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Changes The Vat Code Approved By Decree-Law No. 394-B/84 Of 26 December, Establishing Special Rules On The Taxation Of Waste And Recyclable Scraps And Certain Related Services

Original Language Title: Altera o Código do IVA, aprovado pelo Decreto-Lei n.º 394-B/84, de 26 de Dezembro, estabelecendo regras especiais em matéria de tributação de desperdícios, resíduos e sucatas recicláveis e de certas prestações de serviços relacionadas

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PROPOSED LAW NO. 62 /X

Exhibition of Motives

This proposed Act is intended to amend the Tax Code on Value

Added (VAT), with a view to creating a special VAT regime applicable to the

wastage transmissions, waste and recyclable scrap and certain services

related, mandating that the settlement of the tax due by these operations, in

all phases of the economic circuit, be carried out by the taxable person acquirer of the

goods and services in question.

With this measure you intend to avoid fraud situations that come by checking in this

sector of activity, arising from the circumstance of certain operators not

proceed to delivery in the state coffers of the tax that settled in the operations

conducted, but which conferred right to the deduction on the respective purchasers.

The new rules to be applied, the approval and implementation of which become urgent in the face of

dimension of the problem to be faced, come in the wake of the measures expressly provided for

in the Government's programme, constituting one of its priorities in what concerne the

combat fraud and tax evasion, as well as in the implementation of reinforcement measures

of tax efficiency.

Indeed, one of the characteristics of this branch of activity involving the operations

on waste, wastage and recyclable scrap, consists of the fact that the operations of

collection being carried out by a high number of actors, usually from

reduced size, which much contributes to the increase in the informality of the

respective economic activity.

The experience harvested from other community countries advises that they adopt

special measures, to be applied to the taxable persons pursuing these activities,

based on the inversion of the passive subject, competing for the liquidation of the VAT to the acquirer,

with right to deduction, provided that taxable person of this tax in the national territory.

On the set of the measures set out in the changes to the State Budget for 2005

within the scope of VAT, a legislative permit has been provided for the purpose of being created a

special regime with the nature and purpose of the proposed one. However, because these

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measures imply a derogation from the provisions of Article 21 of the Council Directive

77 /388/CEE, of May 17, 1977 (Sixth VAT Directive), was addressed to the Commission

European a request for derogation under Article 27 of the cited Directive, which,

not having been in a timely manner, invalidating the implementation of the

measures in question under the said legislative authorization.

In the face of the rules the implementation of which is proposed, natural or legal persons,

non-exempt VAT taxable persons, who are purchasers of waste, waste and

scraps, as well as certain benefits of services carried out on such goods,

specific attachment constants to the VAT Code, provided that the respective transmitent

or provider is also a taxable person of tax, must settle the tax by

these acquisitions and may, at the same time, exercise the right to deduction, in the general terms

of the VAT Code.

Alongside the implementation of an inversion rule of the passive subject, it determines

even if the taxable persons whose usual activity consisted in the transmission of the goods

and in the provision of the services mentioned in the said Annex are excluded from the scheme

special exemption provided for in Article 53 and the scheme of the planned small retailers

in Article 60, both of the VAT Code.

As a result, a one-month period is granted to the framed taxable persons,

for VAT purposes, in those two special schemes and practicing the type of

operations here planned, to submit the declaration of changes referred to in the

Article 31 of the VAT Code, in order to make these proceed to the amendment of your

framework for the normal taxation regime. However, and by way of being

ensured the unity of the now established regime, these passive subjects become

responsible for the tax due to the respective purchases of goods and services by

it covered, as soon as from the date of entry into force of the same.

In parallel, it introduces itself to mandatory self-invoicing in cases where the

taxable persons carry out operations with private individuals.

Under the terms of the paragraph d) of Article 197 of the Constitution, the Government presents to the

Assembly of the Republic the following proposal for a law.

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Article 1.

Subject

This Law introduces amendments to the Value Added Tax Code,

approved by Decree-Law No. 394-B/84 of December 26, with its successive

amendments, establishing special rules of taxation in respect of transmission of

skilled goods such as wastage, waste and recyclable scrap and certain benefits

of services with these related.

Article 2.

Amendment to the Value Added Tax Code

Articles 2, 19, 28, 48, 53, 53 and 60 of the Tax Code on Value

Added, approved by the Decree-Law No. 394-B/84 of December 26, pass the

have the following wording:

" Article 2.

[...]

1-[...]:

a) [...];

b) [...];

c) [...];

d) [...];

e) [...];

f) [...];

g) [...];

h) [...];

i) The natural or legal persons referred to in ( a) that, in the

national territory, be purchasers of the goods or services

mentioned in Annex E to this Code and are entitled to

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total or partial deduction of the tax, provided that the respective

transmitters or providers are taxable persons of the tax.

2-[...].

3-[...].

4-[...].

Article 19.

[...]

1-[...]:

a) [...];

b) [...];

c) The tax paid for the purchase of the goods or services indicated in the

point ( i) of Article 2 (1) and in paragraphs 8, 11, 13, 16, 17, 17 b) , 19

and 22 of Article 6;

d) [...];

e) [...].

2-[...].

3-[...].

4-[...].

5-[...].

6-[...].

Article 28.

[...]

1-[...].

2-[...].

3-[...].

4-[...].

5-[...].

6-[...].

7-[...].

5

8-[...].

9-[...].

10-[...].

11-[...].

12-[...].

13-[...].

14-[...].

15-The taxable persons referred to in ( i) of Article 2 (1) are

required to issue an invoice for each purchase of goods or services there

mentioned when the respective transmitant or provider is not a

taxable person, not applying, in such a case, the foreseen constraints

in Article 35 (11)

Article 35.

[...]

1-[...].

2-[...].

3-[...].

4-[...].

5-[...].

6-[...].

7-[...].

8-[...].

9-[...].

10-[...].

11-[...].

12-[...].

13-The equivalent invoices or documents issued by taxable persons

transmitters of the goods or providers of the services mentioned in Annex E

to this Code must contain the expression " VAT due by the

acquirer ", when this is a taxable person of those mentioned in the (

i) of Article 2 (1)

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Article 48.

[...]

1-[...].

2-For such an effect, the invoices, equivalent documents and guides or notes of

devolution, including those that are issued in the quality of acquirer to the

item No. 14 and 15 of Article 28, will be numbered below, in

one or more conveniently referenced series, and should conserve

in the respective order their originals and, well thus, all copies of the

that have been annulled, with the averbings indispensable to the

identification of those who have replaced them, if any.

3-[...].

Article 53.

[...]

1-Benefit from the exemption from tax the taxable persons who, no

possessing not even being required to possess organized accounting for

effects of IRS or IRC, nor practicing import, export operations

or related activities, nor by exerting activity that consists in the

transmission of the goods or provision of the services mentioned in Annex E to the

this Code, have not reached, in the previous calendar year, a volume of

business more than € 10000.

2-[...].

3-[...].

4-[...].

5-[...].

Article 60.

[...]

1-[...].

7

2-[...].

3-[...].

4-[...].

5-[...].

6-[...].

7-[...].

8-They cannot benefit from the special scheme provided for in paragraph 1 by retailers

practicing import, export or activities with them

related, intra-Community operations referred to in para. c) of paragraph 1 of the

article 1 or benefits of services not free of annual value above €

EUR 250, nor those whose activity consisted in the transmission of the goods or

provision of the services mentioned in Annex E to this Code.

9-Are excluded from the special scheme, becoming subject to the particular discipline

or general of VAT, as the case may be, transmissions of goods and benefits

of services mentioned in Annex E to this Code made of the title

occasional, as well as transmissions of assets from the immobilized asset of the

retailers subject to the scheme provided for in this article, which should

add, where appropriate, the respective tax on the ascertained in the terms of

n. 1, for the purposes of its delivery in the state coffers. "

Article 3.

Addition to the Value Added Tax Code

The Annex E is added to the Value Added Tax Code, approved by the

Decree-Law No 394-B/84 of December 26, with its successive amendments, with the

following wording:

" ANNEX E

List of goods and services of the waste sector, waste and scrap

recyclables referred to in point (s) i) of Article 2 (1)

a) Deliveries of ferrous and non-ferrous waste, scrap and used materials,

particularly of semi-finished products resulting from the processing,

manufactures or melting of non-ferrous metals;

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b) Deliveries of ferrous and non-ferrous products semi-processed and

benefits of certain associated processing services;

c) Deliveries of waste and other recyclable materials consisting of

ferrous and non-ferrous metals, their alloys, slag, ash, scales and

industrial waste containing metals or their alloys, as well as

benefits of services consisting of sorting, cutting, fragmentation or

harbying of these products;

d) Deliveries, as well as benefits of certain processing services

related, of ferrous waste, as well as trims, scrap, waste and

used and recyclable materials that consist of glass powder, glass, paper,

card, rags, bones, leather, reconstituted leather, parchment, furs in

rough, tendons and nerves, cordéis, ropes, cables, rubber and plastic;

e) Deliveries of the materials referred to in para. d) , after processing under the

form of cleaning, polishing, sorting, cutting or smelting in lingotes;

f) Deliveries of scrap and waste resulting from the processing of materials

basis. "

Article 4.

Transient standard

Without prejudice to the taxation of their respective activities as of the date of entry into

vigour of this law, the taxable persons previously covered by Articles 53 and 60 of the

Code of VAT which, by virtue of Articles 2 and 3 of this Law, should pass

framed in the normal taxation regime, they must deliver, within 30 days of

statement of amendments provided for in Article 31 of the same Code.

Article 5.

Entry into force

This Law shall come into force on the October 1, 2006.

Seen and approved in Council of Ministers of March 30, 2006.

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The Prime Minister

The Minister of the Presidency

The Minister of Parliamentary Affairs