Government to Exempt Church Abuse Compensation From Tax
Proposed law ensures EUR 1.6M in compensation for 57 abuse victims keeps its full value.
The Portuguese Government announced on Friday that it will introduce legislation to exempt compensation payments to victims of sexual abuse in the Catholic Church from personal income tax (IRS).
The move follows weeks of controversy after it emerged that the tax authority had been classifying the payments as "patrimony gains" under Category G of the IRS code — potentially halving the amounts received by victims.
What happened
In March, the Portuguese Bishops' Conference (CEP) approved financial compensation for 57 victims of sexual abuse whose claims had been validated. Each victim is entitled to between EUR 9,000 and EUR 45,000, with total payouts exceeding EUR 1.6 million.
Of the 95 compensation requests received, 78 were deemed eligible and 57 have already been approved. The remaining cases are still under review.
However, the tax authority's decision to treat the payments as taxable income drew immediate criticism. The State stood to collect approximately EUR 320,000 from the compensations — money intended to provide reparation to people who suffered abuse as minors or vulnerable adults.
The government's response
The proposed law will ensure the compensations "maintain fully their compensatory and support nature for victims, without any tax penalty," the Government stated.
Crucially, the exemption extends beyond Catholic Church cases. The legislation will cover financial compensation awarded for sexual abuse of minors and vulnerable adults in analogous situations, as recognised by decree of the Minister of Justice.
The Bloco de Esquerda and PAN had already tabled parliamentary proposals calling for the exemption, arguing that the payments should be treated on equal footing with damages awarded by judicial or arbitral courts, which are already tax-free under Portuguese law.
Background
Portugal's Independent Commission on the sexual abuse of children in the Catholic Church delivered its final report in 2023, documenting hundreds of cases spanning decades. The compensation scheme was one of the Church's responses to those findings.
Bishop José Ornelas, president of the CEP, described taxing the payments as "not ethically acceptable," adding that the compensations were designed to acknowledge suffering, not to generate revenue for the State.
What happens next
The Government's bill will be submitted to Parliament, where it is expected to receive broad cross-party support given the existing proposals from BE and PAN. Once enacted, the exemption will apply retroactively to all compensation payments already made under the Church's scheme.
