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

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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.

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