Deep Dive – Portugal’s Stamp Duty Requirements

Michael Carlton
June 8, 2022

The most recent update to the Portuguese Stamp Duty system has included some of the most comprehensive tax reporting changes seen in recent years. Stamp Duty is the oldest tax in Portugal and has been around since the Royal Decree in 1660. Considering its age, updates to bring it in line with the global standard of tax reporting were much needed. Although the tax rates within Portugal have remained unchanged, the reporting process to incorporate the provincial liabilities within one return has been greatly appreciated.

Required information

The additional information that insurers are obliged to collect, disclose and submit in their Stamp Duty Declaration is as follows:

  • 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, 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.

Negative impacts of these changes

It’s important to note that the ability to offset taxes relating to previous periods has been revoked by Law Decree no. 119/2019, which allowed insurers to report reduced tax amounts for overpaid liabilities. The modifications to the reporting procedure enable companies to amend previous periods through their internal system. Consequently, this permits adjustments to prior periods and the reclaiming of overdeclared liabilities directly from the Portuguese tax authority. It is our understanding that reclaims will be reimbursed to the client two months after an amended return is submitted.

How can Sovos help with reporting?

Sovos has developed a unique relationship with the Portuguese tax authority, allowing for comprehensive reporting between Sovos systems and the Portuguese API. The reporting procedure can confirm validated IDs to ease data validation and reporting. This collaborative process has allowed Sovos to provide our customers with a smoother and more fluid submission process for Stamp Duty reporting.

Take Action

To understand more about Portugal’s Stamp Duty and how it impacts your IPT compliance, get in touch with our team of experts.

Learn more about the latest rates, rules and regulation of Insurance Premium Tax in our e-book, IPT Compliance – A Guide for Insurers.

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Author

Michael Carlton

Michael joined Sovos in early 2018, primarily focusing on territory submissions for a vast range of allocated territories. Since then, he has become somewhat of an expert for processes especially in Portugal. A core part of Michael’s role as a Compliance Services Representative is reviewing client data to ensure compliance with tax authority deadlines and legislation requirements.
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