e-Invoices for IRS – Q&A
With the e-invoice system (e-fatura), the taxman can pre-fill virtually all parts of our annual IRS income tax declarations. Nevertheless, the system still requires a considerable amount of involvement by taxpayers. First, we must still request invoices; then, we have to confirm and control our individual e-fatura page on the Finanças website. To do this, each person needs an access password (senha) which is the same one used to access the taxpayer’s individual IRS page. The request is placed online and the password is then sent home by post.
Why do I need to confirm invoices?
Businesses report invoices monthly to the tax authorities along with green receipts passed on their behalf. These bills appear on each taxpayer’s personal e-fatura page and must be verified. First, we must confirm that they are all there and are correct. Second, some invoices can relate to different expenses for different activities. Sometimes the taxman cannot always determine what’s what.
How long do I have to confirm my invoices?
Until February 15 of the following year. Please note that businesses must report issued invoices by the 25th of the following month. Only at the end of that month do they appear on an individual’s page on IRS website.
What if there are invoices missing?
In this case, the taxpayer must enter them personally by going to “register invoices” and entering the appropriate data. If the business later declares the invoice, don’t worry. The invoices will appear in duplicate on the site but only one will count. The rules are the same in the case of an invoice not being reported correctly; the taxpayer should rectify the data.
I need to save invoices?
Once confirmed on the site, there is no further need to save these bills. In the case where it is the taxpayer who enters the bill or makes any corrections, you should wait until February 15 of the following year to make sure that everything is okay. If by then the issuer has still not transmitted the invoice, the hard copy should be kept for four years.
How do we control our son’s invoices?
Invoices of dependent children may be issued under a parent’s taxpayer number. When it is the child’s tax number that is used, bills must also be verified on the respective e-fatura web page. To do this, a password is needed for each child. After that, parents can create a direct access path to the child’s page.
Conclusion
There are several assumed prerequisites to manoeuvre through this e-fatura system. First, you must be computer literate. Second, you need to be comfortable navigating the internet. Next, you must have a reasonable command of written Portuguese. Currently, there are no other languages available.
Finally, you need the predisposition to visit regularly the Finanças website to do your verifications. Will several hundred Euros in tax savings be sufficient to motivate foreign residents over these hurdles? Or will these changes encourage many foreign taxpayers to find professional help to achieve the promised tax savings?
This is a somewhat baroque system, in line with traditional bureaucratic thinking wrapped in contemporary information technology. A “simplified regime for invoices” – in spirit with the programme that has worked successfully for years with sole traders – could overcome most of the obstacles and yet still fulfil the primary objective behind these changes: re-enforce the fight against fraud and tax evasion.
This is the second and final article in the series
By Dennis Swing Greene
|| [email protected]
Dennis Swing Greene is Chairman and International Tax Consultant for euroFINESCO s.a.
www.eurofinesco.com
