On 3 October 2013, the Portuguese Government approved the new "exceptional" and "temporary" regularization regime for tax and social security debts.
According to this regime, any taxpayer (individual or corporate) may pay the full amount of their tax or social security debts while benefiting from full exemption from dilatory interest – 6,112% for the year of 2013 –, compensatory interest – 4% per year –, administrative costs, and from a special reduction of the penalties applicable. According to the information released, in order to benefit from this regime, the regularization payments must be made until 20 December 2013.
The use of this mechanism does not preclude the use of any defence mechanisms available to the taxpayer, including the possibility to challenge, administratively or judicially, the relevant debt. Moreover, all debts paid under this regularization mechanism shall be reimbursed, accrued of indemnity interest at a 4% per year rate, if the taxpayer obtains a favourable decision in the relevant procedures.
In practice, the payment of the debts covered by this regime will allow the taxpayer to challenge the enforceability and legality of the debts in question without dilatory interest, adding the possibility of being paid, on total the sum of the tax or contribution, a fixed rate of 4% (of indemnity interest) – which is superior to the interest paid today by the majority of financial institutions.
According to the Council of Ministers official announcement (http://www.portugal.gov.pt/pt/osministerios /ministro-da-presidencia-e-dosassuntosparlamentares/ documentosoficiais/ 20131003-cm-comunicado.aspx), the Portuguese Government approved this regime with the objective of granting the taxpayers one "last" opportunity for the regularization of their tax and contributive status, which is one of the requirements for accessing tax benefits, EU funding and public tenders.
Also according to the announcement, from an economic and social perspective, this regime will enable the debtors to rebalance their financial situation, maintaining the levels of employment level and avoiding insolvency.
From the State's perspective, this regime will represent an additional flow of revenue (adding to the other measures) to reduce the deficit to 5.5% in 2013, as imposed by the Troika, since it is expected to raise around € 700 million.
It is important to recall that this type of measures is not strange to the Portuguese tax system. Since the decade of 1990, the government has already approved some similar regimes, namely, with the Decree-Law no. 225/94 of 25 September (known as the "Plano Catroga"), the Decree-Law no. 124/96 of 10 August (known as the "Plano Mateus") and, later, with Decree-Law no. 248-A/2002 of the 14 November (known as the "Plano Leite"); this last plan resulted in the collection of taxes in the amount of € 1.1 billion.
Adding to these plans, the Government has also created, in 2005, 2010 and 2012, exceptional regimes for tax regularization (RERT), applicable to income and assets held abroad and not reported to the Portuguese tax authorities (See:http://www.rffadvogados.pt/xms/files/ NL_RERT_III_-_portugues.pdf).
This regime will now be approved for publication in the Official Gazette in order to become fully applicable, thus allowing the taxpayers to regularize their tax and social security situation on a more favourable basis.
Lisbon, 4 October 2013
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