Portugal – Are you Ready for the Changing Stamp Duty Reporting Requirements and What Lies Ahead?

Ana Cristina Cardoso
August 18, 2020

With the fast pace of change happening on the global tax landscape, where tax authorities require more granular information with electronic tax submissions, it’s not surprising to see another country embarking on their digital journey. Portugal is now following in the footsteps of other nations by changing the way in which stamp duty is declared. This was initially due to be introduced for the January 2020 return but was postponed to April 2020 and then delayed further due to COVID-19 until January 2021.

Stamp duty is the oldest tax in Portugal, and one of the oldest taxes still in existence in Europe, having been created by Royal Decree in 1660. Since its creation, few changes have been made to the Settlement and Exemption’s control system.  Contrary to what happen with other taxes, little progress has also been made regarding the verification of the amounts paid versus actually delivered to the State and the tax benefits granted. The current system is unable to control the settlement of stamp duty as there is no declaration or settlement system that allows the tax assessment and benefits to be efficiently verified.

The aim of the new system is for the tax authority to obtain both accurate data on the real amounts due for statistical and control purposes.  Ordinance no. 339/2019 of October 1, 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.

Required information

These changes introduced the obligation for insurers to collect, disclose and submit additional information in their Monthly Stamp Duty Declaration. This information is required for a successful submission, and 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.

What lies ahead?

Postponement of the new requirements to January 2021 gives insurers more time to prepare their systems to gather the mandatory information required and ensure complete and accurate reporting.

Law Decree no. 119/2019 revokes the “offsetting” mechanism relating to the tax delivered in previous periods which allowed insurers to deduct the amount overpaid against future liabilities. Instead, it stipulates that whenever there are changes to the amounts previously declared insurers must submit a Replacement Declaration. If the previously declared tax is higher than that actually due, the Tax and Customs Authority will reimburse the excess amount until the end of the second month following the submission of the replacement declaration.  This is providing that it has been delivered within one year and does not contain any filling errors.  If the Replacement Declaration results in an amount higher than that previously paid, 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.

Take Action

Keep up to date with ever changing rules by subscribing to our blogs and following us on LinkedIn and Twitter. We also host regular webinars with our in-house specialists who are on hand to help.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Ana Cristina Cardoso

As a Compliance Services Supervisor, Ana Cristina leads the Country Team, an integral part of IPT Managed Services at Sovos. Having joined Sovos in March 2017, she has worked in a number of roles which provided her with a deep knowledge of IPT, enabling her to ensure that tax compliance and submissions comply with the several tax authorities.
Share this post

North America Tax Information Reporting
March 22, 2024
Market Conduct Annual Statement Reminders and More

On the second Wednesday of each month, Sovos experts host a 30-minute webinar, Water Cooler Wednesday, to share the latest updates on statutory filings. In March, Sarah Stubbs shared information about the many filings due after March 1, from Market Conduct Annual Statements to health supplements for P&C and life insurers writing A&H businesses and […]

North America ShipCompliant
March 21, 2024
How Producers Can Build a DtC Shipping Market

Direct-to-consumer (DtC) shipping has become one of the leading sales models for businesses of all sizes and in all markets. The idea of connecting directly with consumers is notably attractive, as it helps brands develop a personal relationship and avoid costly distribution chains. Yet, for all its popularity, DtC is often a hard concept to […]

North America ShipCompliant
March 20, 2024
Key Findings from the 2024 DtC Beer Shipping Report

This March, Sovos ShipCompliant released the fourth annual Direct-to-Consumer Beer Shipping Report in partnership with the Brewers Association. The DtC beer shipping report features exclusive insights on the regulatory state of the direct-to-consumer (DtC) channel, Brewers Association’s perspective and key data from a consumer preferences survey. Let’s take a deeper dive into some of the […]

March 20, 2024
As the World Gets Smaller, Think Bigger About Global Tax Compliance

For the past few weeks back, my colleagues and I have been talking a lot about the importance of a global strategy when it comes to addressing today’s modern tax environments. On the heels of Sovos introducing the Sovos Compliance Cloud, many in our company’s leadership team have blogged about related topics and the critical […]

North America ShipCompliant
March 12, 2024
Florida HR 583 Set to Uncork Larger Format Wine Bottles

Florida wine lovers could soon enjoy a bigger selection of bottles based on a recent bill passed by the state’s legislature (HR 583) that would remove the existing cap on wine bottle sizes. What is Florida’s HR 583 bill? Currently, Florida law prohibits the sale of wine in bottles larger than one gallon (a little […]