Portugal: measures to support enterprises and workers

Portugal: Government implements measures to support enterprises and workers

As announced, the Portuguese Government has put in place an exceptional and temporary regime for the compliance of fiscal obligations and social contributions which aims at protecting citizens and companies, seeking to safeguard employment and create conditions, as far as possible, to ensure the survival of companies and household income.

Measures for companies and the self-employed, within the framework of tax and contribution obligations:

Deferral of VAT payments and withholding taxes due in the second quarter of 2020

VAT and withholding taxes due in the second quarter of 2020 can be paid as usual or in 3 or 6 monthly instalments, without interest. In the latter case, the first instalment is due on the date of fulfilment of the payment obligation in question and the remaining monthly instalments are due on the same date as the subsequent months.

This measure may apply to taxable entities who:

1. had a turnover of up to EUR 10 million in 2018; or
2. commenced activity on or after January 1, 2019, or restarted activity on or after January 1, 2019, when they did not obtain turnover in 2018; or
3. whose activity falls within the sectors terminated by the Resolution of the Council of Ministers of March 20; or
4. declare and demonstrate a decrease in the turnover reported in the E Invoice of at least 20% of the average of the three months prior to the month in which the obligation exists, compared to the same period of the previous year (even if in 2018 they had a turnover exceeding 10 million euros).

Flexibility in payments must be requested, electronically, by the end of the period for voluntary payment of the tax in question. In the case of taxable persons wishing to benefit from the measure due to the reduction in their invoicing, such reduction will have to be certified by a Certified Public Accountant or Certified Accountant.

Extension of deadlines for submission of periodic VAT returns:

Monthly regime - Periodic declaration for March 2020

• Delivery can take place until May 18, 2020;
• VAT may be paid until May 25, 2020 (without prejudice to membership of an instalment payment scheme);
• For VAT taxpayers with a turnover of up to 10 million Euros (with reference to the year 2019), or who commenced activity on or after 1 January 2020, or who restarted activity on or after 1 January 2020 and had no turnover in 2019, the submission may be based on the data in the eInvoice, without the need for supporting documentation, and, if necessary, regularized by means of a replacement declaration, to be submitted by August 31, 2020 (and any payment adjustment shall be made at the same time).

Monthly regime - Periodic declaration for March 2020

• The delivery can take place until June 18, 2020;
• VAT can be paid until 25 June 2020 (without prejudice to membership of an instalment payment scheme).

Quarterly regime - Periodic declaration for January - March 2020

• VAT may be paid until 25 May 2020 (without prejudice to membership of an instalment payment scheme);
• For VAT taxpayers with a turnover of up to 10 million Euros (with reference to the year 2019), or who commenced activity on or after 1 January 2020, or who restarted activity on or after 1 January 2020 and had no turnover in 2019, the submission may be based on the data in the eInvoice, without the need for supporting documentation, and, if necessary, regularized by means of a replacement declaration, to be submitted by 31 August 2020 (the possible payment settlement must be made at the same time).

Extension of the following deadlines for compliance with tax obligations

The following reporting and payment deadlines are extended:

• The Special Payment on Account, due on March 31, 2020, has been postponed to June 30, 2020;
• The submission of the Model 22 IRC declaration was postponed from May 31, 2020 to July 31, 2020;
• The first Advance Payment and the first Additional Advance Payment due on 31 July 2020 have been deferred to 31 August 2020;
• IES (Simplified Business Information): The delivery deadline has been extended to August 7, 2020 (measure updated on 24/04/2020);
• IRS and IRC withholding at source: those related to April 2020 can be delivered until May 25, 2020; those related to May 2020 - can be delivered until June 25, 2020 (measure updated on 24/04/2020);
• Stamp Duty: those relating to April 2020 can be delivered by 25 May 2020; those relating to May 2020 can be delivered by 25 June 2020 (measure updated on 24/04/2020);
• Transfer Pricing Documentation: The deadline for compliance with the obligation to establish, or submit, has been extended to August 31, 2020 (measure updated on 24/04/2020);
• Tax File: The deadline for compliance with the obligation of constitution, or delivery of the Tax Dossier has been extended to August 31, 2020 (measure updated on 04/24/2020).

Deferral of Social Security contributions due by employers and self-employed workers

This measure applies to self-employed workers and to the private and social sector entities that employ, by reference to the remuneration statement for the month of February 2020:

• Less than 50 workers: these have direct access to the measure;
• Between 50 and 249 jobs: as long as they show a drop of at least 20% in the invoicing communicated through the e-billing in the months of March, April and May 2020, compared to the same period of the previous year or, for those who started their activity less than 12 months ago, to the average of the period of activity that has elapsed;
• A total of 250 or more jobs: as long as it is an IPSS or equivalent, or a company whose activity falls within the sectors closed by the Resolution of the Council of Ministers of March 20, or a company in the aviation and tourism sectors, and as long as they present a drop of at least 20% of the invoicing communicated through the e-billing in the months of March, April and May 2020, compared to the same period of the previous year or, for those who started the activity less than 12 months ago, to the average of the elapsed period of activity.

In the case of employers, the contributions, due in March, April and May 2020, may be paid as follows:

• 1/3 of the amount of the contributions paid in the month in which it is due;
• 2/3 paid in equal and successive instalments in the months of July, August and September 2020 or in the months of July to December 2020, without interest.

This deferment does not require any application, however companies that opt for phased payment must, in July 2020, indicate in the Social Security Direct which of the payment terms they intend to use, namely whether they will pay the two thirds in July, August and September 2020 or in the months of July to December 2020.  In that same month, the company must demonstrate that it meets the requirements to benefit from this deferment, duly certified by its Certified Accountant.

In the case of self-employed workers, the deferment of payment of contributions due will apply to the months of April, May and June 2020 and contributions may be paid as mentioned above.

Suspension of the benefit plans in progress at the Tax and Customs Authority (AT) and the Social Security, with the judicial vacation regime being applicable until the date of termination of the exceptional and temporary measures approved (without prejudice to the fact that these may continue to be punctually complied with).

The suspension of tax execution proceedings initiated by AT and of execution proceedings for debts to the Social Security until June 30, 2020, if the exceptional situation ceases at an earlier date.

Suspension of administrative and tax deadlines that run in favor of taxpayers (e.g. oppositions, complaints and appeals), applying the judicial vacation regime until the date of termination of the exceptional and temporary measures.

Yearly vacation

The approval and posting of the holiday map, scheduled until April 15, can now take place up to 10 days after the end of the state of emergency.

(Measure updated on 7/04/2020)

Measures to Support the Maintenance of Employment Contracts (including simplified lay-off)

A number of measures have also been launched to support the maintenance of employment contracts by companies affected by the closure or considerable slowdown in their activity.

These measures are aimed at establishments or companies that have actually been closed and at workers who are directly affected to them, as a result of the duty to close facilities and establishments or by legislative or administrative determination, as well as companies in the following circumstances, declared by the employer and duly certified by the company's certified accountant:

1. The total or partial stoppage of the company's or establishment's activity resulting from the interruption of global supply chains, or the suspension or cancellation of orders, which can be documented under the terms of the law;
2. The abrupt and sharp drop of at least 40% in invoicing in the period of thirty days prior to the request with the competent social security services, with reference to the monthly average of the two months prior to that period, or in relation to the same period of the previous year, or even, for those who started the activity less than 12 months ago, the average of that period.

Under this measure the employer has the right to:

• Extra support for maintaining an employment contract (the so-called simplified lay-off), with or without training, in the event of temporary reduction of the normal working period or suspension of the employment contract, under the terms of articles 298 et seq. of the Labour Code (normal lay-off);
• Extraordinary training plan;
• Extraordinary financial incentive to support the normalisation of the company's activity;
• Temporary exemption from the payment of Social Security contributions by the employer.

The request is submitted by the employer to the Social Security, and has an initial duration of one month. It can be extended monthly, up to a maximum of 3 months, upon application for extension, to be submitted each month (the application for extension should only be submitted after the initial application is granted). Companies wishing to access this extraordinary measure must always give their consent to the Social Security Institute (ISS) for consultation of the tax situation on the website of the Tax Authority (AT), i.e. they must give their consent either in the initial application or in the applications they make in the months following the request for extension.

It should be noted that these measures cannot be cumulated with the support granted to employees and self-employed workers for the care of children or other dependent minors under the age of 12 or, regardless of age, with a disability or chronic illness, arising from the suspension of teaching and non-teaching activities in a school establishment or social equipment to support early childhood or disability, when determined by health authority or the government. (Measure updated on 07/04/2020).

What is the Simplified Lay-off?

Simplified Lay-off is an extraordinary financial support granted to the company, per employee, destined exclusively for the payment of remunerations during periods of temporary reduction of working hours or suspension of employment contracts. It should be noted that companies that benefit from any of the measures foreseen in this scheme, in addition to other limitations, are prevented from making redundancies for economic reasons (collective dismissal and termination of employment) within 60 days.

If the company opts for the simplified lay-off, the employee is entitled to receive 2/3 of his normal monthly remuneration, with a maximum limit of 3 Guaranteed Minimum Monthly Remuneration (RMMG), i.e. EUR 1,905 and a minimum of 1 RMMG, of which 70% is paid by Social Security through reimbursement to the employer and 30% is paid by the employer.

In cases where the worker is in the modality of reducing working hours, the working hours are paid by the employer and the difference between the value of these hours and the limit of 2/3 is supported, 70% being paid by Social Security and 30% by the employer. However, the worker covered by the regime of reduction of the normal working period or suspension of the employment contract who exercises another remunerated activity outside the company, in the areas of social support, health, food production, logistics and distribution, will not be subject to a reduction in his compensation. (measure updated on 14/04/2020)

Employers are entitled to total exemption from the payment of Social Security contributions. In the first phase of resuming normality of their activity, they will also be entitled to a support, paid in one lump sum and with the value of 1 RMMG (EUR 635) for each worker covered.

Given the volatile and changing nature of the circumstances that motivate the adoption of these measures, NEWCO is monitoring their explanation and implementation on a daily basis in order to be able to respond to the concrete needs of our clients.

Contact us for further information or clarification.