Portugal has a new VAT return form

There will be a new Portuguese VAT Return form, this will reflect the changes on import VAT reporting. Going forward, you can delay the payment of import VAT until your VAT Return is submitted. At this point you can reverse charge your import VAT amounts in the VAT Return, having no financial impact on businesses with full right to deduct.

VAT Return – What are the changes?

This new form includes two new boxes to report imports: (Box 18) for net amount (Box 19) for VAT amount. Also, the annexes have been updated, with the annex for suppliers not having to be completed with code IM in section ‘Prefixo’, in order to identify the amounts subject to reverse charge on imports.

Up to now, you could only access the form via the ‘Portuguese Official Gazette’, but we expect this online system to be updated in the coming days.

Reverse Charge Import VAT – What is it?

Also referred to as ‘Postponed Import VAT’, ‘Reverse Charge Import VAT, as a general rule, the import VAT is paid to customs upon arrival of the goods. This can be deducted later in your VAT Return. This new mechanism unfortunately will create a cash-flow disadvantage for the importer, who will require to wait until the VAT Return is submitted and the refund is received to recover the pre-financed VAT amounts.

Reverse Charge on import VAT involves delaying the payment of import VAT until the VAT Return is submitted. At that point, import VAT amounts will be reported as due and as deductible in the same return, therefore with a nil effect, unless the taxpayer does not have full right to deduct.

Reverse charge on import VAT is already applicable in Portugal on certain items, such as, cereals, olive oil, tea and wools. From 1st March, 2018, this new mechanism will relate to all goods provided an authorisation to the taxpayer has been arranged. There will also be a six-month time limit to report these imports in the VAT Return.

How to apply for this new interpretation?

Imports will not automatically have a reverse charge. AN application via online must be submitted to the Portuguese tax authorities. As part of the application process, your username and password will be required.

This online application can be completed and submitted via the authorities’ website. No additional documentation will be required when submitting this application. If your company requires a Certified Accountant (only applicable for businesses established in Portugal), your application should be submitted via this accountant. Then once your request has been approved, you may de-register from this regime in the same line by selecting the option ‘Cancelamento (por contabilista certificado)’.

amavat Europe provides a one-stop-shop solution for VAT obligations within Europe. We assist clients with a single point of contact that speaks their language and handles all VAT related issues with a standard and cost efficient approach.

If you have any queries or questions, please do not hesitate to contact amavat Europe.

To find out more information please visit www.amavat.eu