Supplementary Budget 2020 and fiscal implications

Supplementary Budget 2020 and fiscal implications

The Supplementary Budget for 2020 (Proposed Law nº33 / XIV) has already been approved by the Council of Ministers, which will materialize the provisions of the Resolution of the Council of Ministers nº 41/2020, of 6.6, proceeding to the amendment of Law nº2 / 2020, of 31.3 (LOE for 2020).

In fiscal matters, the following changes should be highlighted:

Tax losses: it is expected to suspend the counting of the period for reporting losses during the periods 2020 and 2021, the extension of the reporting period from 5 to 10 years, as well as the extension of the deduction limit from 70% to 80 %, when it is, concerned tax losses of 2020 and 2021.

In the concentrations of SMEs carried out in 2020: For 3 years, the limit on the use of tax losses by the acquiring company is disregarded, also dispensing with the application of a state surcharge, and the transmission of tax losses through the acquisition of holdings is allowed SMEs that, in 2020, started to be considered “companies in difficulties”, for the use of these tax losses by the acquiring company.

Payments on account: an adjustment is made to the rules and forms of payment relating to payments due in the 2020 tax period, with a partial or total limitation of the 1st and 2nd payment on account, depending on the activity recorded.

Additional creation of solidarity over the banking sector: whose revenue goes to the Social Security Financial Stabilization Fund

Reintroduction of the Extraordinary Investment Tax Credit: deduction for investment expenses made in the second half of 2020 and in the first half of 2021, with the obligation to maintain jobs for a period of three years.

IRS Payments on account: individuals who obtain income from category B and do not withhold withholding tax must make payments on behalf of the IRS, these being made until the 20th of July, September and December.

Due to the impact of the Covid-19 pandemic containment measures, the possibility of not making the first and second payments on account in 2020 is granted, and the total amount in question can be settled by the settlement deadline – December 31 – of the third payment on account, without any burden or charges.

IRC: Payments on account; Reporting of tax losses; Special tax loss transfer regime applicable to acquirers of entities considered companies in difficulty.

Extraordinary investment tax credit: provides for the creation of a credit that will allow taxpayers a deduction from the collection of IRC in the amount of 20% of the investment expenses in assets related to the exploration and that are made between July 1, 2020 and 30 June 2021.

Incentive to corporate restructuring: for merger operations that take place during the year 2020, the limit generally applicable to the transferability of tax losses corresponding to the proportion between the positive value of net equity is no longer applicable during the first three tax periods. the merged company or the merged company’s permanent establishments and the net asset value of all the companies or permanent establishments involved in the merger.

The companies resulting from the aforementioned mergers are not equally applicable to the State Surcharge in the first three tax periods counted from the date of the merger taking effect, inclusive.

Additional solidarity on the banking sector: An additional solidarity on the banking sector is introduced which has as taxpayers:

  • Credit institutions with main and effective headquarters of the administration located in Portuguese territory;
  • The branches, in Portugal, of credit institutions that do not have their main and effective headquarters of the administration in Portuguese territory;
  • Branches in Portugal of credit institutions with main and effective headquarters outside Portuguese territory.

Exceptional system of payment in installments for tax debts and debts to Social Security: debts that have occurred or will occur in the period between March 9 and the end of June this year may be included in the companies’ ongoing recovery plans, without requiring additional guarantees and with the possibility of payment up to the maximum limit of installments missing from the approved plan.

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