The introduction of the new Portuguese Stamp Duty system has arguably been one of the most extensive changes within IPT reporting in 2021 even though the latest reporting system wasn’t accompanied by any changes to the tax rate structure.
The new reporting requirements were initially scheduled to start with January 2020 returns. However this was postponed until April 2020 and once again until January 2021 due to the COVID-19 pandemic.
How does this affect reporting?
In addition to the information currently requested, mandatory information required for successful submission of the returns now includes:
- Territoriality: The precise location the risk has been issued from (i.e., within or outside Portugal)</
- Insured Name (Tax ID): The policyholder’s tax ID</
- Insured Country Code: The policyholder’s country code to which the tax ID resides
- Location of the risk insured in Portugal: The postcode to which the contract relates to, due to the requirement by the Portuguese authorities to file Stamp Duty on a provincial level, or at least whether the risk is located in Mainland Portugal, Azores, or Madeira.
Lessons learned and how Sovos helps you adapt
Our reporting systems have evolved to help customers meet these new requirements.
For example, our technical department have built a formula that confirms a valid ID to ease data validation and reporting. Consequently, a sense check was built within our systems to determine whether an ID is valid.
With the recent change in the treatment of negative Stamp Duty lines, we’ve also changed our calculations to account for two contrasting methods of treating negatives within our systems.
Previously, both the Portuguese Stamp Duty and parafiscal authorities held identical requirements for the submission of negative lines. However, the introduction of the more complex Stamp Duty reporting system called for amendments to the initial declaration of the policy.
Understandably, this new requirement is a more judicious approach towards tax reporting and will likely be introduced within more tax systems in the future.
As with any new reporting system, changes within your monthly procedures are necessary. Our IPT compliance processes and software are updated as and when regulatory changes occur providing peace of mind for our customers.
And with each new reporting system, we learn more and more about how tax authorities around the world are trying to enter the digital age with more streamlined practices, knowledge and insight to increase efficiency and close the tax gap.
Contact our experts for help with your Portugal Stamp Duty reporting requirements.