COVID-19: Portuguese government temporarily subjects masks and disinfectant gel to the reduced VAT rate

05 / 12 / 2020

Tax Alert Portugal

As announced by the Portuguese Government, Law no. 13/2020, of 7 May, was finally published, which came into force on the day after its publication and provides for the temporary application of the following VAT measures:

1. Application, from 30 January to 31 July 2020, of a VAT exemption to internal supplies and intra-Community acquisitions of:

The goods necessary to combat the effects of COVID-19 which are listed in the abovementioned Law (e.g. ventilators, masks and protective suits, disinfectant, material for field hospitals) and provided they meet the requirements set out in Council Directive 2009/132/EC of 19 October 2009 (for example, the entities acquiring them must notify in advance the competent authorities of their intention to assign such goods to a different destination, as well as when they intend to assign them to third parties);
Acquired by (i) the State, autonomous regions or municipalities, as well as any of their services, establishments and pubic bodies, even if personalised, including public institutes, (ii) health establishments and units belonging to the National Health Service, including those of the private or social sector, or (ii) other entities pursuing charitable or philanthropic purposes;
Acquired by (i) the State, autonomous regions or municipalities, as well as any of their services, establishments and pubic bodies, even if personalised, including public institutes, (ii) health establishments and units belonging to the National Health Service, including those of the private or social sector, or (ii) other entities pursuing charitable or philanthropic purposes;
Intended (i) for free distribution to persons affected by or exposed to COVID-19, as well as to people participating in the fight against this disease, (ii) as well as for treatment of people affected by or in the prevention of COVID-19, keeping the entities listed in the previous paragraph the corresponding ownership in this case;
Invoices supporting these transactions must refer to this Law to justify the non-assessment of the VAT (for example: "exemption in accordance with article 2 of Law 13/2020");
This exemption does not limit the right to deduct input VAT of the sellers of these goods;

2. Application, from May 8 to 31 December 2020, of the reduced VAT rate on imports, internal supplies and intra-Community acquisitions of masks for respiratory protection and disinfectant gel complying with the specifics approved by the Portuguese Government. We note that protective visors and disinfectant sprays were excluded from the scope of this measure.