fiscal targets.

Lisbon Metropolitan Transport (Transportes Metropolitanos de Lisboa or TML) launched the Navegante Planner (Planeador Navegante), a digital platform allowing passengers to plan trips across public transit networks in the metropolitan area. Officials also confirmed that work is underway to integrate transit ticketing between the Lisbon and Porto metropolitan regions.

The Ministry of Finance announced a 50% cut to personal income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) withholding rates for November. The temporary reduction applies to salaries, pensions, and Christmas bonuses (subsídio de Natal) to immediately pass on tax cuts approved by parliament retroactively to January. Standard withholding rates will return in December.

Portugal submitted its draft budgetary plan for the 2027 State Budget (Orçamento do Estado) to the European Commission, committing to European Union net spending growth limits. The plan pairs fiscal discipline with higher military investment, aiming to raise defence spending beyond the NATO benchmark of 2% of gross domestic product (Produto Interno Bruto or PIB). The government also stated it will address housing affordability and begin phasing out fossil fuel subsidies.

Minister of National Defence (Ministro da Defesa Nacional) Nuno Melo announced that the government will replace the entry criteria for the Portuguese Armed Forces (Forças Armadas). The administration plans to overturn changes made under the previous Socialist government that had lowered height requirements and softened health exclusions. Nuno Melo stated the updated rules will better align recruit standards with the operational demands of military missions.

A parliamentary working group approved a joint proposal by the Social Democratic Party (Partido Social Democrata or PSD) and the Socialist Party (Partido Socialista or PS) to extend 100% paid parental leave up to six months. Lawmakers also unanimously approved continuous working hours (jornada contínua) in the private sector for parents of children under 12. The schedule measure allows employees to leave work earlier by taking a shortened 30-minute lunch break, subject to employer agreement.

Prime Minister and Social Democratic Party (Partido Social Democrata or PSD) leader Luís Montenegro rejected suggestions from former Prime Minister Pedro Passos Coelho to negotiate governing pacts with Chega. Passos Coelho argued that the right-wing majority in parliament should govern together, criticizing Montenegro's refusal to ally with André Ventura's party. Montenegro responded that he does not govern based on “tantrums, obsessions, or complexes” and ruled out binding his administration to Chega.

German airline Lufthansa submitted an all-cash offer to acquire a 44.9% stake in TAP Air Portugal. The approach differs from rival bidder Air France-KLM, whose proposal included an option for the Portuguese state to swap its TAP holdings for shares in the Franco-Dutch carrier. The government is currently evaluating the competing bids as part of its plan to privatize the national airline.