Portuguese government unveils 30 new tax-payer friendly measures

Portugal’s Government saw a package with 30 tax simplification measures approved in its parliament on Thursday, according to business daily Jornal de Negócios.

Most (80%) aim to reduce context costs, i.e. to reduce bureaucracy; 36% aim to increase transparency and the understanding of tax obligations; and 30% intend to improve the quality of the services provided.

From the simplification of VAT refunds and electronic invoicing rules to the rules for payment of the IUC (vehicle tax), through extending the validity periods of non-debt certificates, the 30 measures should improve the relationship of companies and employees with the tax authorities. Among the most important are:

VAT – the rules for refund requests will be reviewed and the requirements required for it to be effective will be clarified in order to give taxpayers the choice, on request, to provide a guarantee – related to situations in which the amount of tax to be refunded is more than €30,000, in which case there will be an inspection or an assessment by the Tax Authorities of the declaration submitted. If a guarantee is provided, the return is immediately made, and the guarantee is lifted at the end.

This measure also aims to eliminate paperwork notification of the decision of the request for a VAT refund in relation to taxable persons established in another Member State.

Simplification of billing rules – The regime relating to the processing of invoices will be revised, making the requirements for the issuance of electronic invoices more flexible. The Tax Authority’s invoicing application will have new features, such as cancelling invoices and sending communication to buyers. And the requirements of the invoicing rules will be aligned with the objectives of the ViDA (VAT in the digital age) project.

The automatic submission of the periodic return will be allowed when the taxpayer has not carried out taxable transactions, through the conversion of the provisional declaration pre-filled by the Tax Authority (AT) into a declaration submitted by the taxpayer. This simplification measure aims to avoid unofficial assessments and administrative offence proceedings for failure to submit the periodic return.

The Tax Authorities will allow the automatic classification of invoices for taxpayers with category B activity, that is, self-employment, to exempt the taxpayer from the obligation to classify all invoices, whether they are personal or professional. This measure is in line with the ViDA project and will make it possible to identify whether the invoice is B2B (between companies) or B2C (between company and end customer).

Streamlining the declaration of commencement or change of activity for green receipts – This measure aims to improve support for taxpayers in filling out the declaration of commencement or change of activity. This will facilitate the process of correcting the classification of the activity by the Tax Authority.

Exemption from the regularization meeting in the context of tax inspection – Allow the inspected taxpayer to request the regularization of its tax situation and may choose to waive the meeting provided for in the tax inspection regulation. This meeting is only scheduled if the taxpayer expresses interest in holding it.

Increasing the use of AI tools to speed up the response to the taxpayer – The Tax Authorities will use Artificial Intelligence (AI) to analyse relevant tax information and support the preparation of the response to the taxpayer and develop virtual assistants and tools to support the screening and analysis of submitted requests.

Improving taxpayer support in filling out the IRS return Tax management by individual taxpayers – This will be improved by providing them with information on taxation options. Alerts will also be created regarding the possibility of aggregating income subject to discharge/autonomous taxes. With this measure, it is intended to reduce the volume of questions asked by taxpayers during the period of submission of the IRS and foster a relationship of trust between the taxpayer and the tax authorities.

Simplifying the settlement and collection of the Single Circulation Tax (IUC) – Currently, the IUC is due in the month of the vehicle’s registration date, and its settlement depends on the taxpayer’s intervention through the Finance Portal. With this measure, the tax will be due annually, in relation to all vehicles, on a single date. And the taxpayer will have the possibility to make the payment in two installments, when the tax due exceeds €100.

Simplifying the delivery of the Multipurpose Medical Certificate of Disability (AMIM)- A protocol will be signed between the Ministry of Finance (Tax and Customs Authority), Ministry of Health and the other relevant government areas (Labour, Solidarity and Social Security and Infrastructure and Housing), with a view to the automatic communication of the AMIM.

Revising the regime of goods in circulation – This measure aims to ensure paperwork and documentation becomes fully digital for the regime of assets in circulation. In this sense, the legal framework in force will be revised, eliminating the requirement for duplicate documents for the transport of goods.

Improvement of the tax authority website – The Government will create a more user-friendly website, which will have an English-language version of the most relevant information and some mandatory declarations. This measure aims to ensure that all services are available on the ‘Finanças Portal’ website.

Harmonisation of the validity periods of the Tax Authorities’ and Social Security’s non-debt certificates by establishing a validity period of four months for the non-debt certificate issued by the Tax Authority, equaling the validity period of the non-debt certificate issued by Social Security.

Pre-filling of the model 22 with the tax losses generated in previous years – Pre-filling, whenever possible, the fields of the annual IRC declaration, called model 22, with the deduction of tax losses generated in previous years. This measure will also make it possible to provide a table with the balances of tax losses generated each year, allowing the taxpayer to control these same balances.
Setting the minimum amount for the refund of Stamp Duty at €10. Equalising the minimum refund threshold (currently at €25) with the minimum collection threshold (€10), when the competence for the assessment lies with the Tax Authority.

Simplifying Stamp Duty in the context of free transfers – Simplify the procedure for payment of the Stamp Duty (IS) due on free transfers and introduce the possibility of paying the IS in cash or in installments, without the need for prior communication to the Tax Service.

Revising the regime of VAT exemption waiver certificates – Reviewing the formalities for the effective waiver of VAT exemption in transactions related to immovable property, namely regarding the need and requirements for the prior issuance of a certificate for the purpose of waiving the exemption.

Amending the deadline for requesting payment in VAT installments – Allowing requests for payment in VAT installments to be submitted before the deadline for submitting periodic returns, thus allowing the first installment to be made by direct debit.

Paperless VAT records – Eliminating the need to hold physical registration books for VAT taxpayers who do not have organized accounting, replacing them with the classification of invoices on the Finance Portal.

Export Customs Declaration exemption – Exempt the exporter from submitting an electronic export customs declaration to obtain the document with the exit certificate of the goods exempt from VAT and with a value of less than €1,000.

Simplification of customs procedures – Introduce the submission of the customs declaration prior to the presentation of the goods (advance declarations). This measure will modernise the regulation of places where goods are presented for export, in particular export warehouses.

Ex-oficio communication of the identification of the shareholders – Exempts the taxpayer from communicating the identification of the shareholders of the companies. This information will now be sent by the Institute of Registries and Notaries (IRN) unofficially and free of charge.

Harmonisation of deadlines for compliance with reporting obligations  – Set the deadlines for communication of elements/information or compliance with reporting obligations, in particular in terms of personal income tax, until the end of February of each year, namely: Invoices related to business or professional activity; Household composition and percentage of shared expenses; Invoices communicated for the calculation of tax deductions; Invoices for rental charges for displaced students and reimbursement of health expenses.