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New VAT return and reverse charge import VAT in Portugal

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New VAT return and reverse charge import VAT in Portugal

There is a new Portuguese VAT return form to reflect the changes on import VAT reporting. Going forward, it will be possible to delay the payment of import VAT until your VAT return is submitted. At that point you will be able to reverse charge your import VAT amounts in the return. This mechanism has a nil financial effect for businesses with full right to deduct.

What are the changes in the VAT return?

The new form includes two new boxes to report imports: Box 18 for net amount and Box 19 for VAT amount. Also the annexes have been updated, the annex for suppliers will not to be completed with code IM in section Prefixo in order to identify the amounts subject to reverse charge on imports.

So far, you can only access the form via the Portuguese Official Gazette but we expect the online system to be updated in the coming days. 

What is reverse charge import VAT?

Reverse charge import VAT is also referred to as postponed import VAT accounting. As a general rule, import VAT is paid at customs upon arrival of the goods. This amount can later be deducted in your VAT return. This mechanism creates a cash-flow disadvantage for the importer who will need to wait until the VAT return is submitted and the refund is received to recover the pre-financed VAT amounts.

Reverse charge on import VAT consists on delaying the payment of import VAT until the VAT return is submitted. At that point, import VAT amounts will be reported as due and as deductible in the same return, hence with a nil effect unless the taxpayer does not have full right to deduct.

In Portugal, reverse charge on import VAT is already applicable on certain items such as cereals, olive oil, tea and wools . As from 1 March 2018, this mechanism will apply on all goods provided an authorisation to the taxpayer has been granted. There is also a six-month time limit to report these imports in the VAT return.

How do you apply for this simplification?

Reverse charge on imports is not automatic. You must submit an application online via the website of the Portuguese tax authorities. Your username and password will be required as part of the application procedure.

The online application in the authorities’ website can be completed and submitted online. No additional documentation will be required when submitting this application. In case your company requires a Certified Accountant (only applicable for businesses established in Portugal), your application should be submitted by this accountant.

Once your request has been approved, you may de-register from this regime in the same link by selecting the option Cancelamento (por contabilista certificado).

  • By Marosa VAT
  • Published 08/09/2017 11:42