Informative Note
Covid-19 – Exceptional regime for compliance with tax obligations and social contributions
Following the measures taken to contain the pandemic COVID-19, and within the scope of approval of several extraordinary measures, the Government came to establish an exceptional and temporary regime for the fulfillment of tax obligations and social security contributions, under Decree-Law no. 10-F / 2020, of 26 March.
This regime aims to ensure liquidity for companies, and to preserve their activity and respective jobs. To this end, it eases the payment of tax obligations and social contributions.
I – Tax Obligations
Regarding tax payment, the Government has determined that payments related to VAT and withholding tax on IRS and IRC are to be fulfilled in the second quarter of 2020, which can be met:
a) Under the terms and dates provided for in article 98 of the IRS Code, in article 94 of the IRC Code and in article 27 of the VAT Code; or
b) In three or six monthly installments, without interest.
Installment plans
The monthly installments relating to the plans referred above are due as follows:
a) The first installment is due on the date of fulfillment of the payment obligation in question;
b) The remaining monthly installments are due on the same day of subsequent months.
Note: Applications for payment of installments are submitted electronically, due by the end of voluntary payment period.
Which taxpayers are supported?
- Those who have achieved a turnover of up to € 10,000,000.00 in 2018;
- Those whose activity falls within the sectors that were shutdown by the declaration of the State of Emergency;
- Those who started their activities after 1st of January, 2019;
- Those who have resumed activity on or after 1st of January, 2019, if they did not have a turnover in 2018;
- Those who declare and demonstrate a decrease in the turnover, communicated through the E-factura (carried out by certified auditor or certified accountant) of at least 20% of the average of the three months preceding the month in which this obligation exists, compared to the same period of the previous year.
II – Social Security Contributions
In terms of social security contributions, the Government decided to enact the following measures:
1. Deferred payment of contributions
Who is supported by this measure?
- Self-employed workers; and
- Private and social sector employers with:
a) Less than 50 employees;
b) A total of employees between 50 and 249, when presenting a drop of at least 20% of the turnover communicated through the e-factura in the months of March, April and May 2020, compared to the same period of the previous year or, for those who started the activity less than 12 months ago, the average of the elapsed activity period;
c) A total of 250 or more employees, provided that it is charitable institution or equivalent, or that the activity of these employers falls within the sectors that were shutdown due to the declaration of the State of Emergency, or in the aviation and tourism sectors, or that the activity of these employers has been suspended by legislative or administrative decision and provided that they present a break of at least 20% of the invoice communicated through the e-invoice in the months of March, April and May 2020, in view of the homologous period of the previous year or, for those who started the activity less than 12 months ago, the average of the elapsed activity period.
The requirements stated in subparagraphs b) and c), are to be proven by the employer during the month of July 2020, together with certification by the company’s certified accountant.
Note: Beneficiary employers can be inspected, at any time, by the competent public entities, and must prove the facts on which the deferral depends, in addition to verification by electronic means with AT.
Installment Plans
- Self-employed workers
The deferral of contributions due by the self-employed applies to April, May and June 2020 and contributions can be paid in the same terms as indicated below for employers.
- Private and social sector employers
Employers’ contributions, due in March, April and May 2020, can be paid as follows:
a) One third of the value of the contributions is paid in the month in which it is due;
b) The amount of the remaining two thirds is paid in equal and successive installments in the months of July, August and September 2020 or in the months of July to December 2020, without interest.
In July 2020, employers must indicate in the Segurança Social Direta (the Social Security online service) which of the payment deadlines provided for in paragraph b) they intend to use.
Note: For employers who have already paid all the contributions due in March 2020, the deferral provided for in this article begins in April 2020 and ends in June 2020.
Non-compliance
Failure to comply with the legally defined terms for installment plans determines:
a) The immediate cessation of the benefits granted; and
b) Immediate due of all the missing installments, as well as the termination of the interest exemption.
2. Application of the judicial vacation regime to installment plans in progress at the Tax and Customs Authority and Social Security for debts outside the scope of executive proceedings until 30 June 2020
After 30 June 2020, the governing board of the competent social security institution may decide to extend the suspension period for the benefit plans entered into with private social solidarity institutions under cooperation agreements.
3. Extraordinary extension of social unemployment benefits and all Social Security system benefits that guarantee subsistence minimums until 30th of June, 2020
4. The suspension of revaluations of the conditions for maintaining the benefits of the Social Security system until 30 June 2020
