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Changes The Vat Code Approved By Decree-Law No. 394-B/94, Of December 26, And Proceeds To The Seventh Amendment To Decree-Law No. 347/85, Of 23 August

Original Language Title: Altera o Código do IVA, aprovado pelo Decreto-Lei n.º 394-B/94, de 26 de Dezembro, e procede à sétima alteração ao Decreto-Lei n.º 347/85, de 23 de Agosto

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Exhibition of Motives

The fixation of the standard rate of Value Added Tax in 21%, operated

Through Law No. 39/2005 of June 24 occurred in a context of serious crisis

budget, in which public accounts were found in a budget deficit situation


That measure was then taken over by the Government as an exceptional measure,

indispensable for the sustained consolidation of public accounts. It was also treated as

a key measure to ensure compliance with the obligations of Portugal in the

The scope of the Stability and Growth Pact and to repose the credibility of the economy

Portuguese to the international markets.

In the last three years, the Government has undertaken a strategy of consolidation of finance

public that required the adoption of reformist measures in the framework of the Public Administration

and social security, as well as the containment and improvement of the quality of public spending.

Recently released official data reveals that the value of the budget deficit has decreased

significantly, having ceased to be in an excessive deficit situation in the face of the

commitments set out in the Stability and Growth Pact.

The significant decrease in the deficit in the public accounts verified in the last three years

results from structural changes however carried out, which have already started to produce

results and which will further benefit the Country in the future.

A serious and rigorous effort of fiscal consolidation and the Portuguese economy has been made

continued to grow. Likewise, the verified budgetary consolidation has allowed

regain the confidence of economic agents and allowed the Portuguese to have a

better insight into the importance in having balanced public accounts.

It matters, however, not to forget the less favourable international economic framework,

motivated by the difficulties registered in the financial markets, as well as the increase

of the price of oil. This context reveals a situation of uncertainty that deteriorates the

expectations of economic actors and that it requires the Government to act with caution in the


framework of responsible and credible management of public accounts.

Thus, and without relinquishing the objectives set out, the results obtained allow,

currently, which will proceed to a decline in the normal Value of Value Tax

Added for 20%.

This reduction of the normal Value Added Tax rate will allow you to create

more favourable conditions for the growth of the economy and employment and for attrition

of investment, without the Government devifrom from the development of its policies

social directed at combating inequalities and promoting more opportunities for

all the Portuguese.

For technical reasons, the change in the normal Value Added Tax rate

must come into force at the beginning of a period of coincidental taxation for the subjects

liabilities of the normal monthly and quarterly regime, so the reduction provided in the present

proposed law is expected to come into effect from July 1, 2008.


Under the terms of the paragraph d) of Article 197 (1) of the Constitution, the Government presents to the

Assembly of the Republic the following proposal for a law:

Article 1.

Amendment to the Value Added Tax Code

Articles 18 and 49 of the Value Added Tax Code, approved by the

Decree-Law No 394-B/84 of December 26 shall be replaced by the following:

" Article 18.


a) [...];

b) [...];

c) For the remaining imports, transmissions of goods and benefits of

services, the rate of 20%.


3-The rates to which the points are referred a) , b) and c) of paragraph 1 are, respectively,

of 4%, 8% and 14%, concerning the operations which, according to the


special legislation, if they consider them to be carried out in the Autonomous Regions of the

Azores and Madeira.







Article 49.

In cases where invoicing or its registration is processed by values,

with tax included, in the terms of the previous articles, the clearance of the

corresponding taxable base will be obtained through the division of those values

by 105 when the tax rate is 5%, by 112 when the tax rate

for 12% and by 120 when the tax rate is 20%, multiplying the

quotient by 100 and rounding out the result, by defect or by excess,

for the nearest unit, without prejudice to the adoption of any other

method conducive to identical result. "

Article 2.

Amendment to Decree-Law No 347/85 of August 23

Article 1 of the Decree-Law No. 347/85 of August 23 is replaced by the following:

" Article 1.

1-Are set at 4%, 8% and 14%, respectively, the rates of tax on

the added value to which the points are referred a) , b) and c) of the Article 1 (1)

18. of the Value Added Tax Code, approved by the

Decree-Law No 394-B/84 of December 26 to be applied to transmissions of

goods and benefits of services that are considered to be carried out in the Regions

Autonomous of the Azores and Madeira and on imports whose landings

customs take place in the same Regions.



3-[...]. "

Article 3.

Consignment of revenue

1-Maintains the consignment of VAT revenue equivalent to two percentage points of the

respective fee, one for Social Security and another for the General Box of

Retirements, I. P.

2-A consignment of the revenue referred to in the preceding paragraph vigora till December 31 of


Article 4.

Entry into force

3-The amendments made by this Act to the Code of Value Tax

Added and to the Decree-Law No. 347/85 of August 23 come into force in 1 of

July 2008.

4-In the case of transmissions of goods and benefits of services of continued character

resulting from contracts that give way to successive payments, the changes

introduced by this Law only apply to the operations carried out as of the date

referred to in the preceding paragraph, by defeating, to this effect, the provisions of paragraph 9

of Article 18 of the Value Added Tax Code.

Seen and approved in Council of Ministers of April 10, 2008

The Prime Minister

The Minister of the Presidency

The Minister of Parliamentary Affairs