Value Added Tax
VAT
These are subject to VAT:
- Individuals or companies that, in an independent way and regularly, produce, trade or provide services or an agricultural business;
- Individuals or companies that produce invoices or similar documents, and charge incorrectly or unauthorized VAT;
- Individuals or companies that make intra-community transactions and importation of goods;
- Buyers of some type of services as long as the respective provider is a non-resident entity in Portugal;
- The State and public companies, when they make transactions out of their authority power.
The following transactions are subject to VAT:
- Transmissions of goods or services made in the national territory by a fiscal individual, acting as such;
- Importations of goods;
- Intra-community purchases of goods made in Portugal.
| Transactions subject to VAT in Portugal | |
|---|---|
| Services provider in Portugal or abroad | Services concerning buildings located in Portugal Transport services for the distance travelled in Portugal Artistic, scientific, sport, recreational, teaching services and similar ones provided in Portugal Work on fixed assets done in Portugal |
| Services provider abroad and buyer in Portugal | Concession of author’s rights, licenses, brands and other similar rights |
Non-deductible Exempted transactions
- Financial transactions
- Insurance and re-insurance transactions
- Building transmission and rental income (possibility to refuse exemption)
- Services providing and goods transmissions made in a collective interest of its partners by non-profit-making organisms, as long as the only benefit is a fixed share under the terms of the statute.
- Medical and sanitary services
Non-deductible Expenses
VAT is not deductible for the following expenses:
- Expenses concerning tourism vehicles, pleasure boats, helicopters, planes, motorbikes and motorcycles
- Expenses with fuel; except diesel, FCC, natural gas and biofuels, in which case VAT is deductible in 50%
- Transport expenses, business travelling, accommodation, alimentation, drinks and reception expenses. There are exceptions when theses expenses are related to the organization or attendance to a congress, fair, exposition, seminar, symposium or similar meeting, under certain conditions
- Expenses with drinks and tobacco
- Entertainment and luxury expenses
- Generally speaking all the expenses that are not related to taxable transactions
VAT: PRO-RATA
Pro-rata results from a fraction, with the following transactions:| Numerator | Denominator | Are excluded |
|---|---|---|
| Annual net amount, of the transmissions of goods and the providing of services that are VAT deductible | Annual net amount, of all the transactions | Transmissions of fixed assets in the business activity Real estate or financial secondary transactions regarding the business activity |
Invoices incorrectly issued.... Who pays the VAT?
In the case of documents, those that do not meet the requirements to serve as invoices, if VAT is not paid, who can be made responsible to pay?
Traditional "Cafes" and Petrol Stations
Most certainly, after having made payments in restaurants, cafes, or petrol stations, we all get receipts that look like invoices, but in the reality, they are no good for the accounts. This situation today is very much generalized, and usually causes problems.
The three reasons why:
- It is obligatory to submit an invoice for any commercial transaction
- Because the law requires that steps be taken, where the settlement / payment of VAT for each transaction. Something that can only occur based on a legal invoice.
- Because the VAT shown on invoices, not complying with all legal requirements, is not liable to be deducted by the purchaser of goods or services.
Essential Elements
We emphasize that only bills showing the following information will be valid:
- Numeration with indication of the date
- Names of the companies, respective head offices and their Fiscal Number
- The quantity and name of the goods/services transacted
- The price and VAT charged on the price (with an indication of actual rate at which the goods or services are subject)
- The day on which the goods were made available to the purchaser (or where the services were performed)
- The day on which some of the payments were made even if these days don't coincide with the issue of the invoices
Inexistent: Highlighting the fact that any documents that do not show one or any of these points collectively cannot be regarded as "Factura"- almost as if the bill wasnever issued.
When there is no invoice
It should be stressed the fact that, when dealing with commercial transactions subject to VAT, it is always mandatory for the issue of bills, as that person acquiring the goods or service is jointly responsible with the supplier to pay the tax when this proves at fault if:
- The invoice was not issued (or issued with all the essential information;) or
- When the invoice does not show the name or address of the company or type and / or quantity of traded goods and their price and / or the amount of VAT due.
Sole Responsibility
When referring to sole responsibility we mean that the Tributary Tax Administration, may in the cases mentioned earlier, require payment of VAT, either directly to the seller or buyer as far as if you do not pay the VAT over. They will use the option of freezing assets to recover the tax payment (VAT).
Important! For this reason it is essential to always ask for a valid invoice, this way you avoid the eventuality of tax not been handed in, the Tax Office can come and place the blame on the buyer of the good or services.
Partial
The buyer proves that it paid its supplier (properly identified) all or part of the VAT due for the transaction, they shall be relieved of sole responsibility, although only the part corresponding to the amount of VAT actually paid. Note: Of course if it is proved that the buyer acted in bad faith or in conjunction with the supplier then it revokes to sole responsibility.
Fines
It should also be disclosed the fact that non-issuance of invoices is a punishable offence and can incur fines. The amounts vary between 100 and 5,000 Euros, depending on the seriousness of the offence or the degree of blame. Attention: It is emphasized that the mere fact that the person / company does not request an invoice from the supplier is also subject to penalties, with fines that can go from 100 to 2,500 Euros.
Legal Base- Arts.19º 29º e 79º of CIVA. Arts. 26º e 123º of RGIT.
| "Therefore: If an invoice is wrongly issued or not requested, the responsibility for the VAT due, can be demanded by either the buyer or seller" |