Monday’s Diário da República published a government decree defining the universe of taxpayers that will be covered this year by the IRS’s automatic delivery of income function for 2020, which will be reported to tax authorities in the coming months between April and June shall be.
The decree lists the different tax situations covered by the automatic declaration. As the government announced in February, this automatism will for the first time reach the self-employed who are registered with the tax and customs authorities (AT) in order to exclusively perform a service provision. Even so, not all professionals with green receipts can benefit from this automation in practice.
When the expansion arrives in the middle of a pandemic, many self-employed suffered a drop in income due to the pandemic and received social security support. And since AT only takes into account self-employment income in the automatic declaration, the amounts associated with the assistance must be indicated manually, which means that the provisional declaration submitted by the tax authorities will not be confirmed, filed in the usual conditions and indicated the assistance in Appendix B of the Model 3 Statement as “Subsidies”.
Which taxpayers can then benefit from an automatic declaration in this context?
For the self-employed, as well as for employees or retirees, automation exists only for those who are in the simplest tax situations, that is, who have only one source of income.
Thus, only pensioners with pension values are excluded (pensioners who accumulate the pension with other income are excluded).
In the same way, in relation to employees, only those who have only employed income as a source (ie those who are exclusively employees and have no other types of income benefit from the automatic IRS “Maintenance Pension Income”).
Those who are employed in a company and at the same time carry out other work that complements the green income are seen by the tax authorities as a more complex situation and are therefore left out.
The same thing happens with the self-employed: They only have access to automatic registration if they only earn “income from services rendered”.
For this, three cumulative conditions must be met: be covered by the simplified regime; “To be registered in the AT database exclusively for the exercise of activities listed in the table of activities approved by the regulation referred to in Article 151 of the IRS Code” – with the exception of those linked to the code “1519” are “Other Service Providers” not included in the rest of the list; and the invoices, receipts and receipts in the electronic receipt system (SIRE) on the finance portal to have been issued or taxed by the exemption fees and not to have intended “to opt for their inclusion where permitted by law”.
In addition to the basic question about the professional situation, there are other variables that determine whether a taxpayer is included or excluded.
It is required that taxpayers have earned their income only in Portugal (who works for a company based in another country and stays outside) and that the person is considered to be resident on Portuguese territory for the whole year (in this case 2020) .
Not having the status of an ordinary resident is also a condition; have not received any bonuses “for the performance or for the performance of the work, if they are not attributed by the respective employer”; have not paid alimony; have no deductions for ascendant; and no increase in income “due to non-compliance with the conditions relating to tax advantages”.
After all, it is still a condition not to enjoy tax breaks “with the exception of those relating to the withdrawal of amounts from retirement plans and the patronage regime from the IRS collection”.
For taxpayers who are married or de facto united, the tax authorities submit a declaration that corresponds to the separate taxation. This is the rule. If taxpayers feel that filing the return together is more beneficial from a tax point of view, they can do so by filing the return on the usual terms.
As an example, on a Q&A page posted on the finance portal, AT gives the situation of a couple without dependent children, where one of the employees works for a company and the other is retired. Since one earns only the salary paid by the company and the other the pension paid by Social Security, both have access to the automatic declaration “as long as they do not have any tax advantages (with the exception of those relating to the amounts applied in pension plans and donations in the Under the patronage regime) ”, provided“ they have lived in Portugal all year round ”and“ the income was obtained in the same country and did not pay any maintenance ”.
A single taxpayer living with a child can benefit from automatic IRS filing provided they have not received or paid alimony.
From preliminary to final
The automatic IRS is equivalent to a preliminary declaration that has been completed by the tax authorities based on the information AT already has and that is ready to be converted into a final one, which the taxpayer only needs to confirm with their consent.
A person cannot endorse the statement if they discover there is incorrect information or missing data and submit the statement under general conditions. If a person does not confirm the tentative statement, it will automatically become final at the end of the presentation period on June 30th. Even under these circumstances, a taxpayer can submit a replacement return within 30 days of settlement if they discover that the final return was incorrect.
The provisional declaration by the tax authorities covered taxpayers with the simplest tax situations and has been expanded to include more situations over the years. Taxpayers with children, taxpayers who enjoy tax benefits related to donations, or invest in retirement benefit plans (PPR) are now insured.
Delivery of the IRS begins April 1st and ends June 30th.