COVID-19: New rules for the deferral of the payment of taxes

Considering the COVID- 19 situation in Portugal, the Government has introduced new rules allowing the deferral of the payment of some taxes and the social security contributions.

VAT and CIT/PIT withholding taxes:

The payment of VAT (IVA), CIT (IRC) and PIT (IRS) withholding taxes may be deferred and paid in 3 or 6 monthly instalments, with no interest and without the need of providing guarantees.

This extraordinary tax measure applies to the following companies and self-employed:

• with a turnover lower than €10 million in 2018, or
• with activities within the sectors closed under article 7 of the Decree 2-A/2020, of 20 march, (shops, restaurants, hotels, etc.), or
• those whose activity was initiated during 2019, or
• in any other case, where there is at least a 20% decrease on the average invoicing (communicated via the e-invoicing system) of the preceding three months (of the tax obligation) as compared to the same period of 2019.

Examples:

Social Security Contributions

There is also the possibility to reduce to 1/3 the payment of the social security contributions (in the part of the employer) due in march, april and may 2020. The remaining amount 2/3 should be payable under the same instalment deferral rules set out above, starting in july, with no interest and without the need of providing guarantees.

This extraordinary tax measure applies to:

• Self-employed;
• Entities with less than 50 employees;
• Entities with 50-249 employees in cases where there is at least a 20% decrease on the total invoicing (communicated via the e-invoicing system) in the months of march, april and may 2020, compared to the same period of 2019 (for those who started the activity less than 12 months ago, compared to the average of the elapsed activity period);
• 250 or more employees in cases where there is at least a 20% decrease on the total invoicing (communicated via the e-invoicing system) in the months of march, april and may 2020, compared to the same period of 2019 (for those who started the activity less than 12 months ago, compared to the average of the elapsed activity period), and applicable to the following entities:

• Social Security Private Institution (IPSS) or equivalent;
• Entities which activity is included in a sector closed under article 7 of the Decree 2-A/2020, of 20 march, as well as entities in the aviation and tourism sectors
• Entities which activity suspended due to administrative decision.

   

Examples:

This deferral does not cover the social security withheld by the employer to the employee in the amount of 11% of the salary.

If you have any further questions please do not hesitate to contact us.