Parliament approved today, specifically, a Government law proposal that creates a VAT group regime for economic groups to consolidate the tax amounts to be paid or recovered from the State.
In the vote held today at the Budget, Finance and Public Administration Committee, the initiative received votes in favor from the PSD, CDS-PP and Chega. The PS abstained.
The proposal from Luís Montenegro’s executive (PSD/CDS-PP) introduces the VAT group regime, “which consists of consolidating the VAT balances to be paid or recovered by the members of a group of entities, united by financial, economic and organizational ties”, according to the proposal that was entered into parliament on August 29th.
The new model is aimed at companies that belong to the same economic group, based “on the consolidation of tax balances to be paid or recovered by the members of a corporate group”.
To achieve this, companies must be linked to each other “by close financial, economic and organizational ties”, states the Government in the explanatory memorandum of the proposed law.
According to the explanation of the initiative, consolidation takes place “in a VAT declaration made available by the Tax and Customs Authority and confirmed by the member of the group considered as the dominant entity [a casa-mãe do grupo económico]”.
In the proposal, the executive emphasizes that the group’s companies “continue to present their respective periodic statements, determining the respective balance, creditor or debtor, which is then disclosed in the group’s statement”.
“The consolidation carried out in this way does not affect the normal functioning of the activities of the taxable persons who are part of the group in terms of VAT, who will continue to pay tax on their active transactions and deduct tax on their passive transactions, whether these occur between themselves or with third parties”, the initiative further explains.
When writing the proposal, the executive says he took into account the “experience acquired in the taxation of corporate groups” in the IRC and “the contributions obtained within the scope of the Large Taxpayers Forum”, a dialogue group between the Tax and Customs Authority (AT) and the largest national companies.
The initiative was generally approved on September 19th. At the time, it had votes in favor of the PSD, CDS-PP, Chega and IL. The PS, Livre, PAN and JPP abstained, while the PCP voted against.