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COVID-19 > Tax Incentives

Greater flexibility in the payment of taxes and social contributions

Companies may defer the payment of taxes and social contributions to the State, choosing to pay by interest-free instalments. They may resort to several exceptional mechanisms in response to the economic impact of COVID-19, which allow for an immediate improvement of the liquidity position.

# Corporate Income Tax (IRC) and Personal Income Tax (IRS)

> New Fiscal Calendar

All companies benefit from the new extended deadlines to comply with the following deliveries:

"IRC" and "IRS" April withholdings
Until May 25th

"IRC" and "IRS" May withholdings
Until June 25th

1st "PEC" payment
Until June 30th

Model 22 "IRC" statement
Until July 31st

"IES" and "DA" statements
Until August 7th

1st "PPC" and 1st "PAC" payments
Until August 31st

Tax dossier and Transfer Pricing documentation
Until August 31st

"IRC" and "IRS" withholdings for April and May 2020

"IRC" and "IRS" withholdings for the months of April and May 2020 can be paid until May 25th and June 25th, respectively.

Special Payment on Account ("PEC")
The first "PEC", regarding the financial year of 2020, can be delivered until June 30th, with no accrual or penalties.

Periodic Income Statement (Model 22) of the "IRC"
The "IRC" Model 22 Statement, regarding the financial year of 2019, can be submitted until July 31st 2020, with no accrual or penalties.

Simplified Company Information Statement (IES) and Annual Statement (DA)

The IES and DA statements can be delivered until August 7th 2020 without any penalties.

Payment on Account ("PPC”) and Additional Payment on Account ("PAC”)
The first "PPC" and the first "PAC", regarding the financial year 2020, may be paid until August 31st 2020, with no accrual or penalties.

Tax dossier and Transfer Pricing documentation
The obligation to create and/or deliver the tax documentation process (tax dossier) and the documentation process regarding the adopted transfer pricing policy may be met until August 31st 2020, without any penalties.

Relevant Legislation:

SEAF Decree no. 104/2020-XXII, of March 9th
SEAF Decree no. 153/2020-XXII, of April 24th

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> Fractional delivery of the tax withheld at source for Corporate and Personal Income Taxes

Eligible companies may choose to deliver the tax withheld at source for IRC and IRS, due in April and May 2020, until May 25th and June 25th, respectively, through one of the following:

Immediate delivery, within the regular terms; or

Delivery fractioned into 3 monthly instalments, free of interest; or

Delivery fractioned into 6 monthly instalments, free of interest.

The first instalment is due on the date of fulfilment of the obligation and the following instalments are due on the same day of the following months.

Who may benefit from this?

All companies and self-employed workers may request immediate access to the payment in instalments, as long as one of the following conditions is met:

Turnover inferior or equal to 10M€ in 2018 (assessed within the terms of Article 143 of the IRC Code); or

Beginning (or resumption) of activity on or after January 1st 2019 (as long as there was no turnover for 2018); or

Activity within the sectors closed as established by the State of Emergency (Decree no. 2-A/2020, of March 20th).

The remaining companies and self-employed workers can also benefit from this measure when they demonstrate, with proper certification by the Official Auditor (ROC) or Certified Accountant (CC):

A decrease of the invoicing reported through E-fatura (E-invoice) of, at least, 20% in the average of the 3 preceding months (to the month such obligation refers to) compared to the same period of the previous year; or

When the communication of the invoice elements through the E-fatura does not reflect the totality of the transactions practiced regarding the transmission of goods and services subject to IVA (VAT) (even if exempt), the measurement of the decrease of the invoicing should be made with reference to the turnover.

How to access?

Upon request at the Portal das Finanças (Finance Portal).. The request will be:

Automatically validated in the case of companies which meet one of the conditions for immediate access to the fractioned payment; or

Manually validated for the remaining companies which evidence a breach of activity, with the corresponding certification by ROC or CC.

Relevant Legislation:

Decree no. 2-A/2020, of March 20th

Decree-Law no. 10-F/2020, of March 26th

Declaration de Rectification no.13/2020, of March 28th

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# Social Security Contributions

> Fractional Payment of Social Security contributions

Eligible companies may choose to pay the social contributions of the employer due on March 31st, April 20th and May 20th 2020, as follows:

Immediate payment of 1/3 of the liability contributions of the employer on the date the obligation is fulfilled; and

Payment of the remaining amount (remaining 2/3) through a plan of 3 or 6 monthly instalments, to be fulfilled from July 2020 onwards.

For companies that have already paid their March contributions in full, this scheme applies to contributions due on April 20th, May 20th and June 20th, 2020.

Choosing this scheme is optional, which means all contributions can be paid immediately on the usual terms.

Who can benefit?

All employers may benefit from this provided that they meet one of the following conditions:

They have (i) less than 50 employees (number measured by reference to the remuneration statement for the month of February 2020); or

They have (i) between 50 and 249 employees and (ii) demonstrate a decrease of the invoicing communicated through the E-fatura of, at least, 20% compared to the same period of the previous year or, should they have started the activity less than 12 months ago, compared to the average of the elapsed activity period; or

They have (i) 250 or more employees, (ii) demonstrate a decrease in the turnover reported through the E-fatura of, at least, 20% compared to the same period of the previous year or, should they have started the activity less than 12 months ago, compared to the average period of activity that has elapsed, and (iii) fall into one of the following situations:

Activity within the sectors closed under the terms of the State of Emergency (Decree No. 2-A/2020 of March 20th), or within the tourism and civil aviation sectors; or

Activity that has been suspended, by legislative or administrative determination, under the terms of Decree-Law no. 10-A/2020, of March 13th; or

Private institution of social solidarity or similar.

How to access?

Through automatic membership in the Portal Segurança Social Direta (Direct Social Security Portal). The selection of the payment option in 3 or 6 monthly instalments made in the Portal.

Employers who unduly benefit from this scheme will have to pay all the outstanding instalments, plus interest, in July 2020.

Relevant Legislation:

Decree no. 2-A/2020, of March 20th

Decree-Law no. 10-A/2020, of March 13th

Decree-Law no. 10-F/2020, of March 26th

Declaration of Rectification no. 13/2020, of March 28th

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# VAT Payments

> New deadlines for the submission of periodic VAT declarations

All companies can benefit from the new extended deadlines for submitting periodic VAT declarations:

Monthly Scheme
March VAT Declaration
Until May 18th

Quarterly Scheme
January to March VAT Declaration

Until May 22nd

Monthly Scheme
April VAT Declaration

Until June 18th

The payment of the due tax resulting from the periodic VAT declarations covered by this measure, can be made until the 25th day of each month, without prejudice to adherence to the fractional delivery regime.

VAT - Monthly Scheme

Periodic VAT declarations for the period March and April 2020, can be submitted, respectively, until May 18 and June 18, without any additions or penalties.

VAT - Quarterly Scheme

The periodic VAT declaration for the period from January to March 2020, can be submitted until May 22, without any additions or penalties.

Relevant Legislation:

SEAF Decree no. 153/2020-XXII, of April 24th

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> Fractional delivery of VAT payments

Eligible businesses may choose to supply VAT payments due from April to June 2020 under the monthly scheme, or due in May 2020 under the quarterly scheme, in one of the following ways:

Immediate delivery under the usual terms; or

Delivery in 3 monthly instalments, free of interests; or

Delivery in 6 monthly instalments, free of interest.

The first instalment is due on the date of fulfilment of the obligation and the remaining instalments are due on the same day of the following months.

Who can benefit?

All businesses and self-employed workers may request immediate access to payment by instalments, provided they meet one of the following conditions:

Turnover inferior or equal to 10M€ in 2018 (assessed within the terms of Article 143 of the IRC Code); or

Beginning (or resumption) of activity on or after January 1st 2019 (as long as there was no turnover for 2018); or

Activity within the sectors closed as established by the State of Emergency (Decree no. 2-A/2020, of March 20th).

The remaining companies and self-employed workers can also benefit from this measure when they demonstrate, with proper certification by ROC or CC:

A decrease of at least 20 % in the average of the 3 preceding months (to the month such obligation refers to) in the invoicing reported through E-fatura, compared to the same period of the previous year; or

When the communication of the invoice elements through the E-fatura does not reflect the totality of the transactions practiced regarding the transmission of goods and services subject to IVA (VAT) (even if exempt), the measurement of the decrease of the invoicing should be made with reference to the turnover.

How to access?

Upon request at the Portal das Finanças. The request will be:

Automatically validated in the case of companies which meet one of the conditions for immediate access to the fractioned payment; or

Manually validated for the remaining companies which evidence a breach of activity, with the corresponding certification by ROC or CC

Relevant Legislation:

Decree no. 2-A/2020, of March 20th

Decree-Law no. 10-F/2020, of March 26th

Declaration of Rectification no. 13/2020, of March 28th

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> Periodic VAT declarations based on E-fatura data

Eligible companies may choose to submit the periodic VAT declaration for March 2020, under the monthly payment scheme, or for the period from January to March 2020, under the quarterly payment scheme, based only on the data available in E-fatura and must regularise the situation by means of a replacement declaration to be submitted in August 2020.

Companies which have chosen to submit the periodic VAT declaration for February 2020, under the monthly payment scheme, based only on the data available in E-fatura, must regularise the situation by means of a replacement declaration to be submitted in July 2020.

The submission of the replacement declaration shall not give rise to any penalties, provided that it is submitted and paid during the stipulated month.

Who can benefit?

All businesses and self-employed workers who fulfil one of the following conditions:

Turnover inferior or equal to 10M€ in 2019; or

Beginning (or resumption) of activity on or after January 1st 2020 (as long as there was no turnover for 2019).

Relevant Legislation:

SEAF Order no. 129/2020-XXII, of March 27th
SEAF Order no. 153/2020-XXII, of April 24th

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> Deduction of VAT borne on the acquisition of goods donated to the State, IPSS and NGOs

The following shall be exempt from VAT: transfers of goods free of charge to the State, to the IPSS and to non-profit-making NGOs, for subsequent placement in the disposition of people in need, including people receiving health care due to COVID-19.

The VAT exemption in question confers a right of deduction, thus allowing the VAT payer who donates the goods to recover the VAT borne on their acquisition.

The State, the IPSS and/or NGOs are not required to transfer ownership of assets to the people receiving the health care, all they need to do is make the assets available to them.

Relevant Legislation:

SEAF Order no. 122/2020-XXII, of March 24th

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> Existing VAT mechanisms to improve liquidity

In the area of VAT, some measures already provided for in Portuguese legislation can be adopted to mitigate negative financial impacts and improve the cash position:

Claim a refund of all VAT claims against the State;

Recover VAT contained in arrears or deemed irrecoverable;

Make use of the reverse charge system for VAT on import of goods;

Prioritise the acquisition of goods and services with the application of reverse charge.

# Declarative and Accessory Obligations

> Extended deadline for holding general meetings

General meetings of commercial companies, associations or cooperatives may be held until June 30th 2020.

Relevant Legislation:

Decree-Laz no. 10-A/2020, of March 13th

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> New deadline for submission of Single Report (RU)

Delivery of the "RU", with reference to the financial year of 2019, which would take place between March 16th and April 15th, has been extended until October 31st 2020.

> Issuing of invoices in .pdf format

During the months of April, May and June 2020, it is possible to issue invoices in pdf format, which for tax purposes are equivalent to electronic invoices.

Relevant Legislation:

SEAF Order no. 129/2020-XXII, of March 27th

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> Compliance with obligations to the Tax Authority (AT)

Avoid face-to-face visits to the Portuguese Tax Authority's offices (AT). Use AT's online and telephone services preferably.

Message the online services of "E-Balcão" at the "Portal das Finanças" or call the AT telephone line at (+351) 217 206 707.

Face-to-face services are reserved for urgent and unavoidable matters. It is necessary to schedule the visit through the AT telephone line.

As far as compliance with accounting obligations is concerned, a situation of COVID-19 infection or prophylactic isolation determined by the Health authorities is considered a fair impediment.

Relevant Legislation:

Decree-Law no. 10-A/2020, of March 13th

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# Procedural Acts

> Suspension of time limits and procedural acts in courts and dispute resolution entities

As of March 9th 2020 and until further notice, the judicial vacation regime will apply to procedural acts to be performed in the judicial courts, administrative and tax courts, arbitration courts, Constitutional Court, Court of Auditors and other courts, as well as other dispute resolution entities and tax enforcement bodies.

Law nº16 / 2020 enters into force on the 5th day after its publication, which occurred on May 29.

The limitation and prescription periods that are no longer suspended under the law will, in principle, be extended by the period of time in which the suspension was in force.

This measure applies to:

Procedures that run in notary and registry offices;

Misdemeanour, sanction and disciplinary procedures; and

Administrative and tax deadlines in favour of individuals (namely filing a judicial challenge, free complaint, hierarchical appeal, or other procedures of the same nature).

Some exceptions are allowed such as where the use of means of distance communication is feasible, namely by teleconference or video.

The deadlines for the practice of procedural acts, in particular the administrative and fiscal deadlines that run in favor of individuals (namely filing of judicial challenge, free complaint hierarchical appeal, or other procedures of the same nature) that had been suspended whose original end would occur:

During the suspension period: now considered due on the 20th business day after the entry into force of Law No. 16/2020;
After the entry into force of Law No. 16/2020

Considered due on the 20th business day after the law comes into force, if they are due by that date;
On the date they would be originally due, if they expire after the 20th business day after the law enters into force.

Relevant Legislation:

Decree-Law no. 10-A/2020, of March 13th

Law no. 1-A/2020, of March 19th

Law no. 4-A/2020, of April 6th

Law Proposal no. 30/XIV, submitted for promulgation on May 15th
Law No. 16/2020, of May 29th

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> Suspension of tax execution proceedings

From March 12th to June 30th 2020, the judicial vacation regime will apply to ongoing benefit plans relating to tax enforcement proceedings, without prejudice to their continued compliance.

The tax execution processes and the instalment plans in progress for debts to Social Security outside the scope of the executive proceedings must remain suspended until June 30, 2020, without prejudice of being able to continue to be punctually fulfilled.

Relevant Legislation:

Decree-Law no. 10-A/2020, of March 13th

Law no. 1-A/2020, of March 19th

Decree-Law no. 10-F/2020, of March 26th

Declaration of Rectification no. 13/2020, of March 28th

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ADDITIONAL INFORMATION