COVID-19 > Tax Incentives

Tax benefits and greater flexibility in the payment of taxes and social contributions

Companies can resort to several exceptional tax mechanisms in response to the economic impact of COVID-19, which allow for an immediate improvement of liquidity.

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

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

# VAT Payments

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
Periodic VAT declarations based on E-fatura data
Eligible companies may choose to submit the periodic VAT declarations for February and 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.

Companies which have chosen to submit periodic VAT declarations based only on the data available in E-fatura, must regularise the situation by means of a replacement declaration to be submitted until December 21st, 2020. The submission of the replacement declaration shall not give rise to any penalties, provided that it is submitted and paid until December 21st, 2020.

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:
AT Official Notice No. 30224, of July 1st
SEAF Order No. 129/2020-XXII, of March 27th
SEAF Order No. 153/2020-XXII, of April 24th
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
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.

# 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

# Declarative and Accessory Obligations

ADDITIONAL INFORMATION

Official Information COVID-19 EstamosON > Measures to Support Employment and Businesses

Portal das Finanças > Support to the Taxpayer COVID-19

Social Security > Exceptional Support Measures COVID-19

Deloitte > COVID-19 Tax News Flash

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