The increase would be enough to cover the estimated €800 million cost of the Government’s new pension bonus and further reduction in personal income tax rates.

Figures reported by Jornal de Notícias show VAT revenue rose by 9.7% during the five-month period, significantly faster than predicted in the 2026 State Budget.

Almost half of the increase reportedly came from revenue that had not been anticipated.

Economists believe stronger consumer spending played an important role in the result, alongside inflation and higher fuel prices.

Economist Pedro Brinca told the newspaper that inflation alone would not be enough to explain such a large increase in VAT revenue. He believes the figures are more likely to reflect higher levels of consumption and an economy performing better than current official statistics suggest.

A possible upward revision of Portugal’s gross domestic product could change the picture, particularly if updated calculations show the working population and the overall economy to be larger than previously estimated.

Economist João Duque also linked the increase to a combination of economic growth and inflation. Portugal’s economy is growing by more than 2%, while higher prices mean consumers and businesses pay more VAT even when the tax rate itself remains unchanged.

Fuel prices have contributed to the rise as well. When the base price of petrol or diesel increases, the amount of VAT charged on each purchase also goes up. However, fuel represents only a small part of Portugal’s total VAT revenue and cannot explain the increase on its own.

The additional income gives the Government some extra room in the public finances. However, how much money is genuinely available will also depend on whether unplanned public spending increased during the same period.

For now, the €925.8 million rise in VAT receipts is higher than the approximately €800 million expected to be spent on the pension bonus and the latest IRS reduction.