NEWSLETTER I TAX
CONTENTS NEWSLETTER TAX LAW I JUNE 2017 I NATIONAL LEGISLATION II ADMINISTRATIVE INSTRUCTIONS III INTERNATIONAL CASE LAW IV NATIONAL CASE LAW V OTHER MATTERS
2 2 4 5 6
NEWSLETTER I TAX I 1/7
NEWSLETTER TAX LAW
I NATIONAL LEGISLATION
Ministry of Finance Ordinance no. 185/2017, of 1 June
Regulates Decree-Law 19/2017, of 14 February, which establishes an electronic system for the communication of data on travellers', and respective purchases, intending to benefit from the Value Added Tax ("VAT") exemption on purchases made in Portugal.
Office of the Secretary of State for Tax Affairs Decision no. 212/2017-XXI, of 31 May 2017, published in June 2017
Determines that the obligation to submit the Corporate Simplified Information return ("IES") can be fulfilled up to 22 July 2017, without incurring in any penalties.
Ministry of Finance Ordinance no. 191/2017, of 16 June
Approves a new version of Form 38 Declarations of Cross-Border Transactions ("Modelo 38 Declaraes de Operaes Transfronteiras"), and respective instructions, to be submitted by credit institutions, financial institutions and other institutions which render payment services to comply with the obligation of declaring money remittances and transfers made to an entity located in a country, territory or region with a more favourable tax regime.
II ADMINISTRATIVE INSTRUCTIONS
Tax and Customs Authority Binding Information concerning case no. 11 591/2017, of 31 May, published in June 2017 Framework - Foundation - Services provided in relation to childcare, such as: teaching of music, dance, theatre, swimming; school/study support and after-school activities; activities during the holidays (educational holiday camp).
Clarifies that the sale of photographs and photo albums to students and the sale of uniforms (mandatory as per the internal regulations of the institution) to students and staff, are not ancillary to the educational activity and therefore may not benefit from the exemption provided for in Article 9 (9) of the VAT Code.
NEWSLETTER I TAX I 2/7
It also clarifies that sports and artistic extracurricular activities, school and study support, after-school activities and activities during the holidays (i.e., educational holiday camps) may benefit from the exemption provided for in Article 9 (7) of the VAT Code.
Tax and Customs Authority Binding Information concerning case no. 11 643/2017, of 31 May, published in June 2017 Framework Non-profit association Organization and coordination of courses, studies and research in psychodrama and sociodrama
Clarifies that the rendering of services and related sales of goods by a non-profit association with a cultural and recreational purpose, for which the sole consideration are the fees paid by the members, shall be VAT exempt. However, such exemption shall not apply if other payments are made in addition to the membership fee.
Further clarifies that vocational training activities are only exempt from VAT if the provider is accredited by the Directorate-General of Employment and Labour Relations ("DGERT").
It also states that the organization of cultural congresses by a non-profit association may benefit from VAT exemption, whereas the VAT reduced rate of 6% applies to the sale of magazines.
Tax and Customs Authority Binding Information concerning case no. 11 771/2017, of 31 May, published in June 2017 Rates Economic and employers' organizations Improving the efficiency of existing irrigation systems Rural Development Program 2014/2020 Renovation of irrigation systems; Monitoring the application to PDR2020.
Clarifies that the works for the renovation of irrigation systems fall under the provision of item 4.2. (f) of List I annex to the VAT Code and are therefore subject to the reduced VAT rate of 6%.
Further clarifies that the services rendered in connection with the monitoring of applications for the Rural Development Programme 2014/2020 are taxed at the standard VAT rate of 23%.
Tax and Customs Authority Binding Information concerning case no. 11 895/2017, of 26 May, published in June 2017 Framework: Non-profit organization Foundation that organizes annual congresses, with free access to its members Financial support of the organizations by donors
Clarifies that the activity of a non-profit organization that essentially organizes events with a cultural and educational scope for the promotion of universal human values to young people benefits from the VAT exemption foreseen in Article 9 (14) of the VAT Code.
NEWSLETTER I TAX I 3/7
Further clarifies that sponsorships received by the same entity, which have a predominantly commercial purpose related to the rendering of advertising services, are deemed consideration for a service subject to VAT at the standard rate of 23%.
Tax and Customs Authority Tax Management Area - VAT Circular no. 30 191, of 8 June 2017
Discloses the concepts of "immovable property", "services connected with immovable property" and "supply of equipment for carrying out work on immovable property", added to Council Implementing Regulation (EU) No. 282/2011, of 15 March 2011, for the purpose of the qualification of services rendered in connection with immovable property.
Tax and Customs Authority Department of Customs Taxation Services Division of Customs Debt, Customs Value and Origins Circular no. 15 591, of 12 June 2017
Clarifies the procedures to be adopted by economic operators in the context of the Global Economic and Commercial Agreement signed between Canada and the European Union.
Further clarifies that the economic operators must take into account the content of Circular no. 15579, of 30 March 2017, of the Department of Customs Taxation Services, regarding the Registered Exporter System, the only mechanism foreseen for the issuing of proof s of preferential origin for exports from the European Union to Canada.
Tax and Customs Authority Department of Excise Tax and Vehicle Tax Services Vehicle Tax Division Circular no. 35 077, of 12 June 2017
Discloses the procedures to be adopted for the issuing of Vehicle Customs Declaration ("DAV") in electronic format and other DAV that continue to be processed at customs.
III INTERNATIONAL CASE LAW
Court of Justice of the European Union Judgment of 8 June 2017 Case C-580/15
In the Judgment in question, rendered in the context of a request for a preliminary ruling, the Court of Justice of the European Union states that Article 56 of the Treaty on the Functioning of the European Union ("TFEU") and Article 36 of the European Economic Area ("EEA") Agreement must be interpreted as precluding a national legislation which provides for a
NEWSLETTER I TAX I 4/7
national tax exemption system which, although applicable to savings income from deposits in banks domiciled in that Member State or in another EEA Member State, is reserved to services that comply with specific criteria, particular to that national market, and not other services which are essentially similar but do not fulfil said criteria.
Court of Justice of the European Union Judgment of 14 June 2017 Case C-26/16
In the Judgment in question, rendered in the context of a request for a preliminary ruling, the Court of Justice of the European Union states that Article 138 (2) (a) of the VAT Directive precludes national provisions from making the VAT exemption of an intra-Community supply of a new means of transport subject to the requirement that the purchaser of that means of transport is established or domiciled in the Member State of destination of that means of transport.
The Court of Justice of the European Union further clarifies that said exemption cannot be refused in the Member State of supply solely because the means of transport has been subject to a temporary registration in the Member State of destination.
The Court of Justice of the European Union also states that the above mentioned article of the VAT Directive precludes the vendor of a new means of transport, transported by the purchaser to another Member State and subject to a temporary registration in that latter State, from being required to pay the VAT at a later stage when it is not established that the temporary registration regime has ended and value added tax has or will be paid in the Member State of destination, or in the event of tax evasion by the purchaser, unless it has been established that that vendor knew or ought to have known that the transaction was part of a fraud committed by the purchaser and did not take all reasonable steps within his power to avoid his participation in that fraud.
IV NATIONAL CASE LAW
Constitutional Court Judgment no. 267/2017, of 31 May 2017, published in June 2017 Case no. 466/16
In the Judgment in question, the Constitutional Court declared unconstitutional the provision set out in Article 135 of the 2016 State Budget Law, in the part in which it determines that Article 88 (21) of the IRC Code according to which the total amount of CIT autonomous taxation assessed in a year cannot be deducted of the amount of special payment on account performed in that year applies to tax years prior to 2016 due to the interpretative nature of the norm.
NEWSLETTER I TAX I 5/7
Supreme Administrative Court Judgment of 7 June 2017 Case no. 01 417/16
In the Judgment in question, the Court stated that a wind turbine, which is part of a wind farm feeding electric energy into the public distribution system, cannot be considered a building for Municipal Property Tax ("IMI") purposes as it does not have an individual economic value.
South Central Administrative Court Judgment of 25 May 2017 Case no. 618/13.1BELLE
In the Judgment in question, the Court considered that, should the taxpayer timely submit a request for the provision of a guarantee with the purpose of suspending a tax enforcement procedure, the Tax and Customs Authority may not determine the cancellation of tax benefits granted to the taxpayer before it issues a decision concerning the aforementioned request, as otherwise the principle of good faith would be breached.
Administrative Arbitration Centre Tax Arbitration Court Arbitration Decision of 4 April 2017, published in June 2017 Case no. 96/2015-T
In the Arbitration Decision in question, the Tax Arbitration Court stated that, for the purposes of determining the depreciation quotas for photovoltaic panels and wind turbines (which were not legally determined at the time) one should consider solely the expected useful life of the assets in normal conditions, and not the duration of the investment plan, the profitability of the investment vis--vis the agreements entered into with the Portuguese State or even the duration of the surface area under contract.
The Tax Arbitration Court further stated that the expected useful life of the assets indicated by the manufacturers should be considered the maximum period, and thus the taxpayer would be allowed to determine the useful life of its assets between that reference period and half of that.
V OTHER MATTERS
Portugal signs multilateral convention to prevent base erosion and profit shifting
On 7 June 2017, at the OECD Forum in Paris, the State Secretary for Tax Affairs signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, together with 67 other countries and territories, thus simultaneously
NEWSLETTER I TAX I 6/7
altering approximately 1100 Agreements for the Avoidance of Double Taxation signed between the different parties.
CUATRECASAS, GONALVES PEREIRA & ASSOCIADOS, RL Sociedade de Advogados de Responsabilidade Limitada
LISBOA Praa Marqus de Pombal, 2 (e 1-8) I 1250-160 Lisboa I Portugal Tel. (351) 21 355 3800 I Fax (351) 21 353 2362 firstname.lastname@example.org I www.cuatrecasas.com
PORTO Avenida da Boavista, 3265 - 5.1 I 4100-137 Porto I Portugal Tel. (351) 22 616 6920 I Fax (351) 22 616 6949 email@example.com I www.cuatrecasas.com
This Newsletter was prepared by Cuatrecasas, Gonalves Pereira & Associados, RL for information purposes only and should not be understood as a form of advertising. The information provided and the opinions expressed herein are of a general nature and should not, under any circumstances, be a replacement for adequate legal advice for the resolution of specific cases. Therefore, Cuatrecasas, Gonalves Pereira & Associados, RL is not liable for any possible damages caused by its use. Access to the information provided in this Newsletter does not imply the formation of a lawyer-client relationship or of any other sort of legal relationship. This Newsletter is published free of charge and may not be copied or distributed without formal prior consent. The personal data you provide us, including your email address, will be treated in accordance with national and European data protection legislation. If you do not wish to continue receiving this Newsletter, please send an e -mail to firstname.lastname@example.org
NEWSLETTER I TAX I 7/7