On December 31, 2018, Portugal published Law No. 71/2018 in the official gazette (Diário da República) to enact the State Budget Law for 2019. Articles 274 and 276 of the legislation implement Articles 1, 3, and 4 of the EU Directive on certain VAT obligations for supplies of digital services (2017/2455) of December 5, 2017, via new Article 6a in Portugal’s Value Added Tax Code (“VAT Code). The VAT amendments apply from January 1, 2019.
Editor’s Note: EU member states had until December 31, 2018 to implement Article 1 of Directive 2017/2455.
Editor’s Note: Article 275 of Law No. 71/2018 also transpose EU Directive 2016/1065 of June 27, 2016 on VAT treatment of vouchers to limit double taxation among EU member states, which is not covered in this article.
Article 276 of Law No. 71/2018 transposes Directive 2017/2455 on certain VAT obligations for supplies of digital services into Irish domestic law. The explanatory notes of the regulations say that the purpose of these provisions is to amend the place of taxation for Irish VAT, and to introduce rules for invoicing electronic and telecommunications services. The new rules extend an existing EU-wide portal (MOSS) for the VAT registration of distance sales.
In general, when services are provided to non-taxable persons, these benefits are taxable in the EU member state of consumption. Pursuant to new Article 6a of the VAT Code, these services will be taxable in the service provider’s country of establishment when the annual amount is less than €10,000.
According to Directive 2017/2455, the place of supply of telecommunications services, radio and television broadcasting services, and electronically supplied services to a non-taxable person is the place where that person is established, has his permanent address, or usually resides. An exception applies if all of the following conditions are met:
- Supplier is established or, in the absence of an establishment, has his permanent address or usually resides in only one EU member state.
- Services are supplied to non-taxable persons who are established, have their permanent address or usually reside in any member state other than the state referred to above.
- Total value, exclusive of VAT, of the supplies does not exceed €10,000, or the equivalent in national currency, in the current calendar year and did not exceed this amount during the preceding calendar year.
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