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State Budget 2021 proposal – VAT key takeaways

© Catarina Mantero

The 2021 State Budget proposal was presented last night by the Portuguese Government to the Portuguese National Parliament.

There are 3 VAT key measures to keep in mind:

1. Postponement of e-commerce package entry into force

Postponement to 1 July 2021 (currently 1 January 2021) of the entry into force of the new e-commerce package for distance sales,  (Law no. 47/2020, 24th August, with transposition of UE Directive 2017/2455 of 5 December 2017 and transposition of EU Directive 2019/1995 of 21 November 2019). This is in line with the recent indications of the European Commission.

2. VAT reduced rate on face masks and hand sanitizer sold to general public 

Extension for the year of 2021 (currently until the end of 2020) of the VAT reduced rate applicable to imports, local supplies and intra-community acquisitions (general public nature) of respiratory protection masks and alcohol gel sanitizer;

3. Exemption on supplies of PPE’s to public bodies and listed private health and charity entities 

Extension until April 2021 (currently until 31 October 2020) of the VAT exemptions (with right of deduction) applicable to local supplies and intra-community acquisitions of PPE – protective personal equipment (specifically listed) used to fight COVID-19 when such supplies have, as recipients, public bodies of the State or private entities (health, social security and charities) identified by the PT government as benefiting from the exemption regime.

The proposal will now be discussed and voted by the Portuguese National Parliament but the above proposals are expected to be approved.

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