12/31/2021
VAT Exemption for Transmissions of In Vitro Diagnostic Medical Devices and Vaccines from COVID-19
The attached order determines that the VAT exemption applicable to the transfer of in vitro diagnostic medical devices of COVID-19, to vaccines against the same disease and to services related to these products will be maintained until December 31, 2022.
Autonomous Region of Madeira - Withholding Tax Tables for 2022
The attached order approves the withholding tax tables for the year 2022 regarding the Personal Income Tax (IRS), to be applied to income earned by individuals residing in the Autonomous Region of Madeira.
12/30/2021
Installment Payment Scheme
This Decree-Law No. 125/2021 changes the regime of payment in installments of taxes, before the filing of tax execution proceedings, and the regime of payment in installments of taxes in tax execution proceedings.
We highlight the following:
- Creation of a true pre-executive phase for the generality of taxes managed by the AT, allowing taxpayers to pay their obligation without the stigma of having an executive process pending, in case they wish to comply and cannot do so immediately;
- Approval of two extraordinary and transitory measures arising from the effects of the pandemic context, namely (1) the extension of the maximum number of installments from 36 to 60, regardless of the debt of all individuals and legal entities with notorious financial difficulties in tax enforcement proceedings filed in 2022 and in ongoing enforcement proceedings, restructuring the installment plan up to a five-year limit; (2) the renewal of the possibility of joining installment plans for the payment of VAT and IRC and IRS withholdings in the first half of 2022.
12/29/2021
Criteria for Selecting Taxpayers
Ordinance no. 318/2021 sets out the criteria for the selection of taxpayers whose tax situation must be monitored by the Large Taxpayers Unit of the Tax and Customs Authority and establishes the respective publicity and validity procedures.
Ordinance no. 130/2016, of 10 May is hereby revoked.
12/23/2021
Construction Average Price per Square Meter for IMI Purposes
Ordinance no. 310/2021 of December, 20
The attached ordinance sets in € 512 the construction average price per square meter, for the purposes of article 39 of the Municipal Property Tax Code.
This ordinance applies to all the urban buildings which tax declarations Model 1, referred to in articles 13 and 37 of the Municipal Property Tax Code, are submitted from 1/01/2022
12/23/2021
Official Model of the Stamp Duty Monthly Statement and Respective Instructions for Filling Out
Rectification Statement no. 43/2021
The attached ordinance amends and replicates the official model of the Stamp Duty Monthly Statement and respective instructions for filling out, referred to in no. 2 of article 54-A of the Stamp Duty Code.
12/17/2021
Publication of the IRS Withholding Boards
On December 7, 2021, the Circular letter no. 4 / 2021 was published by the Management of Personal Income Tax Services (DSIRS), disclosing the IRS withholding tables for holders of employment and pension income with tax residence in Portuguese territory to be applied in 2022, except for the Autonomous Regions of the Azores and Madeira.
Approval of the Models of the IRS Declaration Forms
On December 17, 2021, Ordinance no. 303/2021 was published, approving the models for the forms to be used in IRS declarations and the respective instructions for filling out the forms.
It was necessary to reformulate the model 3 declaration and some of its annexes accordingly, as well as updating the respective instructions for completion, considering the legislative changes resulting from Law no. 75-B/2020, of December 31 (LOE 2021), regarding the allocation of real estate from private assets to business and professional activity and regarding the transfer of real estate from business and professional activity to the taxpayer's private assets; as well as the transitory regime foreseen in article 369 of the same law.
The following model forms have been approved:
- Annex B - business and professional income earned by taxpayers covered by the simplified regime or who have practiced isolated acts - and respective instructions for completion;
- Annex C - business and professional income earned by taxpayers taxed on the basis of organized accounting - and the respective instructions for completion;
- Annex G - capital gains and other asset increases - and the respective instructions for completing the form;
- Annex G1 - non-taxed capital gains - and the respective instructions for completing the form.
The forms relating to the cover of Form 3, Annex F - property income and Annex H - tax benefits and deductions remain in force, although new instructions for completing these forms have been approved.
This ordinance takes effect on January 1, 2022.
12/16/2021
Payments on Account 2021
This order regulates the exemption of payments on account of Corporate Income Tax for the period beginning on or after 1 January 2021 provided for in article 374 of Law no. 75-B/2021, of 31st December (State Budget for 2021) in the following terms:
- Cooperatives and taxpayers who have obtained, in the 2020 tax period, a turnover up to the maximum limit of the medium-sized company classification, pursuant to article 2 of the annex to Decree-Law 372/2007, of November 6 (€ 50.000.000) may be exempt, without the need for certification by a certified accountant, from both the first and second payments on account and the third payment on account, pursuant to article 107 of the Corporate Income Tax Code;
- If the taxpayer finds that, because of the exemption, and in relation to the periodic tax return for the 2021 period, he has failed to pay more than 20% of the amount that, under normal conditions, would have been paid, he may pay the missing tax, without any burden or charge, until the deadline for the third payment on account, as a rule, December 15.
12/14/2021
Amendments to Directive 2013/34/EU Concerning the Disclosure of Information by Multinational Corporations
Directive (EU) 2021/2101 of the European Parliament and of the Council of 24 November 2021 was published, amending Directive 2013/34/EU on the disclosure of information on income tax by certain companies and branches. This amendment established an increase in reporting obligations for these multinational groups.
This directive will apply to the parent entities of multinational groups (ultimate parent companies), subsidiaries and affiliates established in the European Union that belong to a group whose turnover exceeds 750 million euros during two consecutive fiscal periods.
This new obligation, which has similar content to the "country by country reporting" that is currently in force as a result of the BEPS Plan, establishes the obligation to submit to the Tax Authorities and publish on the Group's website relevant information on the nature of the autonomous companies or of the ultimate parent companies’ activities, the number of employees, the income earned, and the taxes paid in the financial year in question.
The information must be disclosed separately for jurisdictions belonging to the Member States of the European Union, and in aggregate form for other jurisdictions, with the exception of jurisdictions classified as non-cooperative by the European Union.
The Directive will enter into force on December 21st, with Member States having to transpose it into their internal regulations by June 22nd, 2023.
12/13/2021
Amendments to Transfer Pricing Rules
Order no. 268/2021, of 26 November was published, which revises the transfer pricing regulations in operations carried out between an individual or corporate taxpayer and any other entity, under article 63 of the Corporate Income Tax (CIT) Code.
This revision implements the changes already introduced in article 63 of the CIT Code, regarding the scope of application of the arm’s length principle and the adoption of the most appropriate method in the determination of transfer prices, and, on the other hand, welcomes the developments resulting from the OECD’s work in this area, with particular emphasis on the general rules for the application of the arm’s length principle, namely
- in the delineation of transactions with associated parties and in the scope of the concept of terms and conditions;
- in the comparability analysis, listing the main actions in the identification of comparables for the purpose of assessing the conformity of transfer prices practiced with such principle;
- in the selection and application of transfer pricing methods;
- the provision of specific rules for some operations.
Regarding transfer pricing documentation obligations, this Order restructures the organization of the documentation process, foreseeing a double structure translated into the preparation and maintenance of a Master File and a Specific File (Local File).
As regards the obligation to prepare a transfer pricing file, the limits which exempt the entity of the documentation process are increased. The following are therefore exempt from this obligation:
- Taxpayers who, in the period to which the obligation relates, have an annual amount of income lower than €10,000,000.00;
- Even taxpayers with a total annual income exceeding €10.000.000,00 are exempt from this obligation, in respect of transactions with associated parties whose value in the period has not exceeded, per counterparty, €100.000,00 and, in total, €500.000,00.
Taxpayers that qualify as a small or medium company, in accordance with Decree-Law no. 372/2007, of November 6, when not covered by the exemptions foreseen above, are required to prepare a Simplified Dossier with documentation regarding the policy adopted in the determination of the transfer prices.
The present Order takes effect on November 27th, 2021, except for chapter IV (requirements for the preparation of the Dossier), which takes effect in the tax periods beginning on or after January 1st, 2021.
Amendments to the Advance Pricing Agreements
Order no. 268/2021, of 26 November was published, which revises the regulation of the procedures to enter into advance pricing agreements (APA), under article 138 of the Corporate Income Tax Code (CIT) Code.
This revision implements the changes already introduced in article 138 of the CIT Code, regarding the maximum term of validity of an APA, which is now 4 years and, on the other hand, it defines more clearly the several stages of the process of its execution.
Bilateral or multilateral agreements may only be concluded with States with which Portugal has concluded a tax treaty that includes a mutual agreement procedure provision, as provided for in Article 25(3) of the OECD Model Tax Convention or in Article 16 of the Multilateral Convention for the Modernization of Tax Treaties. The negotiation process for such agreements includes a phase of consultations between the tax authorities of the countries involved, carried out under that procedure.
We also highlight the following changes:
- The request for a preliminary assessment will have to be submitted in writing no later than 3 months before the deadline for submission of the proposed agreement;
- The maximum term of the APA is now 4 years;
- The agreement may cover tax periods for which the taxpayer has already submitted the periodic tax return (Mod. 22), provided that the relevant facts and circumstances verified in these periods are identical or similar and that no more than two years have elapsed since the deadline for submission of the respective tax return at the time of conclusion of the agreement.
- The monitoring and verification of compliance of the APPT will now be the responsibility of the Large Taxpayers Unit (“UGC”).
Amendment to Rates of Circulation Tax and Measures to Support Road Transport
Law no. 84/2021 amends the rates of Circulation Tax on vehicles used for public transport of goods and for hire or reward, falling under category D, reducing them by approximately 50%.
In addition, it extends the support measures for road transport provided for in article 70 of the Tax Benefits Code until 31 December 2026.
This law enters into force on January 1, 2022.
12/02/2021
Declaration Model 10, Income and Withholdings - Residents and Respective Filling Instructions
Ordinance no. 278/2021 of November, 2
The attached ordinance approves the latest model of Declaration Model 10, Income and Withholdings - Residents, and the respective filling instructions of the form, which aims to comply with the reporting obligations foreseen in sub-paragraph ii) of paragraph c) and paragraph d) of No. 1 of Article 119 of the Code of Personal Income Tax and Article 128 of the Code of Corporate Income Tax.
The return must be submitted by electronic data transmission.
This ordinance comes into force on January 1, 2022.
Filling Instructions of the Declaration Model 25, Donations Received
The attached ordinance approves the instructions for completing the latest model of Form 25, Donations Received, which aims to comply with the obligation set out in Article 66 of the Statute of Tax Benefits, by entities receiving tax-relevant donations.
This ordinance will come into force on January 1, 2022
New Model 37 Declaration and the Respective Filling Instructions
Ordiance no. 276/2021 of November 30th
The attached ordinance 276/2021 approves the Model 37 Declaration and respective instructions for filling out, to be used by the entities referred to in no. 1 of article 127 of the IRS Code.
It is important to bear in mind the following obligations:
- The Model 37 Declaration is mandatorily delivered by electronic data transmission;
- For the electronic use of data, the entities must:
- register through the Portal das Finanças, unless they already have a password;
- have a file with the characteristics and structure of information; and
- send it according to the procedures indicated in www.portaldasfinancas.gov.pt
- The declaration is considered to have been submitted on the date it is submitted, and any errors can be corrected within 30 days. In case the detected errors are not corrected, the declaration is considered without effect.
This ordinance comes into force on January, 1 of 2020.
