Compliance Services

Following the lead of multiple countries in Europe, Portugal has lowered VAT on gas and electricity to from 23% to 6% in the wake of inflation in the country.  

We expect other European countries to follow a similar trajectory in the coming months and are closely monitoring changing tax rates both in Europe and globally. 

Further to Law Decree 42-A/2022, dated 30 June 2022, the proposed extension of the B2G mandate to small / medium enterprises (SMEs) has once again been delayed and is now expected to be implemented on 1^st January 2023.

This is synonymous with the further extension of PDFs being accepted as an e-invoice until 1^st January 2023, underlining the Portuguese Tax Authorities’ intention to consolidate and expand the scope of their fiscal measures.

The Portuguese State Budget, approved on 27 June 2022, introduced some changes for SAF-T reporting. SAF-T reporting refers to the Standard Audit File for Tax and Portugal pioneered the SAF-T format, being the first country to introduce it on 1^st January 2008. It was created with the underlying intention to orchestrate an efficient exchange of information between businesses and tax authorities.

All VAT-registered taxpayers in Portugal are subject to SAF-T reporting obligations. The State Budget has now extended this obligation to foreign businesses from 1^st January 2023.

This effectively brings the Portuguese SAF-T legislation in harmony with the requirement for non-established companies in Portugal to also use certified billing software, which came into effect in July 2021. This requirement ensures that taxpayers can only use billing systems authorised by the Portuguese Tax Authorities (PTA), thus reducing the scope for tax evasion and fraud.

Portugal’s 2022 budget has been approved in Parliament.

Amongst measures such as transposing certain VAT Directives for EU purposes and amending VAT compliance-related deadlines:

• The reduced rate of 6% (5% in Madeira and 4% in the Azores) has been extended for:
  • Certain dairy-free products;
  • Repair services for domestic appliances;
  • Delivery and installation of certain solar panels.

This extension is due to expire on 30 June 2025.

In the past few months, we have communicated that in Portugal, a PDF can, in certain instances, qualify as an electronic invoice.

The requirement to include a digital signature has yet again been delayed, further to Order 49/2022. Portugal has delayed this requirement several times.

This means that now from 1^st January 2023, PDFs will have to include a Qualified Electronic Signature (QES).

In Portugal, under certain circumstances, a PDF invoice can qualify as an electronic invoice. The Covid-19 pandemic has meant that many countries around the world have had to deal with challenges in the management of their fiscal operations. Part of these challenges have involved governments acknowledging that they must provide some concessions to taxpayers.

During much of Covid, PDF invoices were made available to clients, despite not meeting the stringent requirements to qualify as an invoice.

During the following periods, it was / is permitted that PDFs can qualify as e-invoices, despite not meeting stringent requirements:

• April, May and June 2020;
• 9 November 2020 to 31 December 2021;
• 1 January 2022 to June 30 2022.

This means that up to 30 June 2022, PDFs can be accepted as e-invoices without the need to meet any specific requirements.

At all other times, the PDF must be digitally signed to be accepted as an e-invoice.

We previously advised that the ATCUD code on Portuguese invoices (as well as other fiscal documents) is now optional from 1 January 2022. This has now been officially confirmed by Order 351/2021-XXII. Previously, it had been announced that it would be mandatory from 1 January 2022.

We also recently published an update advising that Portugal had extended the period unsigned PDFs could be accepted as an e-invoice. This had previously been extended to 31 December 2021; this has now been further extended to 30 June 2022, by virtue of Order 351/2021-XXII, at which point PDFs must be digitally signed.

Portugal has previously communicated the admissibility of invoices in PDF format as electronic invoices. Order no. 260/2021-XX11, dated 27^th July 2021, has extended this permissibility until 31 December 2021. This had previously been extended until 30 September 2021.

PDFs must be digitally signed from January 2022.

The standard VAT rate in Portugal (the Azores) has been reduced from 18% to 16%.

Tax Circular 30237 outlines the procedures to be followed further to this tax rate change. These include:

• Chargeability;
• Adjustments;
• The cash VAT regime;
• Intra-community acquisition of goods.

There have been no changes to the mainland Portuguese tax rates.

To combat tax evasion and fraud, the Portuguese Tax Authorities have defined some rules that billing systems must fulfil to ensure the non-violation of billing data once it is registered.

This means that only billing systems that fulfil the requirements defined in law and which are certified by the PTA can be used.

This will be effective from 1^st July 2021. These new measures will also apply to non-resident businesses that are registered for VAT in Portugal with a turnover exceeding 50,000 Euros in the calendar year 2020. This means that these entities are required to use exclusively billing systems certified by the PTA for issuing invoices and other relevant tax documents.

There are a few options to business how to go about this- including choosing to have their own software certified, using third-party pre-certified software or outsourcing the process.