PAN Battles Corporate Giveaways in Portugal's 2026 Budget Fight

The smaller parties at São Bento rarely seize the national spotlight, yet the latest skirmish over next year’s Orçamento do Estado has turned the PAN—normally associated with animal-rights causes—into a headline act. Their charge is blunt: public money is being channelled to highly profitable corporations while households and small businesses struggle to keep the lights on.

A familiar budget battle, but a new protagonist

Successive Portuguese governments have been accused of favouring large enterprises whenever recessions or energy shocks force emergency spending. What is different this time, PAN leader Inês de Sousa Real argues, is the scale of incentive packages tucked into the 2026 draft budget. The party points to €2.1 B in planned tax credits for “strategic investors”, accelerated depreciation rules for multinationals expanding data centres, and expanded electricity rebates for energy-intensive industries—schemes the Treasury insists will preserve jobs and attract capital. PAN contends the opposite: the measures simply “give a hand to those who least require it,” allowing conglomerates already reporting record margins to double-dip on relief while ordinary taxpayers foot the bill.

What exactly is under fire?

At the heart of the dispute sits the so-called Corporate Investment Super-Credit, worth up to 25 % of qualifying expenditure. According to a preliminary note by the Tribunal de Contas, enterprises posting annual profits above €100 M captured nearly 62 % of similar credits in 2024. PAN claims this pattern will deepen because the budget drops the prior €50 M eligibility cap. Another flashpoint is the proposed extension of the temporary energy cost subsidy—initially designed for 2022’s gas-price spike, now repackaged until 2027. Critics say the metal, paper and cement sectors, whose combined net profit topped €4.3 B last year, stand to gain the lion’s share.

PAN’s counter-proposal: shift the fiscal spotlight downward

During an October parliamentary hearing, the party unveiled a bundle of amendments aimed at redirecting funds. These include doubling the personal income-tax rebate for families earning under €20,000, converting part of the corporate super-credit into green grants for micro-enterprises, and establishing a nationwide public-transport pass capped at €20 per month for low-income commuters. While the full cost—€1.6 B by the Finance Ministry’s calculus—would be covered by trimming large-firm subsidies, the government argues such cuts would threaten investment pipelines in Sines, Ovar and Palmela.

Government’s defence: competitiveness first

Finance Minister Joaquim Miranda Sarmento maintains that Portugal “cannot afford to be an island of high taxation in a continental market.” He points to Spain’s 10 % corporate tax discount for digital infrastructure, Ireland’s trademark box regime, and Italy’s super-deduction for machinery, insisting the Portuguese package merely keeps the country in the race. Job-creation clauses and environmental criteria, he says, will prevent pure profiteering. Yet even centre-right CDS deputies privately concede monitoring loopholes has proven tricky; a 2025 audit revealed 17 % of firms receiving prior incentives missed employment targets without penalty.

Following the money: what the data reveal

Fresh figures released this summer by the Autoridade Tributária e Aduaneira show that of the €5.4 B in total tax benefits granted in 2025, €3.2 B flowed to companies reporting profits above €100 M, while SMEs shared €930 M. The concentration is starker in energy rebates: four corporations absorbed 78 % of all disbursements. Economists at Nova SBE say such skewness is not inherently harmful if investments spill over into wages and supplier contracts; nevertheless, their study detected only a 4 % wage premium in subsidised firms compared with the national average.

Political ripple effects ahead of 2026

With European funds from the Plano de Recuperação e Resiliência tapering off, next year’s budget is set to become the last major fiscal document before the 2026 general election. PAN hopes its anti-corporate stance will resonate with urban voters squeezed by 8.6 % food inflation and soaring rents. The Socialist Party, caught between pro-growth rhetoric and its progressive base, has hinted at tweaking eligibility thresholds to placate smaller businesses. Meanwhile, Left Bloc and Livre are lining up behind PAN, promising a joint amendment blitz when the budget reaches committee stage.

Why everyday residents should care

For people in Portugal, the debate translates into more than ideological sparring. Tax credits to multinationals ultimately shape how much remains in the public purse for schools, hospitals and affordable transport. If large companies keep the bulk of incentives, the state may lean on consumption taxes—already pushing petrol above €2/L—to balance accounts. Alternatively, redirecting relief to small firms could energise Portugal’s patchwork of family-owned bakeries, cafés and tech start-ups, which account for 2 in 3 private-sector jobs but just 28 % of subsidy flows. As the budget winds its way through parliament, the outcome will determine whether 2026 delivers a recovery that feels broad-based or merely inflates corporate balance sheets.