The New Year has brought few relevant changes in terms of taxes in Portugal, which is good news for the stability of the tax regime, stability being something that investors crave so much.
Below are some of the changes introduced within the scope of the 2017 Budget that could impact the companies of the International Business Centre of Madeira:
- Special payment on account: The limit was formerly €1,000 and now it has been reduced to €850;
- Urgent binding information: The maximum period for responding to a request for urgent binding information has been reduced from 90 to 75 days.
- Countries, territories or regions with regimes that are clearly more favourable: now also included on the list of countries, territories or regions with regimes that are clearly more favourable are those that, even though they are not included in the list published by the Portuguese government, do not have a tax identical or similar to a corporate income tax, or if it exists, the applicable rate is less than 60% of the corporate income tax rate in force in Portugal, whenever cumulatively speaking the tax codes and legislation expressly stipulate this and there are special relations between people and entities that reside in those places and the residents of Portuguese territory.
This rule is not applicable to EU Member States or members of the European Economic Area (provided that there is formal administrative cooperation on taxation equivalent to that which is in place within the European Union).
Also in this regard, the Isle of Man, Jersey and Uruguay were removed from the list of countries, territories or regions with a clearly more favourable regime, as of 1 January 2017.
- Updating of the IAS amounts and the Guaranteed Minimum Monthly Income: the indexation amount of social welfare (IAS) payments in 2017 is now €421.32. As such, the amount of the Guaranteed Minimum Monthly Income was adjusted and in Madeira it will be €568.14;
- Independent taxation rates: Representation costs, daily allowances and travel allowances for use of the worker’s own car will now be subject to independent taxation, regardless of whether or not these costs are deductible from corporate taxes;
- Tax losses: The rule determining that deductible tax losses must be calculated over a longer period of time has been eliminated. This change ensues from the reduction in the carry over period for tax losses, dropping from 12 to 5 years, which will apply to losses generated as of 1 January 2017. In order to prevent more recent losses from expiring, losses whose carry over period will expire first may be deducted first;
- SAF-T (PT) file: All corporate taxpayers that perform a commercial, industrial or agricultural activity with a stable head office or establishment in Portuguese territory shall be obliged to have the capacity to export SAF-T (PT) files. This obligation was previously only in place for those with computerized organised accounts;
- Conventional remuneration of shareholder capital: All companies residing in Portuguese territory may now deduct from their taxable profit the amount resulting from the annual application of a 7% rate on entries of up to 2 million euros, when establishing a company or increasing shareholder capital; for this purpose, both cash entries and the conversion of advances or loans to shareholders are taken into account. The deduction is made when calculating taxable profit for the taxation period when the aforementioned entries are made, and during the next five taxation periods;
- Extinction of benefits from periodic taxes: access to permanent or temporary tax benefits by taxpayers depends on the lack of tax debts. In the case of periodic taxes, this fact should be ascertained not only at the end of the year or taxation period when the taxation event took place, but also when the tax pertaining to the benefit is paid;
- Exemption from pledging guarantees: Requests for exemption from pledging guarantees in the case of irreparable losses to the taxpayer or in the case of a manifest lack of economic resources can only be refused by the Tax Authorities if there is strong evidence that the lack or inexistence of goods is due to wrongful actions committed by the interested party;
- Communication of invoice information SAF-T (PT): The deadline for reporting invoice information has been changed to the 20th day of the month that follows the month in which the invoice was issued (previously it was the 25th day).
NEWCO will be pleased to answer any questions regarding these developments or to provide clarifications regarding the impact that these changes may have on the companies of the International Business Centre of Madeira.