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Documentation for taxes

By PEDRO SIMÕES  [email protected]

Pedro Simões is licensed in fiscal law and management, and is the Managing Director of ACOQ Consultancy Lda, based in Lisbon.

Portuguese law is very tight concerning acceptance (or not) for tax deductions. Tax authorities quite often don’t accept expenses because they are not documented as they should be. The document doesn’t fill all the requirements to be accepted by Portuguese law. Here are questions and answers to clear any doubts you might have.

When I sell a television, and want to deliver it, what kind of documentation should I issue to my client?

This question must be divided in two. The first part is the transport: a document for transport and a document to invoice. For transport purposes, you can issue a Guia de Remessa or a Guia de Transporte. If you use this, you then have five days after the delivery date to issue an invoice (factura). There are also other kinds of documents that can be used to make the sale, such as Venda a dinheiro or Factura-recibo. These are the most common and are generally used when the sale and the payment occurred at the same time. However an invoice is a document that can also be used to transport.

What if I charge my clients every month for accountancy services?

In this case the invoice must be issued no later than five days after the last day from the period it is related to. For example the accountancy fee for June must be invoiced no later than the July 5.

How many copies do I need to issue to the client?

When you write a factura, you must issue two copies, one for your client, and a copy for your files.

A client returned a television that I sold him last month. What kind of document should I use?

This is the same as if you want to credit or invoice your client. You have five days to make the credit note and send it to your client. Don’t forget that you must have a copy of the credit note stamped and signed by your client in order to receive the VAT deduction. Also don’t forget to write on the credit note the information from the invoice from the initial sale.

What information must be written on a factura? Must it be done on a computer?

The factura must have the supplier’s information (name, fiscal number) as well as the client’s (name, fiscal number and address). The factura must be numbered in sequences. Also the quantity and the specification of the goods or services that are being charged (invoiced) to the client is obligatory. The price without VAT and information about the vat tax rate must also be indicated on the invoice. You are not obliged to have a computer system to invoice; in which case you have to get books from the printers.

I delivered a television and will be invoicing my client later. What do I have to do?

The delivery date and the date of invoicing can be different, but by no more than five days. However when the date of delivery is different from the date of the invoice, it must be written on the invoice.

When you go to a supermarket, the invoice mentions different rates of VAT. Is that obligatory?

Yes, when you sell different products at different VAT rates, you must mention on the invoice the information by each product and the correspondent VAT rate.

I have a company that is non-resident, but has an establishment in Portugal. Is there any specific information that must be written on the company invoice?

The rules for the documentation are the same as where the company is resident, however the Fiscal Representative’s information (name, address and fiscal number) must be written on the invoice.

Can I invoice electronically?

Yes you can have electronic invoices. The client must accept that the invoice is electronically produced, and the supplier must guarantee the authenticity and integrity of its contents, by requiring an electronic signature or electronic data change.

My company contracted another company to renovate our office. Should they charge me VAT?

There are some construction and renovation services that once they are provided by one company to another can be made with a special VAT arrangement. This option was granted by the Government and allows that in some specific services provided by two entities on the VAT system, can invoice without the VAT be written on the invoice: IVA devido pelo adquirente. Please note that the services that can be included are limited, and it is not for all kinds of maintenance services.

Portugal has a very bureaucratic system, and this a good example. When your cost is not documented properly, it is not deductable for Company Income Tax or Individual Income Tax. Besides the deduction, the tax law even says that if you don’t document your costs properly, you might end up paying 50 per cent in tax for that.

Pedro Simões can be contacted by emailing [email protected] or in confidence to [email protected] or by calling (00351) 219 205 225 or fax (00351) 212 468 352.