COVID-19 > Tax Incentives

What is it? What are the benefits?

Companies with tax losses in 2020, having made profits in previous years, shall not be subject to the increased rates of autonomous taxation, as provided for in article 88(14) IRC Code.

The State Budget 2021 provides that this rate will not apply for the 2020 and 2021 tax periods.

Who can benefit?

Companies.

For more information you can consult the Deloitte page, State Budget 2021 and the PEES.

Relevant legislation:

Article 88 of the IRC Code.

What is it? What are the benefits?

In view of the current economic context, a particular consideration of tax losses is warranted, giving them a specific and transitional framework with the following rules:

• Disregard the years 2020 and 2021 for the purpose of counting the period of use of tax losses in force on 1 January 2020;
• For tax losses in 2020 and 2021, change for companies with a reporting period of 5 to 10 years (for SMEs the 12-year period is maintained), as well as extend the deduction limit from 70 % to 80 % for all companies when in these 10 percentage points tax losses in 2020 and 2021 are concerned.

Who can benefit?

Companies.

For more information you can consult the tax change document issued by the Association of Certified Accountants and the PEES.

Relevant legislation:

Bill No. 33/XIV

Article 52 of the IRC Code

What is it? What are the benefits?

In the concentrations of SMEs carried out in 2020, disregard the limit of use of tax losses by the incorporating company(by reference to the assets of the companies involved in the transaction), with the rule of non-distribution of profits, for 3 years, without, during the same period, the application of state surcharge (where applicable).

Consider the transmissibility of tax losses in the acquisition of shareholdings of SMEs which, in 2020, have been considered 'companies in difficulties', for the use of these tax losses by the acquiring company, with the rule of non-distribution of profits and the commitment to maintain jobs for 3 years.

Who can benefit?

Companies. 

This measure is still under development, however, for more information you can consult the PEES.

What is it? What are the benefits?

Refund of the Extraordinary Investment Tax Credit, creating for investment expenses incurred in the second half of 2020 and the first half of 2021, a deduction to the collection of IRC, corresponding to 20 % of investment expenses up to a limit of 5 million euros, to be used for a maximum period of 5 years, with the obligation to maintain jobs during the period of use of the tax credit , with a minimum of three years.

Who can benefit?

Entities which are principally engaged in a commercial, industrial or agricultural activity may benefit from this incentive and, cumulatively, fulfil the following conditions:

• have organized accounting;
• taxable profit is not determined by indirect methods;
• Have the tax situation regularized;
• Do not cease employment contracts for three years, from the date of effect of this benefit, under the arrangements for collective dismissal or dismissal for termination of the job.

What are the eligible expenses?

• Investment expenses in assets related to the holding of fixed tangible assets and biological assets that are not consumable, acquired in a new state and which enter into operation or use until the end of the tax period starting on or after 1 January 2021.
• Investment expenses in intangible assets subject to loss, namely:
• Expenditure with development projects;
• Expenses with elements of industrial property, such as patents, trademarks, permits, production processes, models or other assimilated rights, acquired for a consideration and whose exclusive use is recognised for a limited period of time.

Investment expenses in assets susceptible to personal use may not be considered for the purposes of this tax benefit, such as:

• Light passenger or mixed vehicles, recreational boats and tourist aircraft, except where such goods are subject to the operation of the public transport service or are for the rental or transfer of their use in the exercise of the normal activity of the taxable person;
• Furniture and articles of comfort or decoration, except when related to productive or administrative activity;
• Those incurred with the construction, acquisition, repair and expansion of any buildings, except when related to productive or administrative activities.

For more information you can consult the Association of certified accountants page.

Relevant legislation:

Law No. 27-A/2020 of 24 July

Law No. 49/2013

What is it? What are the benefits?

IVAucher is a program that allows customers to accumulate the amount of VAT paid in goods and services from the sectors of catering, accommodation and culture (please check the list), and later use them in those sectors.

The program has 3 different stages:

1) Accumulation – 1^st June to 31^st August. Customers may accumulate the amount of VAT paid in goods and services from the sectors of catering, accommodation and culture. To do so, it is sufficient to ask the individual tax identification number (NIF) to be included in the receipt.

2) Validation – 1^st September to 30^th September. The amount of accumulated VAT is subject to validation and definitive clearance from the Tax Authority (note: in September, customers can neither accumulate further VAT benefits nor use those accumulated in the previous months).

3) Utilization – 1^st October to 31^st December. Customers may use the accumulated definitive VAT benefit in any of the three covered sectors, up to a limit of 50% per purchase.

Who can benefit?

The program targets exclusively at businesses in the sectors of catering, accommodation and culture (please check the list).

How to apply?

Accession to the IVAucher program is optional and may be applied for from 15^th June onwards (through the filling of a form and through making adequate systems available). Considering the 3 program stages, deciding to join the program will only produce practical effects in the Utilization stage, as explained subsequently:

1) Accumulation – 1^st June to 31^st August. Business owners do not have to join the program for customers to accumulate the amount of VAT paid. For instance, as long as a business’ main CAE (Código de Atividade Económica, i.e., code of economic activity) falls within the eligible range of the program (please check the list), and the customer’s NIF number is included in the receipt, the accumulation of the VAT benefit is automatic.

2) Validation – 1^st September to 30^th September. The accumulation phase does not require any new action by business owners, it is only necessary for the customer to request the receipt with NIF and for the retailer to send the information on the receipts to the Tax Authority in the usual terms (webservice or SAF-T).

3) Utilization – 1^st October to 31^st December. For customers to use the accumulated definitive VAT benefit in a given business from the three designated sectors, business owners must adhere to the program, from June 15^th onwards. To do this, business owners need to fill out the application form (available at TPA SaltPay) and have one of the following systems available:

• a compatible Automatic Payment Terminal (TPA) (e.g. a Saltpay payment terminal); or

• the IVAucher App for business owners; or

• Update a compatible billing system.

For additional information, please visit https://www.ivaucher.pt/. Should any further questions arise, please contact the Ministry of Finance (ivaucher@mf.gov.pt) or for technical questions regarding the payment methods the system operator, Saltpay (ivaucher@saltpay.co).

What is it? What are the benefits?

Possibility of payment of VAT, calculated in the periodic statement for the 3rd quarter of 2020 and 1st half of 2021

• In three or six monthly instalments, of a value equal to or greater than € 25, without interest.

All companies and independent workers are eligible.

For more information see the page of Tax Authority.

Relevant legislation:

Decree-Law No. 99/2020

Decree-law No. 52/2021-XXII

Eligible companies can opt to pay VAT related to the second half of 2020 as follows:

• Immediately, in the usual terms;
• In three monthly instalments, without interest; or
• In six monthly instalments, without interest.

The first installment is due on the date of compliance with the obligation and the remaining installments are due on the same day of the following months.

Who can benefit?

All companies and self-employed workers can immediately apply for payment in instalments, as long as they meet one of the following conditions:

• Micro companies with turnover of up to 2 million euros and a 25% drop in turnover in 2020, compared to 2019;

• SMEs with turnover of up to 50 million euros with a 25% turnover drop in 2020, compared to 2019;

• Activity within the sectors closed under the terms of the State of Emergency, including catering, accommodation and culture.

Any other company or self-employed person may benefit from this incentive, if they prove with a statutory auditor (ROC) or certified accountant (CC) certificate that:

• Decrease of at least 20% in the average revenue, reported through E-fatura website, of the three months prior to the month in which the obligation exists, compared to the same period of the previous year.

When the communication of the elements of the invoices through the E-fatura does not reflect the totality of the operations carried out in relation to the transfer of goods and services subject to VAT (even if exempt), the measurement of the drop of invoicing must be made with reference to the revenue.

How to access?

Application via the Finance Portal. The application will be:

• Automatically validated in the case of companies that verify one of the conditions of immediate access to the fractional payment; or

• Manually validated for the remaining companies that demonstrate a decrease of activity, with respective ROC or CC certification.

For more information see the page of the Tax Authority.

Relevant legislation:

Decree n.º 2-A/2020, of 20 March

Decree-law n.º 10-F/2020, of 26 March

Declaration of Rectification n.º 13/2020, of 28 March

Decree nº 52/2021-XXII

Eligible companies may choose to submit the periodic VAT declarations for November and December 2020 and January, February, March, April and May 2021, of the monthly regime, and the declarations to be delivered in November 2020, as well as in February and May 2021, of the quarterly regime (referring, respectively, to the 4th quarter of 2020 and 1st quarter of 2021), within the legal term provided for in no. 1 of article 41 of the CIVA, can be submitted until the 20th of each month, and payment can be made until the 25th of each month.

Who can benefit?

All companies and self-employed workers who meet one of the following conditions:

• Turnover less than or equal to 10M € in 2019; or
• Beginning (or restart) of activity that occurred on or after January 1, 2020 (provided that they did not present turnover in 2019).

Relevant legislation:

Circular Letter n.º 30224, of 1 July, of AT

Order n.º 129/2020-XXII, of 27 March, of SEAF

Order n.º 153/2020-XXII, of 24 April, of SEAF

• 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.

This measure is intended to return to the organizers of congresses, fairs, exhibitions, seminars, conferences and the like the amount equivalent to VAT deducted from the Tax and Customs Authority with the expenses incurred for the direct needs of participants pursuant to Article 21(2) (d) of the CIVA. Support cannot go beyond half the VAT spent.

What are the benefits?

Under this scheme, the amount equivalent to 50 % of the VAT incurred and not deductible in the costs incurred for the direct needs of the participants relating to the organisation of congresses, fairs, exhibitions, seminars, conferences and the like may be refunded when they result from contracts concluded directly with the service provider or through entities legally qualified to that end and have been proven to contribute to performing activities which are liable to VAT.

The following expenditures shall be considered:

• Transport and business travel and staff costs, including tolls;
• Expenses relating to accommodation, food, beverages;
• Reception costs, including those relating to the reception of persons from outside the company;
• Expenses relating to real estate properties or part of real estate properties and its equipment, intended primarily for such receptions. This measure will be in force until 31 December 2021.

Who can benefit?

Entities with the Main Portuguese Classification of Economic Activities «82300 – Organization of fairs, congresses and other similar events»

How to access?

The application for refund is submitted through the Tourism of Portugal portal, on the SGPI platform, from the second month following the issuance of the supporting documents and until the end of the one-year period from the date of issue of these documents.

More information can be available in the Tourism of Portugal page.

Relevant legislation:

Decree-Law No. 54/2020

Tax collections (onging and forthcoming) of the Tax and Social Security Authority will be suspended during the first quarter of 2021 (by 31 March).

During this period, it is also impossible to execute attachment and pay installment plans for debt to Social Security.

For the regularization of the tax situation, automatic installment plans for debt that are under tax execution will be created, up to € 5,000 euros for individuals and up to € 10,000 for companies. The installment plans have a grace period of 2 additional months.

For more information see the dedicated page of the Tax Authority.

This extraordinary regime provides for the admissibility of payment of contributions due in November and December 2020 by self-employed persons or employers (contributions from the company's responsibility), in three or six instalments, without interest, between:

• July to September 2021; Or 
• July to December 2021. 

Self-employed persons or employers who choose to defer the payment of contributions are not dependent on the delivery of an application for that purpose, simply by indicating, in February 2021, on the respective pages of Direct Social Security (Segurança Social Direta), the payment period they wish to see applied.  

Finally, it is established that failure to comply with any of the access requirements for deferral of payment of contributions, or failure to pay any of the instalments, will be penalised with the immediate repayment of all other missing instalments, as well as the termination of the interest exemption.

Who can benefit?

The right to the extraordinary deferral of the payment of social contributions for the months of November and December 2020 to: 

• self-employed; 
• employers in the private and social sectors that qualify as micro, small or medium-sized enterprises.

Relevant legislation:

Decree-Law No. 99/2020

Avoid face-to-face contacts with tax authority services. Electronic and telephone services of the Tax Authority (AT) should be used preferentially.

• Use E-desk of the AT or the AT telephone hotline, through the number (+351) 217 206 707.

• Face-to-face contact is reserved for urgent matters, and prior scheduling is required through the AT telephone service line.

• As regards the fulfilment of accounting obligations, COVID-19 infection or prophylactic isolation determined by the health authorities is considered a valid justification.

Relevant Legislation

Decree-Law No. 10-A/2020 of March 13