All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.
Local Insights

Portuguese VAT: Gold-plated invoicing obligations for non-established businesses

Sponsored by

cuatrecasas-logo-vector.png
ball-63527.jpg

Daniel S de Bobos-Radu and Diogo Gonçalves Dinis of Cuatrecasas provide a summary of the new rules impacting invoicing obligations in Portugal.

Despite the alignment with the requirements stemming from Article 226 of Council Directive 2006/112/EC (VAT Directive), the Portuguese government has been changing invoicing obligations with a severe impact on non-established taxable persons.

In this regard, Decree-Law 28/2019, of February 15 2019, brought new mechanisms aimed at fraud-tackling, including broadening the scope of the obligation to use certified invoicing software and the obligation to issue invoices and other tax-relevant documents containing a unique document code and a QR Code. It also transposed Article 219-A of the VAT Directive, clarifying the territorial scope of invoicing obligations.

Below is a summary of the new rules in force.

Certified invoicing software: From January 1 2020, Portuguese taxable persons with a turnover above €50,000 ($53,286) must raise invoices (and other tax-relevant documents such as credit and debit notes) through an invoicing software certified by the local tax authorities. As from July 1 2021, this obligation was extended to non-established taxable persons identified for VAT purposes in Portugal.

Unique Document Code (ATCUD): Taxable persons must include an ATCUD on invoices and other tax-relevant documents issued through their certified invoicing software. This obligation was postponed to January 1 2023.

Series reporting obligation: Taxable persons must communicate electronically to the tax authorities the numeric series used to issue invoices and other tax-relevant documents prior to their use. For each series of documents communicated, the authorities will assign a validation code that must integrate the ATCUD. Alike ATCUD, this obligation was postponed to January 1 2023.

Bidimensional Bar Code (QR Code): A visible QR Code must be placed on the invoices and other tax-relevant documents issued through the certified invoicing software. The QR Code will be generated in accordance with the technical requirements and specifications set out by the tax authorities. This obligation is in force from January 1 2022.

SAF-T (PT): As per the 2022 state budget bill, non-established taxable persons identified for VAT purposes in Portugal are required to submit the SAF-T (PT) file on a monthly basis until the 5th day of the subsequent month. This obligation is expected to go live as soon as the state budget law is gazetted.

This bundle of ancillary obligations is already having a negative impact on foreign businesses, not only because of the technical complexity underlying their implementation, but also because the absence of a turnover threshold for implementation may be leading business to start a cost-benefit analysis, with an evident impact on competition neutrality. Moreover, in terms of proportionality, there is no empirical evidence yet that such measures will be effective in combating fraud and tax evasion.

Be that as it may, this is the right time for companies to reassess the efficiency of their supply chains and, eventually, adapt contractual agreements to benefit from simplification measures such as the VAT quick fixes and the domestic reverse-charge mechanism in lieu of maintaining VAT identification in Portugal.

more across site & bottom lb ros

More from across our site

The UN’s decision to seek a leadership role in global tax policy could be a crucial turning point but won’t be the end of the OECD, say tax experts.
The UN may be set to assume a global role in tax policy that would rival the OECD, while automakers lobby the US to change its tax rules on Chinese materials.
Companies including Valentino and EveryMatrix say the early adoption of EU public CbCR rules could boost transparency of local and foreign MNEs, despite the short notice.
ITR invites tax firms, in-house teams, and tax professionals to make submissions for the 2023 ITR Tax Awards in Asia-Pacific, Europe Middle East & Africa, and the Americas.
Tax authorities and customs are failing multinationals by creating uncertainty with contradictory assessment and guidance, say in-house tax directors.
The CJEU said the General Court erred in law when it ruled that both companies benefitted from Italian state aid.
An OECD report reveals multinationals have continued to shift profits to low-tax jurisdictions, reinforcing the case for strong multilateral action in response.
The UK government announced plans to increase taxes on oil and gas profits, while the Irish government considers its next move on tax reform.
War and COVID have highlighted companies’ unpreparedness to deal with sudden geo-political changes, say TP specialists.
A source who has seen the draft law said it brings clarity on intangibles and other areas of TP including tax planning.