Glossary

Tangible fixed assets (TFA) are assets with physical substance that are held for use in the production or supply of goods or services, for lease to third parties, or for administrative purposes, and are expected to be used for more than one reporting period. The accounting treatment of Tangible Fixed Assets (TFA) is regulated by the Public Accounting Standard 5 - Tangible Fixed Assets, as provided in Annex II of the Accounting Standardization System for Public Administration, approved by the Decree-Law No. 192/2015, of September 11th.

The tax burden corresponds to the percentual relation between the total amount of tax revenue and actual social contributions and a country’s GDP. In the European Union, the tax burden of each country may also include the amount of tax collected in favour of supranational institutions.  

The tax effort weighs the tax burden of a country by the standard of living of its citizens, thus indicating the effort of taxpayers to satisfy the tax obligations imposed by the State. This indicator is measured as the ratio between the tax burden and any indicator that reflects the economic capacity of its citizens (e.g. GDP per capita in PPP).

Tax elasticity corresponds to the tax revenue responsiveness, in percentage terms, to a 1% change in the macroeconomic base of a given tax, ceteris paribus.

Tax evasion consists in the use of illicit means to hide the tax base (e.g., income or wealth) with the objective to underpay the amount that would be legally owed.

A tax expenditure is the amount of tax revenue that a given political entity voluntarily waives in order to achieve certain social and economic goals. Tax expenditure is related to tax relief, whether structural in nature or true tax benefits.

Tax reimbursements correspond to Reimbursement of the amount of tax paid in excess by a taxpayer in a given period.

In accordance with Article 19 of the Portuguese General Tax Law, the tax residence corresponds to the usual place of residence for individuals. The tax residence for companies corresponds to the place where the headquarters or the effective management is located. In the absence of these two, the tax residence for companies corresponds to the place where their permanent establishment is located in Portugal.

Tax revenue corresponds to the total of current, definitive, coercive and unilateral pecuniary benefits received by the state, a local authority or another public entity. Examples include revenue from taxes on income, goods and services, property and other taxes.

The Tax Wedge (Labour) measures the difference between the total labour costs to the employer and the net wage received by the employee (net from labour taxes and employer’s and the employee’s social contributions). 

Tax withholding is a mechanism that allows the tax administration to withhold in advance the expected tax amount owed by a taxpayer in a given fiscal year. The amount withheld is delivered directly to the tax administration by the entity that provides the income to the taxpayer.

The code of conduct for the implementation of the Stability and Growth Pact defines temporary and one-off measures as those whose budgetary effect is transitory and does not lead to a sustained change in the intertemporal budgetary position.

The terms of trade is the ratio between the price of exports and the price of imports, representing the purchasing power of exported goods and services, i.e., the quantity of goods and services that a country can import in exchange for one unit of exported goods and services. They can be used to measure the relative evolution of national exports in the value chain. A positive evolution of the terms of trade means that the price of exports has risen more than the price of imports, while a negative evolution reflects the opposite.

The total debt limit refers to the limit defined in article 52 of Law no. 73/2013, of 3 September (financial regime of local authorities and inter-municipal entities), which establishes that the total debt of budgetary operations of the municipalities, including that of local government owned enterprises and of other entities participated by the municipalities in which there is control or presumption of control by them, may not exceed, at the end of each year, 1.5 times the average of the net current revenue collected in the three previous fiscal years.

In the perspective of public budget accounting, total expenditure or budget expenditure includes all expenditure that has a budgetary expression. This includes any and all transactions involving financial assets and liabilities (non-effective expenditure), as well as all other transactions related to the acquisition of goods and services, interest, subsidies, social benefits, remunerations and investment (effective expenditure).

Public expenditure or total expenditure is the use of resources by public entities to purchase goods or services to meet public needs. The concept used by the CFP refers to the total expenditure of the General Government sector from a national accounts perspective. It corresponds to the sum of current expenditure and capital expenditure.

It corresponds to the actual revenue added to the revenue resulting from budgetary financial assets and liabilities, and the balance from the previous fiscal year, purged of treasury operations.

The trade balance, also known as balance of goods and services, corresponds to the difference between exports and imports of goods and services. It may be calculated separately for transactions of goods (balance of goods) and of services (balance of services).

Transfers under the Autonomous Regions Finance Law are the sums to be transferred to each of the autonomous regions, included annually in the State Budget Law, aiming to fulfil the principle of solidarity enshrined in the Constitution, in the political-administrative statutes of the Autonomous Regions and in the Autonomous Regions Finance Law itself.

Transfers under the Local Finance Law are financial transfers to municipalities and parishes, allocated annually in the State Budget Law with the purpose of promoting the distribution of public resources between the State and local authorities, with a view to achieving the objectives of horizontal and vertical financial balance. They include transfers to inter-municipal entities arising from the delegation of powers by the State or any other public entity.

Treasury Bills are short-term public debt securities (with maturities of up to one year) representing a loan from the Republic of Portugal, issued at a discount (I.e., the price is lower than the nominal value reflecting the prepaid interest), by auction or limited subscription and redeemable at maturity at their nominal value.

Long-term public debt securities, representing a medium-long term loan of the Republic of Portugal (with maturities between one year and 50 years), placed through a banking syndicate, auction or limited subscription, with periodic interest (or not) and repayable on maturity at their nominal value.