During today’s vote in the Committee on Budget, Finance, and Public Administration, the initiative gained approval from PSD, CDS-PP, and Chega, while the PS abstained.
The proposal by Luís Montenegro’s executive (PSD/CDS-PP) introduces a VAT group regime, “which involves consolidating the VAT balances to be paid or recovered by the members of a group of entities connected through financial, economic, and organizational links,” as stated in the proposal submitted to parliament on August 29.
The new model targets companies within the same economic group, focusing “on consolidating the tax balances to be delivered or recovered by the members of a corporate group.”
For this purpose, companies must be connected by “close financial, economic, and organizational ties,” the Government notes in the bill’s explanatory memorandum.
According to the initiative’s explanation, consolidation occurs “in a VAT declaration provided by the Tax and Customs Authority and confirmed by the group member considered the dominant entity [the parent company of the economic group].”
The executive clarifies that the group’s companies “continue to submit their periodic declarations, determining their respective balance, credit or debit, which is then accounted for in the group’s declaration.”
“The consolidation thus operated does not affect the normal operation of the activities of the group’s VAT-subjected members, who will continue to remit tax on their active transactions and deduct tax on their passive transactions, whether these occur among themselves or with third parties,” the initiative further explains.
In drafting the proposal, the executive considered the “experience acquired in the taxation of corporate groups” under the IRC and “the contributions obtained within the Large Taxpayers Forum,” a dialogue group between the Tax and Customs Authority (AT) and the largest national companies.
The initiative was approved in general on September 19, supported by votes from PSD, CDS-PP, Chega, and IL. The PS, Livre, PAN, and JPP abstained, while the PCP voted against.
[Updated at 12:06]
