Taxpayers in Portugal are no longer required to remain in the monthly VAT regime for three years
A decree-law addresses 13 of the 30 measures in the VAT regime under the Government's Tax Simplification Agenda, introduced in January, along with eight more measures to simplify procedures and reporting requirements.
Changes to the Monthly VAT Regime
Taxpayers who choose the monthly VAT regime will no longer be required to stay in it for three years, according to new tax simplification measures approved by the Council of Ministers.
Overview of the Tax Simplification Measures
This update is part of a decree-law that moves forward with 13 of the 30 measures in the Agenda for Tax Simplification, presented by the Government in January, alongside eight additional measures designed to simplify tax procedures and reporting obligations.
Removal of the Three-Year Requirement
An official source from the Ministry of Finance confirmed that one of the additional measures is the elimination of the three-year commitment for taxpayers who opt for the monthly VAT regime.
Current VAT Regime Rules
Currently, taxpayers with a turnover of up to €650,000 are in the quarterly VAT regime (those earning above this amount must follow the monthly regime). However, they can choose to opt for the monthly regime if they wish.
Other Measures Approved in the Tax Simplification Package
The decree-law approved by the Council of Ministers introduces several additional simplification measures:
1. Waiver of Declaration of Commencement of Activity for Isolated Acts
The requirement to submit a declaration of commencement of activity is waived for isolated acts, meaning taxpayers will not need to submit this declaration for a single taxable transaction, regardless of its value.
2. Extension of Deadlines for Model 10 Declaration
The deadline for submitting the Model 10 declaration (used to report income paid to third parties) has been extended.
3. Exemption from Submitting Physical Architectural Plans
Taxpayers will no longer be required to submit physical architectural plans for property assessments.
4. Simplification of Impairment Loss Rules
The rules for recognizing impairment losses on non-current assets for IRC purposes have been simplified.
5. Withholding Tax Waiver
The Government has approved a measure to waive withholding tax for amounts below €25 for income in categories B, E (capital), and F (property).
6. Reduction of Minimum Stamp Duty Refund
The minimum amount for Stamp Duty refunds has been reduced from €25 to €10.
7. Automatic Submission of VAT Declaration (Zero Transactions)
A measure now requires the automatic submission of the periodic VAT declaration when there are no taxable transactions, eliminating the need for manual submission of "zero" declarations.
8. Simplified Business Information (IES) Declaration
The declaration of Simplified Business Information (IES) has been streamlined, with the removal of annexes Q and O.
9. Simplified Procedures for Tax Shipments
There will be simplified procedures for tax shipments of goods worth less than €1,000, aiming to ease the customs and tax formalities.
Commitment to a Simpler and Fairer Tax System
Secretary of State for Tax Affairs, Cláudia Reis Duarte, emphasized that the Agenda for Tax Simplification is a work in progress, with these measures representing an important step toward a simpler, fairer, and more transparent tax system. The goal is to reduce context costs and strengthen Portugal's economic competitiveness.
Pending Measures
While most of the 30 measures have been included in the decree-law, some still require parliamentary approval before they can be legislated.
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