Financing of religions

In Portugal, until the advent of liberalism in the first quarter of the 19th century, historical records show that the Catholic Church (hereinafter referred to as the “Church”) owned about half of the national wealth. Its property was inalienable and was virtually exempt from taxation. The Church still received tithes and other revenues, free of taxes. However, with the advance of liberalism and republicanism between 1832 and 1910 and, in particular, with the Laws of Disestablishment (1834) - the disposal of the Church’s assets and the dissolution of religious orders - a large proportion of ecclesiastical property was nationalised. Clerics were left without means of support and the State then granted them pensions, thus turning them into employees of the State.

This policy was continued throughout the constitutional monarchy (1820-1910) and during the regime of separation established by the First Republic (1911). The Law of Separation nationalised all the Church’s assets and the parishes initiated a process of restructuring, with the creation of religious associations.

In 1918, this began to change, especially under the mandate of President Sidónio Pais, who allowed followers of all religious communities to create corporations, according to their internal regulations. The end of the First Republic (1926), the rise to power of António Salazar (1933), and the Concordat of 1940 confirmed the principle of free organisation of the Church and, consequently, the creation of religious bodies which were recognised by the State as having their own legal status. The Concordat allowed the Church to recover some real estate and guaranteed it exemption from taxes on ecclesiastical property, on the remuneration of priests and on the occupation of several positions in education and spiritual support (subsidised by the State).

The transition to democracy that started in 1974 and the Constitution of the Third Portuguese Republic in 1976 did not grant religions any system of subsidies (Article 41). Nevertheless, the preservation of the 1940 Concordat and all the financial and fiscal provisions to the Church after the democratic transition, as well as the immigration phenomena (Muslims from Africa; Orthodox Christians from Eastern Europe and Evangelical Christians from Brazil) and the growth of religious minorities, led the Portuguese government to pass a Religious Freedom Act (RFA) in 2001. In this RFA, all religious institutions registered in Portugal benefit from the tax-free contribution regime and the tax benefits of Articles 31 and 32. This law led Portugal to a new Concordat with the Vatican in 2004. The provisions of this new Concordat are similar to the RFA in terms of financial support for the Church (Article 26), tax exemptions and benefits. However, there are some specific features reserved for the Church, such as its possible inclusion in the tax collection system (Article 27), the tax exemption of the ecclesiastical authority responsible for funds destined for the Church (Article 26/4) and support for the Catholic University of Portugal (Article 21/3).

See also:
– BRITO, José de Sousa e, « Le financement des communautés religieuses au Portugal", in Brigitte Basdevant-Gaudemet et Salvatore Berlingò (eds.), The Financing of Religious Communities in the European Union, 1ère ed., Trier, Institute for European Constitutional Law, 2009, p. 287-294.
– MONIZ, Jorge Botelho, “O financiamento público da religião na Europa católica pós-crise”, Ius Ecclesiae, Rivista internazionale di Diritto Canonico, 28, 1, 2016, p. 79-112.
– PIRES, Manuel, “Aspectos fiscais”, in Manuel Saturnino Gomes (coord.), Estudos sobre a Nova Concordata. Santa Sé – República Portuguesa, 18 de Maio de 2004, col. Lusitânia Canónica, 11, 1ª ed., Lisboa: Universidade Católica Editora, 2006, p.120-147.

D 19 December 2017    AHelena Vilaça AJorge Botelho Moniz

There is no constitutional provision for any subsidies to religions. In fact, the Constitution of the Portuguese Republic (1976) clearly defined the separation of churches and religious communities from the State (article 41/3).

However, at national and international level, notably in the RFA - Religious Freedom Act (2001) - and in the Concordat (2004), the Portuguese State allows for the possibility of supporting registered churches and religious communities through tax exemptions and benefits. This separation regime - also referred to in the RFA under the principles of equality, neutrality and the non-denominational position of the State (Articles 2, 3 and 4) - is reconciled with the principle of state-religion cooperation in matters of common interest (e.g. education, peace and human rights), as provided for in Article 5 of the RFA and Article 1 of the Concordat. It is within the logic of separation with cooperation that we must interpret the fiscal advantages that the State offers to churches and religious communities registered in Portugal.

Regardless of the legal status of the religious community, there are three types of religious activity that are considered non-taxable: i) donations from followers for the exercise of worship and rites; ii) public collections for religious purposes; and iii) the free distribution and display of religious publications (RFA, Article 31/1).

In addition to the tax-free contributions in Article 31 of the RFA, religious legal entities that are registered as such in the national register of legal entities also enjoy the tax benefits granted in Article 32 of the RFA, such as tax exemptions on places of worship and buildings intended for activities for religious purposes; establishments intended for the training of ministers of religion or for religious education; the acquisition of real estate for religious purposes, and on donations made to those entities, up to a maximum of 15% of an individual’s taxable income.

In addition to all the above-mentioned advantages, the country’s established churches and religious communities (the Church, the Evangelical Alliance and the Muslim and Jewish communities) enjoy all the tax benefits granted in Article 32 (No. 4 et seq.) of the RFA and in Article 26 of the Concordat, such as the 0.5% rate of personal income tax and tax exemption for any free acquisition of property for religious purposes.

The Catholic Church: Church institutions receive a VAT refund for activities and acquisitions for religious or charitable purposes (Article 1 of Decree-law 20/90). The Concordat (Article 27) gives the Portuguese Episcopal Conference the option to include the Church in the 0.5% income tax collection system provided for in the RFA. However, taking up this option requires the renunciation of VAT exemption (RFA, Article 65).

The Ismaili Imamat: The Ismaili Imamat signed a supranational agreement (a second Concordat, even although the other contracting party is not a state) with the Portuguese State in 2015. This legal agreement gives a certain pre-eminence over other non-Catholic churches and religious communities, especially in terms of taxation, with greater tax benefits than those provided for in the RFA (see Article 11 of this agreement). In particular, it includes exemptions on donation income, on the remuneration of the Aga Khan and on foreign income, and the reimbursement of VAT on goods and services for official functions.

See also:
– BRITO, José de Sousa e, “Le financement des communautés religieuses au Portugal”, in Brigitte Basdevant-Gaudemet et Salvatore Berlingò (eds.), The Financing of Religious Communities in the European Union, 1ère ed., Trier: Institute for European Constitutional Law, 2009, p. 287-294.
– MONIZ, Jorge Botelho, “O financiamento público da religião na Europa católica pós-crise”, Ius Ecclesiae, Rivista internazionale di Diritto Canonico, 28, 1, 2016, p. 79-112.
– PIRES, Manuel, “Aspectos fiscais”, in Manuel Saturnino Gomes (coord.), Estudos sobre a Nova Concordata. Santa Sé – República Portuguesa, 18 de Maio de 2004, col. Lusitânia Canónica, 11, 1ª ed., Lisboa: Universidade Católica Editora, 2006, p.120-147.

D 19 December 2017    AHelena Vilaça AJorge Botelho Moniz

Education: The Constitution of the Portuguese Republic (Article 43/3) states that public education cannot be denominational. Nevertheless, the State guarantees the freedom to teach any religion, provided that it is practised within the framework of an individual’s faith (Article 41/1). The State pays a salary to teachers of moral and religious education in public schools, up to secondary education. There are three churches and religious communities that benefit from this financial support: the Catholic Church, the Evangelical Alliance and the Baha’i community. Teachers of evangelical morality, unlike their Catholic counterparts, are not considered public sector employees and therefore have a less secure employment status (they are paid by the hour). There is no funding for denominational institutions of higher education. However, according to Decree 307/71, revised by Decree 128/90, the Catholic University of Portugal (UCP) can be supported directly by the State through financial compensation. This support is due to the fact that the UCP is not a private university, as it has the legal status of a legal entity of public utility.

Social Assistance: Social solidarity institutions, including religious organisations, may be funded for their services to disadvantaged populations. In this respect, we must mention IPSSs (Private Institutions of Social Solidarity) which, according to Decree No. 75/92, are entitled to public compensation in the pursuit of their social solidarity objectives. For this reason, agreements and protocols are established between these legal entities of public utility and the State (Article 8 of Decree 119-83 and Article 31/3 of Law 4/2007). In Portugal, for various historical, political and cultural reasons, the Catholic Church directly or indirectly owns about 30% of all IPSSs.

Chaplaincies: the State subsidises churches and religious communities for services conducted by ministers of religion in military settings (Decree 251/2009), hospitals (Decree 253/2009) and prisons (Decree 252/2009). This spiritual support is provided for by Article 17 of the Concordat and by Article 13 of the RFA (Religious Freedom Act). In the exercise of their functions, chaplains are considered as civil servants (military chaplains are part of the armed forces) (in the three above-mentioned decrees, see Article 15) and are paid by the State. Military chaplaincies currently have a structure for Catholic spiritual assistance. Evangelical chaplains work on a voluntary basis. Hospital chaplaincies do not have permanent chaplains, but it is possible to request spiritual assistance, even in the case of minority religious denominations, whenever necessary.

Religious buildings: The State sometimes subsidises church initiatives with a particular social purpose. This includes granting land, provided for in urban plans, for the construction of new churches or temples and financial support for their construction. This was the case for the central (Sunni) mosque in Lisbon (between 1978 and 2004), the Hindu temple in Lisbon (1980s), the construction of a Koranic school and mosque in Loures (1999) and the Church of the Holy Trinity in Oeiras (2015).

Mass Media and Communication: Public funding for broadcasting religious programmes on public television and radio services is provided in Portugal for all registered churches and religious communities, in pursuit of their religious objectives (Article 25/1 of the RFA). Notwithstanding the universality of this norm, according to Article 25/2, the allocation and distribution of broadcasting time must be in proportion to the representativeness of religious denominations. For this reason, the Church has a certain predominance in this area. For example, it broadcasts the television programmes “70x7” and “A Fé Dos Homens [People’s Faith]” in addition to the Sunday Eucharist.

The Missionary Agreement: The 1940 Missionary Agreement has never been formally repealed. The Portuguese State is therefore still responsible for the subsistence pensions of Portuguese missionaries in former overseas colonies.

D 19 December 2017    AHelena Vilaça AJorge Botelho Moniz