Changes are coming to Portugal’s Billing SAF-T reporting requirements for non-resident taxpayers that trade in the country.

The process may be stringent but that doesn’t mean it has to be difficult for your company. Here are four things you need to be aware of about Portugal’s billing SAF-T obligations.

1: Non-resident taxpayers must file the first billing SAF-T report by 8 February 2023

Billing SAF-T is already compulsory for resident Portuguese companies but from January 2023, non-resident VAT registered companies are also obligated to submit a monthly billing SAF-T. The first report is due on 8 February 2023 and has particular requirements, which we discuss below.

The monthly deadline for submitting the Billing SAF-T is the eight day of the month following the reporting period.

2: You must use a certified billing software to generate the monthly report

A unique requirement to Portugal is that the Billing SAF-T file must be generated by ‘certified billing systems’ as designated by the tax authorities. Failure to comply with this requirement is subject to a fine.

Non-resident taxpayers need to ensure they are using a certified billing software to remain compliant.

Sovos’ SAF-T cloud solution is recognised as a certified billing software by Portugal’s tax authority. This makes staying on top of Portugal’s SAF-T Billing report obligations simple, with customised options available for customers needing to take a tailored approach.

3: You must submit SAF-T Billing in the correct format

Portugal’s SAF-T requirements include specific formatting for generation and submission. Based on the original OCED 1.0 schema, this includes a specified header, master files, and source documents.

For the most part, information in the schema is conditionally required, meaning most fields only need to be submitted if the relevant data exists in a taxpayer’s source system.

Taxpayers must be able to generate the required fields in their system and understand which data is required for submission.

4: Portugal’s SAF-T requirements continue to change

Portugal’s tax authority has continued to introduce new requirements and extend the scope of SAF-T in the country.  Changes include stricter integrity and authenticity requirements and reducing the time window for invoice reporting obligations.

The tax authority’s changing requirements and increased visibility put additional strain on taxpayers to submit compliantly and on time.

Sovos’ Managed Service can help ease tax compliance burden for companies operating in Portugal and beyond. Our team of tax experts combined with our tax technologies help companies with filing and reporting obligations. Speak to our team to learn more about how Sovos can help solve tax for good.

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:

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.

Looking ahead

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.

Take Action

Contact our experts for help with your Portugal Stamp Duty reporting requirements.

Treatment of fire charges is tricky in almost all jurisdictions. Fire coverage can vary from as high as 100% to 20%.

No-one would dispute that the most complex fire charge treatment is in Spain. In Portugal, whilst the rules are less complex, they have a unique reporting system for how the policies covering fire must be reported.

How Portuguese Fire Brigade Tax reporting is unique

The Portuguese Fire Brigade Tax (FBT), otherwise known as National Authority for Civil Protection Fire Brigade Charge or ANPC (Autoridade Nacional de Proteção Civil), is due on certain policies covering fire risks. Such policies can be mapped as Class 3-13.

The tax rate is 13%, but usually the fire coverage is set at 30%, so the applied rate is only 3.9%. As per market practice, if the fire proportion is not separately identified in the policy, then 30% fire proportion is assumed. ANPC is settled to the ASF (Autoridade de Supervisão de Seguros e Fundos de Pensões), the body that administrates parafiscal taxes in Portugal, on a monthly basis together with the other parafiscal taxes such as INEM (medical emergencies). There is currently no speciality in the regulation.

The unique feature of the Portuguese fire tax is the five yearly reporting requirement. This five yearly report was last due in 2016 and will be due again in 2021. The report requires insurers to prepare a summary which lists total ANPC or Fire taxes paid in respect of the year when it’s due. So although the report itself is due every five years, the reportable policies are limited only to the policies subject to ANPC in that reporting year.

Another unique feature of this reporting is that although all insurers are subject to settle ANPC liabilities monthly, not all insurers are necessarily obliged to submit this report. ASF informs the insurance companies who are required to submit this report.

How to report Portugal’s Fire Brigade Tax

Reporting is biannual. In 2016 the first semester data (01-01-2016 to 30-06-2016) was due to be reported by 31 August 2016 and the second semester data (01-07-2016 to 31-12-2016) was due by 28 February 2017.

In 2016, when this report was last due, ASF issued an official circular about the reporting requirements. A template has been published to provide help for insurance companies to fulfil their obligations.

In 2016 the report requested a total of the ANPC charges per county and per district. That included more than 300 districts. As yet, we’ve not seen a circular about the requirements for 2021, so we’re in contact with ASF to find out if the report is still due and if yes, the requirements and when the notifications will be sent to the insurance companies.

We hope the complexity of this reporting hasn’t been further increased by the ASF. This unique reporting is time consuming for insurance companies and looking at the global trends in reporting requirements we expect the FBT report will still be due this year.

Take Action

Get in touch about the benefits a managed service provider can offer to ease your IPT compliance burden.

On 15 February 2019, Portugal published Decree-Law 28/2019 regarding the processing, archiving and dematerialisation of invoices and other tax related documents including:

The decree aims to consolidate rules and to promote the adoption of electronic means of dealing with tax documentation and archiving. It also aims to eliminate tax fraud by tightening controls through the identification of invoicing software, identifying where invoicing terminals are located, the mandatory obligation to include a unique document code (UUID) in the tax document and, finally, identifying the location of the transaction.

According to the Decree-Law, invoices (paper or electronic) must be processed using certified invoicing software, which must, amongst other things, complete the invoice’s content in line with the VAT law. Simplified invoices (issued for less than €100 Euro) can, however, be processed by “other electronic invoicing means” such as cash machines. The Decree-Law also regulates contingency situations where the invoice must be based on pre-printed documents.

What’s new?

Scope extended for mandatory use of certified invoicing software

Having to use invoicing software that has been certified by the tax authority is not new in Portugal. However, the changes in the new Decree-Law mean that more taxpayers must now comply with the obligation as the mandate threshold has reduced.  Previously it only affected companies (with a permanent establishment in Portugal) with a revenue in the previous year of €100K.  It now includes companies with a revenue of over €75K (applicable during 2019) and reduces to €50K from 2020.

Unique invoice code

The decree also mandates that from 1 January 2020, invoices must carry a unique invoice code (UUID) following the government’s requirements. The code will also be represented as a QR code on printed invoices. Both requirements are new and software providers will have to adapt their solutions in the future to meet these new legal requirements.

Prior authorisation of invoice series

Another new requirement set by the Decree-Law is that taxpayers must communicate to the tax authority the invoice series used by each establishment before issuing any invoice. The tax authority will assign to each series a code that must be included in the new mandatory UUID. While not the same, a similar requirement applies in many other countries, more specifically, in countries that have introduced a clearance model. In fact, Latin American countries with a clearance system often require taxpayers to either request prior invoice ranges from the tax authority, or to have an invoice series authorised by the tax authority, or to have the numeration done directly by the tax authority in connection with the clearance process. A good example of the first scenario is in Chile or Colombia, where taxpayers must request prior authorisation of an invoice range by the Chilean tax authority. An example of the second process is Mexico, where the invoice is numbered by the state agent that intervenes in the clearance process. However, such a requirement is new in the EU context, demonstrating once more that Europe is drawing inspiration from Latin America’s success in closing their VAT gap.

Guaranteeing integrity and authenticity in paper and electronic invoices

When it comes to guaranteeing the integrity and authenticity of invoices, it is worth noting that the decree deviates from the Directive 2010/45/EU as the possibility to use business controls provides a reliable audit trail (hereinafter BCAT) as a method of guaranteeing integrity and authenticity is expressly limited to paper-based invoices only. Furthermore, such controls must be properly documented.

For electronic invoices (ie those that are issued and received electronically) integrity and authenticity are guaranteed when one of the following methods is used: qualified e-signature; qualified e-seal in accordance with e-IDAS Regulation; or electronic data interexchange (EDI) with secure and documented processes to ensure integrity and authenticity. Taxpayers have until 31 December 2020 to migrate to the new methods of guaranteeing integrity and authenticity for electronic invoices.

Portugal is implementing its own vision when it comes to guarantees of integrity and authenticity putting itself, once more, closer to Latin American clearance countries where such guarantees are only achieved by digitally signing e-invoices. The distinction between methods (BCAT for paper invoices vs. e-signatures and EDI for electronic invoices) is an explicit preference of e-signatures and EDI over BCAT methods as the most efficient way to guarantee e-invoice integrity and authenticity.

New obligations

In addition to the new invoicing requirements, the Decree-Law imposes taxpayers with new obligations to notify the tax authority with additional information. This includes:

Taxpayers who have already carried out activities subject to VAT must present the above-mentioned information by 30 June 2019.

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