COVID-19: payments on account and depreciations for a longer period than the maximum period established for tax purposes
Portugal Tax Alert
In the context of the current COVID-19 pandemic, new measures were approved to enable companies to increase their cash flows.
Payments on account (FY2021)
Taxpayers who are cooperatives or have obtained in the 2020 fiscal period a turnover up to the maximum limit set for their classification as medium-sized enterprises (i.e. EUR 50 million) are now allowed not to make the first and second payments on account when they verify that they will not obtain any taxable profits or the payment already made is enough to cover the estimated amount.
However, if they verify that payments made are insufficient, they may pay the additional outstanding amount, without any penalty or consequence, until the end of the deadline set for the third payment on account (i.e., until 15 December 2021 or until the 15th day of the twelfth month of the respective tax period when different from the calendar year).
The possibility to waive the third payment on account under the general terms set forth in the IRC Code is still available.
These measures are established under Order of SEAAF no. 205/2021-XXII, of 30 June and the Order no. 6564/2021, of 6 July.
Use of depreciation/amortisation quotas below the minimums
When CIT taxpayers use depreciation/amortisation quotas below the minimum quotas allowed for tax purposes, their use is subject to prior notification to the Tax Authority until the end of the respective tax period.
In March 2021 it was exceptionally allowed to execute said communication, without any penalty, until the 5th month following the end of the 2020 tax period, insofar that Covid-19 pandemic justifies the use of said quotas lower than the minimums allowed as set in Dispatch no. 99/2021-XXII/SEAF, 26 March 2021,
Following the submission of numerous communications of this nature, the Tax Authority considers justified the adoption of the said quotas (i.e. without the need of prior communication) as a result of the non-use or limited use of respective assets as a result of the COVID-19 pandemic situation, as set out in Circular Letter no. 20.234/2021, of 5 July, notwithstanding the control made by the Inspection Services.