CIT – Special payment on account exemption

CIT – Special payment on account exemption

On the 18th of March, the Portuguese Tax Authorities (“ATA”), through ruling no. 20208, clarified the changes introduced by the State Budget Law for 2019 regarding the special payment on account (“PEC”) exemption.

Besides the situations already listed in paragraphs a) to d) of article 106º (11) of the Portuguese Corporate Income Tax Code, the State Budget Law added a new paragraph e) to that article, stating that taxable persons who do not make the payment by the end of the third month of their taxation period are exempted from that payment, provided that the reporting obligations laid down in Articles 120 and 121 of the Portuguese Corporate Income Tax Code, relating to the two previous tax periods have been fulfilled.

For the “PEC” exemption to apply, the taxable person must comply, within the respective legal period, with the declaratory obligations (Mod 22 and IES) for the two tax periods prior to which the “PEC” respects.

Given that, exceptionally, for the 2017 tax period, the deadline for submitting the income tax return Mod. 22 was extended until June 30, 2018, that will be the legal deadline to consider for this exemption to apply, according to Order SEAF n 132/2018 XXI.

Regarding the “PEC” for the 2019 tax period, the timely delivery of the Mod. 22 and the IES declarations for the 2017 and 2018 tax periods are conditions for the exemption from this payment.

Exemption from “PEC” is valid for each tax period, and the ATA is responsible for verifying the taxpayer’s tax situation.

The application of this exemption does not require any previous procedure, and, for the purposes of exemption, it is irrelevant to submit replacement declaration (s).

Elsa Rodrigues

Elsa Rodrigues

Founding Partner/Lawyer