Clarifies the moment as of which a credit is deemed irrecoverable under an insolvency procedure (and, as a consequence, the taxable person can benefit from the “bad debt relief” regime): when the insolvency is declared …
1. Domestic supplies – adjustment of the taxable amount: “bad debt relief”
With effect as of January 1, 2015, the 2015 State Budget Law:
- Clarifies the moment as of which a credit is deemed irrecoverable under an insolvency procedure (and, as a consequence, the taxable person can benefit from the “bad debt relief” regime): when the insolvency is declared following a final judgement (as res judicata) on the verification, admission and ranking of the credits, as foreseen in the Insolvency and Corporate Recovery Code (Código de Insolvência e da Recuperação de Empresas), or whenever there is the ratification of the off-court insolvency plan;
- Simplifies the procedure for the recovery of VAT included in credits overdue after the January 1, 2013 (i.e. subject to the “new bad debt relief regime”), which are unpaid for more than 24 months and for which there is clear evidence of impairment and that efforts to collect such debts were made: the recovery procedure is no longer dependent on the accounting derecognition of these credits;
- Provides that, whenever there is an assignment of “bad debts” after the adjustment, in favour of the assignor, of the VAT and if the bad debt is subsequently (fully or partially) recovered, the assignor has to adjust, in favour of the state, the VAT previously deducted. In its turn, the assignee is entitled to recover such tax.
2. New Inventory Communication rule
With effect from January 1, 2015, taxable persons that have to prepare their accounts in accordance with the Portuguese Generally Accepted Accounting Principles and with an annual total turnover of at least EUR 100,000 in the previous fiscal year, are liable to report to the Portuguese Tax and Customs Authority the inventories registered in their balance sheet in a given year until January 31 of the following year.
- Ministerial Order 2/2015, of January 6, defines the model and structure for the file for the communication of inventories to the Portuguese Tax and Customs Authority
- Order of January 20, of the Secretary of State of Tax Affairs, extends the deadline for the communication of inventories until February 6, 2015
3. Farmers special scheme
Effective as of January 1, 2015, farmers may opt for a special scheme, thus benefitting from the small business exemption applicable to the supply of agricultural goods (as listed in a new Annex F of the VAT Code) and services (as listed in a new Annex G of the VAT Code). Farmers who opt for this scheme may request from the Portuguese Tax and Customs Authority, authorisation to apply a flat-rate compensation (assessed through the application of a rate of 6% on the total amount of supplies of agricultural goods and services in each semester).
4. Portuguese Tax and Customs Authority Circulars
The Portuguese Tax and Customs Authority has published the following Circulars:
- Ofício-Circulado 30168/2014
DSIVA explains the amendments introduced by 2015 State Budget Law to the Portuguese VAT Code and to other Portuguese VAT legislation
- Ofício-Circulado 30169/2014
DSIVA explains the new special scheme for farmers
Conceição Gamito and Catarina Belim
Vieira de Almeida & Associados