Portugal just told energy companies to share the profits. Here's what it means for you.

Good morning, Lisbon. It's Friday, 8 May. Nineteen degrees, overcast, with rain likely this afternoon. Not the weekend start we wanted, but IndieLisboa is indoors.

🌬️ AIR QUALITY: 22 (Good).

🗞️ TOP STORY

PORTUGAL IS GOING TO TAX ENERGY COMPANIES' WINDFALL PROFITS. HERE'S WHAT THAT MEANS FOR YOUR BILLS.

On Tuesday, Finance Minister Miranda Sarmento announced in Brussels that Portugal will impose a windfall tax on energy companies' extraordinary profits, modelled on the mechanism used during the 2022 energy crisis. A draft bill will be presented to parliament "in the coming weeks." Galp fell 4.3% on the news. EDP dropped 5.6%.

This is the first concrete government intervention on the energy costs this newsletter has been tracking since late February. Until now, the response has been limited to the ISP fuel tax safeguard and a vague acknowledgement that the surplus might not hold. The windfall tax is a different register: it is the government saying publicly that energy companies are making extraordinary profits from a war, and that those profits should be redirected toward household relief.

The mechanism will draw on the 2022 Contribution on Extraordinary Profits, which was itself based on an EU regulation allowing member states to levy temporary solidarity contributions on fossil fuel companies. Portugal, alongside Germany, Italy, Spain, and Austria, wrote to the European Commission in April calling for an EU-wide windfall tax. Brussels declined and left it to individual countries. Sarmento is now proceeding nationally.

Details are thin. The Finance Minister said it was "premature" to elaborate on the size, scope, or duration of the tax. In 2022, the mechanism applied to companies whose taxable profits significantly exceeded recent averages. Revenue was earmarked for household energy support. Whether 2026's version follows the same structure or targets a wider set of companies remains to be seen.

What this means for someone living in Lisbon. The windfall tax itself does not directly lower your energy bill. It generates government revenue that can then be used for bill rebates, vouchers, or subsidies. The 2022 version funded direct transfers to vulnerable households. If the 2026 version follows the same model, expect targeted support rather than across-the-board price cuts. The timeline matters: "coming weeks" for a bill, then parliamentary debate, then implementation. Relief, if it arrives, is more likely in late June or July than tomorrow.

The broader context: Brent crude has been trading between $93 and $101 since the US blockade of the Strait of Hormuz took effect in April. Diesel jumped 9.5 cents this week. Portuguese inflation hit 2.7% in March. The ceasefire has been extended with no deadline and no talks scheduled. The pressure that created the conditions for this tax is not going away, and the government knows it.

Bottom line: The government is taxing windfall profits. The money should eventually flow toward household relief. But "eventually" is doing a lot of work in that sentence, and your next electricity bill arrives before the legislation does.

⚡ QUICK HITS

The Concertação Social met yesterday. Thursday's session was framed by Labour Minister Palma Ramalho as the final round on the Trabalho XXI reform. The CGTP's general strike on June 3 remains on the table. We'll cover the outcome in detail once the dust settles and both sides have responded publicly. If you work in Portugal, this remains the most important labour story of the year.

Airlines have cancelled 13,000 flights across Europe in May. The cancellations are driven by the same fuel cost squeeze that prompted Transavia to cut 50 Portugal flights last week. If you have summer travel booked, check your bookings directly with your airline now rather than waiting for a cancellation notification.

AIMA is extending regulated migration pathways to students. AIMA president Pedro Portugal Gaspar said this week that the agency is considering broadening the regulated migration framework to include students, expanding on the vocational training pathway introduced in April. Details are still emerging, but for anyone in Portugal on a student visa or considering one, this is worth watching.

🍽️ SPOT OF THE DAY

FAUNA & FLORA (MADRAGOA)

Madragoa is a five-minute walk from the river, ten minutes from Cais do Sodré, and somehow still the neighbourhood that most of Lisbon's expat community hasn't properly explored. Fauna & Flora, on Rua da Esperança, is one of the reasons to start.

The concept is all-day brunch in a room that feels like someone turned a greenhouse into a café. Plants everywhere: hanging from the ceiling, climbing the walls, lining the windowsills, sitting on every available surface that isn't your table. The presentation is deliberately photogenic, but the food is better than the Instagram account suggests, which is the detail that separates Fauna & Flora from the dozens of Lisbon brunch spots that look good and taste ordinary.

The menu runs wide. The açaí bowls are the most ordered thing on the menu and they're well made. The matcha pancakes are the signature dish: tall, fluffy, stacked, and surprisingly filling. The halloumi toast with avocado, spinach, and basil mayo is the savoury option most people come back for. The pink hummus with roasted vegetables is the vegan order. The pulled teriyaki beef bagel is the thing you order when you've decided you're not here for health food after all. The smoothies and fresh juices are taken seriously, and the coffee is better than average.

The original Madragoa location is the smallest and the most atmospheric. There are now four locations: Santos/Madragoa (the original), Anjos on Rua Febo Moniz, Chiado on Rua António Maria Cardoso, and a newer Estoril outpost. All serve the same menu. The Madragoa original is the one worth visiting first, because the room is the room, and the neighbourhood walk afterwards, down Rua da Esperança toward the river, past Invicta Madragoa and the Mercado da Ribeira, is one of the better post-brunch strolls in the city.

→ What's a matcha pancake stack? Find out ←

Rua da Esperança 33, Madragoa. Tuesday to Saturday 9am to 7pm, Sunday 9am to 5pm. Closed Mondays. Walk-ins only. Expect a wait on sunny weekend mornings. Phone: +351 961 645 040.

Insider tip: Go on a Tuesday or Wednesday morning when the room is quiet and the kitchen isn't rushed. The weekend queue is real, especially at the Madragoa location. If it's full, the Anjos branch is usually less busy and the walk through Arroios market on the way is worth the detour.

📅 WHAT'S ON

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See you tomorrow morning.