I. EDITORIAL – THE APPROVAL OF THE STATE BUDGET FOR 2020
In December we highlight the approval of the State Budget (“SB”) for 2020, still subject to the discussion and approval of the Parliament.
The SB establishes the objective of obtaining a budget surplus as well as to reduce the public debt of the gross national product which represents about 116% of it.
Regarding the main tax effects, it should be noted the Municipal Property Tax increase for building plots.
The remaining taxes are mainly unchanged. The Corporate Income Tax has no modifications, whereas the Personal Income Tax provides the limit of the tax class change of 0.3%; there is not any changes in progressive rates.
Regarding the remaining legislation, it is worth to note the approval and publication of the Decree-Law no. 170/2019 of December 4, which proceeded to the eleventh amendment of the Public Contracts Code and the Decree-Law no. 174/2019 of December 13, which proceeded to the creation of specialized courts of jurisdiction, under the terms of the Statute of Administrative and Tax Courts.
Concerning case-law it is noteworthy the Judgement of the Justice Court of December 19, Case no. C-707/18, on the interpretation of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, and in particular Article 28, in the context of a bilateral promise for the sale of immovable property not registered in the national land register. In its turn, we would like to emphasis the Judgment of the Constitutional Court no. 686/2019 and no. 687/2019, in Case no. 157/191 and Case no. 294/20192, respectively, in which the constitutionality of the Article 169 of the Tax Process and Procedure Code was discussed. By those decisions the Court has defined the scope of the abovementioned legal regulation and it was not considered as not comply with the Portuguese Constitution, therefore was not declared as unconstitutional.
Finally, in Miscellaneous we would like to point out the approval of the Major Planning Options and Multiannual Budget Programming Framework for 2020-2023.
Ordinance no. 400/2019 of December 2: Amendment to several ordinances in order to promote the implementation of the «Mar 2020 Operational Programme» (“Programa Operacional Mar 2020”) for mainland Portugal.
Decree-Law no. 169-B/2019 of December 3: Approves the regime for the organization and functioning of the XXII Constitutional Government.
Decree-Law no. 170/2019 of December 4: Introduces the eleventh amendment to the Public Contracts Code, approved in annex to Decree-Law no. 18/2008, of January 29, and the second amendment to Decree-Law no. 111/2012, of May 23.
Ordinance no. 404/2019 of December 10: Approves the list of substances and methods prohibited from 1 January 2020 as an annex to this ordinance, which forms an integral part thereof.
Decree-Law no. 172/2019 of December 12: Amends the regime of postponement of procedural acts, in situations of maternity, paternity or death of a close relative of the solicitors.
Decree-Law no. 174/2019 of December 13: Proceeds to the creation of specialized courts of jurisdiction, in accordance with the Statute of Administrative and Tax Courts.
Decree-Law no. 174-A/2019 of December 18: It changes the basis of the concession for the operation of the rail passenger service on the north-south axis of the Lisbon region.
Ordinance no. 405-A/2019 of December 19: It defines the reference countries, to be considered in 2020, for the authorisation of the prices of new medicines and for the annual review of the prices of medicines in the hospital and outpatient markets, as well as maintaining, for the same year, an exceptional criterion to be applied in the price review system.
Ordinance no. 406/2019 of December 20: Approves the model for the participation of rents foreseen in no. 3 of article 15-N of Decree-Law no. 287/2003, of November 12, in its current wording, and the corresponding instructions for completion.
Decree-Law no. 174-B/2019 of December 26: Merges EMEF – Empresa de Manutenção de Equipamento Ferroviário, S. A., into CP – Comboios de Portugal, E. P. E., and establishes the respective terms and conditions.
Decree-Law no. 175/2019 of December 27: Proceeds to the first amendment of Decree-Law no. 151/2019, of October 11, which operated the intermunicipalization of Sociedade de Transportes Coletivos do Porto, S. A.
Decree-Law no. 176/2019 of December 27: Approves the transitional budget implementation scheme set out in Article 12h of Law 91/2001 of August 20.
III.1. Court of Justice of the European Union
Judgement of the Justice Court of December 4, Case C‑493/18: Reference for a preliminary ruling. Judicial cooperation in civil matters. Insolvency proceedings. Regulation (EC) No 1346/2000. Article 3(1). Actions which derive directly from insolvency proceedings and which are closely connected with such proceedings. Sale of immovable property and creation of a mortgage. Action brought by the trustee in bankruptcy seeking a declaration that the transactions concerned are ineffective. Article 25(1). Exclusive jurisdiction of the courts of the Member State in which the insolvency proceedings were opened.
“Article 3(1) of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings must be interpreted as meaning that an action brought by the trustee in bankruptcy appointed by a court of the Member State within the territory of which the insolvency proceedings were opened seeking a declaration that the sale of immovable property situated in another Member State and the mortgage granted over it are ineffective as against the general body of creditors falls within the exclusive jurisdiction of the courts of the first Member State.
Article 25(1) of Regulation No 1346/2000 must be interpreted as meaning that a judgment by which a court of the Member State in which the insolvency proceedings were opened authorises the trustee in bankruptcy to bring an action in another Member State, even if that action falls within the exclusive jurisdiction of that court, cannot have the effect of conferring international jurisdiction on the courts of that other Member State.”.
Judgement of the Justice Court of December 19, Case C-707/18: Reference for a preliminary ruling. Taxation. Common system of value added tax. Directive 2006/112/EC. Taxable transactions. Deduction of input tax. Purchase of immovable property not registered in the national land register. First-registration costs incurred by the purchaser. Recourse to specialist third companies. Participation in a supply of services or investment expenditure carried out for the purposes of an undertaking.
“Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as not precluding the parties to a transaction, the aim of which is to transfer the ownership of immovable property, from agreeing a clause according to which the future purchaser will incur some or all of the costs of the administrative formalities relating to that transaction, in particular those connected with the first registration of that property in the national land register. However, the mere presence of such a clause in a bilateral promise for the sale of immovable property is not determinative in order to ascertain whether the future purchaser is entitled to deduct the value added tax relating to the payment of the costs arising from the first registration of the property concerned in the national land register.
Directive 2006/112, and in particular Article 28 thereof, must be interpreted as meaning that, in the context of a bilateral promise for the sale of immovable property not registered in the national land register, the future purchaser — a taxable person — who, as he or she contractually undertook to do with regard to the future vendor in that promise, carries out the necessary steps for the first registration of the property concerned in that register by having recourse to the services provided by third parties who are taxable persons, is deemed to have supplied the services in question himself or herself to the future vendor, within the meaning of Article 28, even though the parties to the contract agreed that the sale price of that property does not include the value of the land-registration operations.”
III.2 Constitutional Court
Judgment of the Constitutional Court no. 667/2019 of November 13, Case no. 143/2016:
Judgment of the Constitutional Court no. 686/2019, Case no. 157/191 and no. 687/2019, Case no. 294/20192: It is judged as constitutional the Article 169 of the Tax Process and Procedure Code, which establishes that the tax acts review request submitted beyond the 120-day period provided in the law does not suspend the tax enforcement process.
III.3. Courts of Justice
Judgement of the Court of Appeal of Lisbon of December 5, Case no. 5538/05.0TJLSB. L1-6: Presumption of notification. Share. Hereditary share. Remainder.
Judgement of the Court of Appeal of Coimbra of December 3, Case no. 60/16.2T8MGL.C1: Horizontal property. Construction defects. Applicable legislation. Expiry of rights. Time limits applicable.
Judgement of the Court of Appeal of Lisbon of December 13, Case no. 167/09.2TYLSB-C.L1-1: Qualification of insolvency. Culpable insolvency. Obligation to keep accounting.
III.4. Administrative and Tax Court
Judgement of the Supreme Administrative Court of December 4, Case no. 01170/05.7BELSB: Corporate Income Tax (“IRC”). Tax deduction of the socially beneficial contributions. Criterion. Benefit.
IV.1.1. Monographs and Periodic Publications
Pedro Moniz Lopes, “Contratos Administrativos e Boa Fé – Em especial, da relevância das condutas prévias e concomitantes à execução para a interpretação dos contratos administrativos”, AAFDL, dezembro 2019;
Paula Costa e Silva, Nuno Trigo dos Reis, “Efeitos Lícitos da Prova Ilícita – Em Processo Estadual e Arbitral”, AAFDL, dezembro 2019;
Jorge Miranda, “Recordando a Comissão Constitucional”, AAFDL, dezembro 2019.
IV.1.2. Generic Guidelines & Cia
Blinding information in Case no. 15796 of 02.12.2019, of Director of VAT Services Area
Subject: Services provision – Holder of a local accommodation licence and owner of a village property, signed a contract with the third party, “a Rental Contract” related to the property – Acquisition of accommodation services to the owner and simultaneously the accommodation services provider to the property customers.
Blinding information in Case no. 16120 of 02.12.2019, of Director of VAT Services Area
Subject: Tax rates – the reversal of the taxable person rule shall not apply, to the repair services of the doors and gate maintenance, the services provider shall settle the VAT due.
Blinding information in Case no. 16132 of 02.12.2019, of Director of VAT Services Area
Subject: Tax rates – Works contract – Main permanent dwelling remodelling work – The labour-intensive services are almost 100% of the total value of the provided services.
Blinding information in Case no. 16714, of 04.12.2019, of Director of VAT Services Area
Subject: Location of company operations – Non-taxable transactions in domestic territory. The domestic territory taxable person that acquires goods from a supplier established in China, and, by their order, dispatched for delivery to their customers situated outside the EU, without passing through the domestic territory.
Blinding information in Case no. 16730, of 04.12.2019, of Director of VAT Services Area
Subject: Tax rates – Transmission of plastic moulds certified and authorized to be used by the food sector.
Circulate letter no. 35116, of 04.12.2019, of Deputy General Director of Excise Duties Tax Area (“IEC”)
Subject: Cider production, soft drinks and spirit drinks for small beer producers.
Circulate letter no. 35115, of 05.12.2019, of Deputy General Director of Excise Duties Tax Area (“IEC”)
Subject: Traceability and safety of tobacco element products – exemption purposes – Embassies and Consulates/International Bodies.
Circulate letter no. 35117, of 18.12.2019, of Deputy General Director of Excise Duties Tax Area (“IEC”)
Subject: New features of the car taxation system.
Circulate letter no. 30217, of 23.12.2019, of of Director of VAT Services Management Area
Subject: VAT – VAT payment regarding the Certain Transmissions of Goods from The Forestry Production.
IV.2.1. Economy, Finance and Taxation
It was created a working group to define a national and integrated anti-corruption strategy, which involves the prevention and the repression of it, carried out by different professional entities.
It was also approved a draft law which introduces harmonisation and simplification measures intended for improve the functioning of the VAT system, of the intracommunity trade, transposing the Directives (EU) no. 2018/1910 e 2019/475.
On 14.12.2019, the Council of Ministers approved the State Budget for 2020, the Major Planning Options, and the Multiannual Budget Programming Framework for 2020-2023.
It has been approved the National Energy and Climate Plan 2030 (“PNEC” 2030) which established as a target for 2030 to reach the 47% energy from renewable sources and a reduction in primary energy consumption of 35% marking the country’s commitment to energy sector decarburization in order to achieve carbon neutrality in 2050.
V. INDUSTRIAL PROPERTY
With the purpose of establishing a new framework for cooperation between the National Institute of Industrial Property and the Institute of Quality and Intellectual Property Management of Cape Verde, a Memorandum of Understanding was signed on December 9 between the two institutes, with the following main objectives: (i) strengthening relations between Portugal and Cape Verde, through bilateral cooperation between INPI and IGQPI in the field of industrial property (IP); (ii) scientific and technological development, (iii) promoting innovation and technology transfer, as well as (iv) strengthening business competitiveness and promoting the economic growth of the two countries.
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- I. EDITORIAL
- II. LEGISLATION
- III. CASE-LAW
- IV. BRIEFS
- V. INDUSTRIAL PROPERTY