The new stamp duty requirements in Portugal will come into effect in February 2021, having been previously delayed.
The delay has given insurers extra time to prepare for the upcoming changes but even with that additional buffer, many may still be unsure of the requirements and what is expected of them.
The new system will provide the Portuguese tax authority with accurate data on the amounts due and insurers will have to provide additional information to comply and to correctly submit declarations.
Ordinance no. 339/2019 of 1 October, sets up and approves the official model of the Monthly Stamp Duty Declaration, as well as the obligation of the Monthly Stamp Duty Declaration’s electronic submissions for all transactions, even those exempt from stamp duty.
Information required for Portugal’s Stamp Duty Declaration
Insurers will now be required to collect, disclose and submit additional information in the Monthly Stamp Duty Declaration.
Previously only the declared amount of stamp duty due was required – detail of policies was not required for reporting but this is changing.
Information required moving forward includes:
- Policyholder’s tax ID:Tax ID issued by the policyholder’s country of residence
- Policyholder’s country code: The code of the policyholder’s country of residence which should be the country issuing the policyholder’s tax ID
- Territoriality: The exact location where the insurance premium has been issued from – i.e. inside or outside the Portuguese territory
- Insured risk’s location in Portugal: The postcode of the area or region where the risk is located – i.e. Continent (Mainland)/Azores/Madeira, since the Portuguese tax authorities require the stamp duty to be filed regionally
In addition to this information, the Law Decree no. 119/2019 revokes the “offsetting” mechanism relating to the tax delivered in previous periods that had allowed insurers to deduct the amount overpaid against future liabilities.
Insurers must now submit a Replacement Declaration whenever there are changes to the amounts previously declared.
If the previously declared tax is higher than that actually due, the Tax and Customs Authority should reimburse the excess amount by the end of the second month following the submission of the replacement declaration, providing it’s been delivered within one year and doesn’t contain any filling errors.
If the Replacement Declaration results in a higher amount than that previously paid, then fines for missing tax may be imposed in addition to the payment of the difference.
This Law Decree also provides the possibility for insurers to file a Gracious Claim whenever there is an improper settlement. This mechanism should be used to request a refund of negative amounts for policies declared prior to January 2021.
This change is just another example in the list of tax authorities requesting additional information on a more frequent basis, in an effort to minimise tax gaps. We don’t see this trend disappearing and we recommend that insurers stay abreast of the latest regulations to be prepared for any future authorities requesting similar transactional information.
Understanding and interpreting local tax rules can be challenging and Sovos’ team of regional experts can help insurers navigate the complexities and ensure timely and compliant filing of taxes.
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