Tax and Customs Authority

Tax Management Area - VAT

Circular no. 30181, of 6 June

VAT – Food and Beverage

Clarifies the meaning of the amendments made by the State Budget Law for 2016 to the paragraphs 1.8 and 3.1 of List II Appended to the Value Added Tax (VAT) Code, concerning the application of the intermediate tax rate to the provision of food and beverage services, coming into effect on 1 July 2016.

Among other aspects, it specifies the concepts of “restaurant and catering service” and of “ready-to-eat meals, in the forms of takeaway or home delivery”, provides practical examples of food and beverage goods and services that are covered or excluded from the intermediate tax rate, and also links the application of the reduced tax rate to the provision of accommodation services in hotels to the application of the intermediate rate on food services, in cases in which the accommodation service is provided in half or full board.

Tax and Customs Authority

Department of Personal Income Tax Services

Circular no. 20192, of 7 June

Clarifies that the withholding taxation rate of 21%, established for entities not principally engaged in a commercial, industrial or agricultural activity, is applicable to capital income received by the State, autonomous regions, local authorities, as well as any of their services, establishments and organisations, even if personalised, in cluding public institutes, with the exception of public entities of a corporate nature, associations and federations of municipalities and associations  of parishes  which are not engaged in commercial, industrial or agricultural activities and social security and welfare institutions.

It shall be noted that these entities, covered by Article 9.1(a) to (c) of the Corporate Income Tax (CIT) Code, benefit from a general exemption from this tax, except with regard to capital income.

Tax and Customs Authority

Office of the General Director

Circular no. 4/2016, of 23 June

Withholding taxation on employment income and pensions - Azores

Discloses the tables for withholding of Personal Income Tax (PIT) for individuals with income earned from employment and pensions with tax residence in the Autonomous Region of the Azores, to be applied in 2016, approved by Order No. 6635 -A/2016, of 19 May, of the State Secretary for Tax Affairs.

Tax and Customs Authority

Binding Information concerning case no. 10115, of 25 May 2016

VAT - Taxable amount - Fees for services charged by IMT, I.P., collected by driving schools, in respect of "revalidation of driving licences" and related situations

Clarifies that the fees for services of the Instituto da Mobilidade e dos Transportes, I.P., concerning the revalidation of driving licences and related situations, collected by driving schools, must be considered included in the activities of these schools, being, as such, operations subject to and not exempt from VAT, and should be inclu ded in the taxable amount of the services charged and invoiced to their clients.

Tax and Customs Authority

Binding Information concerning case no. 10211, of 31 May 2016

VAT - Fees – Educational institution that provides students with uniforms, transport, extra- curricular activities, study rooms and other services

With regard to the exemption from VAT applicable to the supply of services involving education, and for transmissions of goods and provisions of related services, by institutions that are part of the National Education System or recognised as having similar purposes by the competent ministries, the Tax Authority and Customs Authority (AT) clarifies, in this binding information, in particular, that:

  1. The sale of smocks and uniforms by an educational institution covered by the abovementioned exemption from VAT must be taxed at the normal rate of this tax;
  2. The sale of note books by the same educational institution must be taxed at the normal VAT rate, if they are not produced by the institution itself;
  3. Transport services guaranteed by the educational institution is considered accessory to the education service, benefiting from the aforementioned exemption from VAT;
  4. The provision of yoga, swimming or dance classes by this pre-school educational institution, not being covered by the concept of extra-curricular activities referred to in Ministerial Order 644-A/2015, of 24 August, must be taxed at the normal VAT rate;
  5. The availability of a study room for former students and other students constitutes a provision of services subject to and not exempt from VAT.