Amendments to tax legislation have been approved

From the innumerous changes introduced, we highlight the following, which entered into force on past October 1^st:

• Rental income (PIT): tax incentive approved by Law no. 3/2019, of 9 January, which reduces in 2% or 5% the autonomous tax rate of 28%, applicable over rents, resulting from lease agreements settled for more than 2 years and which entered into force on 1 January 2019, was now limited to rental contracts for permanent habitation. In addition, it is also foreseen whenever said rental contracts cease its effects before its duration elapsed due to the landlord, the latter has to pay the corresponding tax that was not paid due to referred tax incentive;

• Income referring to previous years (PIT): in alternative to the current procedure of taxation in the year of obtaining said income, dividing it by the years it refers to, it becomes possible to present a substitution return as regards the relevant years, up to the 5^th year before the payment or its disposal;

• Pensions respecting to previous years (PIT): they must be subject to separate withholding tax, dividing its amount for the sum of the months they refer to. The tax rate computed in applicable to total pension income referring to previous years;

• Withholding tax due over income paid to non-residents (PIT and CIT): for the purposes of reduction or exemption of internal withholding taxation as per a double tax treaty or other international agreement (as well as for refund purposes), it becomes sufficient obtaining a certificate of tax residence, which must also confirm said non-resident is subject to taxation therein. This certificate still has to be attached to the relevant form (RFI or DJR) which has to be filled in, but not subject to certification by the corresponding tax authorities. Therefore, it is no longer an option to present said forms certified by the tax authorities of the State of residence of the income beneficiary;

• Transfer pricing: some rules have also been changed as regards this matter, which we had already the opportunity to disclose and which can be seen here;

• Concept of turnover (CIT): the concept of “turnover” is established for the purposes of the CIT Code and any legislation envisaging to tax profits, corresponding to the value of the sales and services provided, also including rentals related to investment properties as defined in the applicable accounting standardization, even when registered as fixed assets, obtained in an activity encompassing the taxpayers corporate object. In the case of banks, insurance companies and other entities from the financial sector for which it is set a specific accounting plan, the turnover is substituted by interest and income and commissions or gross premiums issued and insurance contracts and operations deemed as investment contracts or contract of provision of services, according to the nature of the activity performed by the taxpayer;

• VAT payment: taxpayers have more 5 days to pay the corresponding VAT to the State as regards the deadlines established for the presentation of the VAT periodic returns in a monthly or quarterly basis;

• Invoices issued must be communicated to the tax authorities up to day 12 of the following month, when until 30 September 2019 they had to be communicated by day 15 of the following month. We recall that Decree-Law no. 28/2019, of 15 February, reduced this deadline to day 10 of the following month, however only as from 1 January 2020. Therefore, doubts are raised whether this new deadline will be in force just until 31 December 2019. We also refer that Ofício-Circulado no. 30213/2019, of 1 October, has some flaws in footnote no. 23; so amendments are expected;

• Invoices communication: the respecting data communicated to the tax authorities has to be maintained up to the 15th year following the one they refer to (previously until the subsequent 4th year).