Exemption in internal transactions

The supply of services consisting of visits to libraries and public archives, as well as transfers of rights related to copyright are now expressly exempt from VAT.

On the other hand, services provided by social action entities, in the scope of their normal activity, albeit outside their premises, are also considered to be operations exempt from VAT.

Tax rates

VAT rates applicable to transactions deemed to be located in the Autonomous Region of Azores are increased to 5% (reduced tax), 10% (intermediate rate) and 18% (standard rate).

Obligation to issue invoice

Where the recipient of services falling within the VAT exemptions foreseen for financial, insurance and reinsurance services is established or resides in another Member-State of the European Union, the Portuguese supplier is dismissed from the obligation to raise invoices in order to document the services supplied.

Change of details relating to the activity

The change of details relating to the activity promoted by the Portuguese Tax Authorities ex officio with regard to the cessation of the activity, the falsehood of the details declared and the existence of well-founded indications of fraud in the transactions concluded, is immediately effective and must be notified to the taxable person within 10 days.

Bad debts VAT relief scheme

It is clarified that the deduction of tax in the scope of the enforcement proceedings, of insolvency proceedings, of a special revitalisation process (“SRP”) or of a procedure in the scope of the Sistema de Recuperação de Empresas por Via Extrajudicial (“SIREVE”) (Companies Recovery System through Extrajudicial Agreements) excludes the deduction of the tax following the qualification of a debt as a doubtful debt.

The taxable person is also obliged to inform the purchaser of the goods or services of the adjustment of the tax, allowing the purchaser to correct the input VAT previously deducted, where VAT is deducted in the situations referred to above (enforcement proceedings, insolvency proceedings, SRP or SIREVE).

In the cases in which the deduction of VAT need not be preceded by the prior authorisation of the Portuguese Tax Authorities (doubtful debts on account of their having been overdue for more than 6 months since the maturity date, in the amount of no more than EUR 750.00, where the debtor is a private party or a taxable person exclusively concluding exempt transactions that do not entitle to deduction or in the case of debts considered irrecoverable in the scope of enforcement proceedings, insolvency proceedings, SRP or SIREVE), the taxable person must exercise his or her right to the deduction within 2 years as from 1 January of the following calendar year.

Goods and services subject to a reduced rate

Dried fruit will now be subject to the reduced VAT rate under the item «Fruits and vegetables and horticulture products».

On the other hand, agriculture activities not connected to land use or in which the latter has an ancillary nature (e.g., water cultivated crops, manufacture of pots or trays, among others) will now be included in the activities subject to the reduced rate.

VAT cash accounting scheme

It is clarified that the right to deduction of taxable persons excluded from the VAT cash accounting scheme in respect of goods and services covered by such scheme arises with the issue of the invoice, and must be exercised in the return of the period in which the taxable person received the invoice or in the return relating to the following period.

Goods in transit scheme (“GTS”)

The person who puts the goods into circulation at the disposal of the carrier, to carry out loading operations, is also considered a “sender”.

The following goods are now excluded from the GTS:

  • Goods of property, plant and equipment;
  • Goods from aquaculture and goods that are clearly intended for agricultural production, apiculture, forestry, aquaculture and livestock farming;
  • Waste legally equivalent to solid urban waste;
  • Hospital waste subject to a declaration form;
  • Goods to be delivered to users by private welfare institutions (“PWI”) or by other in connection with the protocol established with the social security system;
  • Goods collected in campaigns of solidarity carried out by non-profit organisations;
  • Goods resulting from or necessary to the pursuit of activities carried on by the entities of the State or local business sector engaged in the management of water supply, sanitation and municipal waste system.

Transport documents

With regard to the issue and content of transport documents, provision is made for the issue of global transport paper documents also in those situations in which, when the transport begins, the goods to be delivered to each place of destination are not known.

Provision is also made that, in the case of the actual delivery of goods, the transport documents and the simplified invoice must be processed in duplicate and that, with regard to goods included in the services provided by the same sender, exit of those goods must be recorded in a specific document, processed electronically, by means of a certified software, through an internally manufactured software, on Portal das Finanças or on paper, on a sequentially numbered printed form.

On the other hand, changes relating to the recipient or purchaser of the goods will also require the issue of additional transport documents on paper, stating the change recorded and the document corrected.

Where the recipient or purchaser is not a taxable person, this must be stated in the transport document but only if such document is not an invoice.

With regard to goods transported by street vendors and fair and market vendors, covered by the special exemption regime or by the small retailers’ special scheme, the transport document may be replaced by either the purchase invoice or the simplified purchase invoice.

With regard to the circuit and validity of the transport documents, provision is made that the documents in question must be processed by the senders of the goods or, by prior agreement before circulation, by a third party in its own name and for its own account or also by other taxable persons, where the goods in circulation are the subject of services supplied by them.

As far as the printing of transport documents is concerned, more stringent requirements are imposed on printers for the Ministry of Finance to authorise the printing of transport documents. In particular, in addition to the requirement of non condemnation or non commitment of a wide range of tax offences, it is also established that printers cannot be in breach of their tax payment obligations (VAT and corporate income tax).

Seizure of assets in circulation and of transport vehicle

Provision is made that the seizure of goods in circulation and of the corresponding transport vehicle be limited to cases in which the supervising bodies detect signs that a crime was committed or where no immediate evidence is provided of the origin or destination of the goods. The offenders may also provide the evidence within 15 days after the goods are seized or after the notification of the sender to that effect.

Consequently, the seizure report draw up will be delivered at the tax services of the area where the offence was detected and it will be for these services to inform the competent criminal police bodies accordingly.

Should the criminal police body conclude that there are no signs that a crime was committed, it will inform the competent tax services, so that the latter may draw up the report relating to the possible offence and continue with the misdemeanour proceedings.

The decision to seize the goods in circulation and the corresponding transport vehicle may now be appealed against to the judicial court of 1st instance having criminal jurisdiction in the area where the seizure was made, rather than to the tax court of 1st instance of the same area.

The seizure is no longer provided for in case of failure to produce the transport documents due to lack of registration, cessation of the activity or breach for 3 consecutive periods of statement obligations relating to VAT by the taxable person or of omissions or incorrect information in the transport documents.

VAT exemption in sales to exporters

It is clarified that VAT exemption on sales of goods to exporters, with a value higher than EUR 1,000.00 (per invoice), is applicable provided the exporter has its registered office, permanent establishment, domicile or registration for VAT purposes in the Portuguese territory. On the other hand, the right to exemption also depends on the fact of the goods being dispatched or transported outside of the European Union, irrespective of the dispatch or transport being made by the exporter or by a third party on its account.

Issue of serial invoices

The rules governing the issue of invoices in several series are laid down, and it is established that the series must be identified in accordance with the specific commercial needs of the taxable person, and, within each series, the invoices and the corresponding amending documents must be dated and numbered in sequence, for a minimum period of 1 tax year.

Communication of the details of the invoices by electronic data transmission

The transitional simplified regime of communication of details of the invoices issued is extended to 2014 for taxable persons meeting all of the following requirements: not being obliged to have a SAF-T (PT) invoicing file, not using, nor being obliged to have, invoicing software and not choosing electronic data transmission, included in an electronic invoicing programme or by sending of a standardised file conceived on the basis of the SAF-T (PT) file or by insertion in Portal das Finanças, as well as for taxable persons that only conclude transactions exempt from VAT, which are covered by the special VAT exemption regime for turnover not higher than EUR 10,000.00 or by the small retailers’ regime.

Waiver of the VAT exemption on real estate transactions

The objective conditions of the waiver of the exemption have been amended, it being now provided for that a 30% increase (instead of 50%,as it was up to 31.12.2013) of the taxable value of assets for the purposes of the Municipal Tax on Real Property is enough, as a result of transformation or renovation works, for the waiver of the VAT exemption to be permitted in situations of first transfer or lease of the property after said works.

It is also established that the fact of the property not being actually used to conclude taxable transactions for a period of more than 5 years (instead of only 3 years as until now), will give rise to the mandatory settlement of VAT deducted from the purchase of the same with waiver of the exemption.