VAT exemption on donations granted for later distribution to persons in need (Article 15(10) of the VAT Code)
Extension of the exemption during the emergency period motivated by the pandemic of the new coronavirus – COVID-19
Through Order No. 122/2020-XXII of 24 March 2020 by the Secretary of State for Tax Affairs, considering:
- The emergency situation of public health of international scope declared by the World Health Organization on January 30, 2020, and the classification of the new Coronavirus – COVID-19 as a pandemic, on March 11, 2020, which determined, on March 18, 2020, the decree of the state of emergency in Portugal;
- That on 20 March 2020, in the face of the covid-19 pandemic, the European Commission sent a note to the Directors-General of the Tax and Customs Administrations of the Member States (and the United Kingdom), clarifying which exceptional instruments are available to help disaster victims and which can be used to tackle this unprecedented health crisis;
- That Member States have the possibility of importing relevant protective equipment, other medical devices or medical equipment in the context of the COVID-19 outbreak with customs duty relief and VAT exemption, Under Articles 74 to 80 of Council Regulation (EC) 1186/2009 of 16 November 2009 and Articles 51 to 57 of Council Directive 2009/132/EC of 19 October 2009, which determines the scope of paragraphs 2009/132/EC of 19 October 2009, which determines the scope of paragraphs b) and (c) Article 143 of Directive 2006/112/EC (VAT Directive);
- That Articles 51 to 57 of Council Directive 2009/132/EC of 19 October 2009 are transposed into national law by means of Articles 49 to 55 of Decree-Law No 31/89 of 25 January;
- that those legal provisions provide for the application of VAT exemption to goods imported by State bodies whether they are intended to be distributed free of charge to disaster victims or are intended to be made available free of charge to victims of such disasters and remain the property of the bodies concerned;
- That the simple application of Articles 51 to 57 of Council Directive 2009/132/EC of 19 October 2009 may jeopardise the principle of VAT neutrality by not applying in the same way to identical transactions carried out in national territory;
- That the article 15(10)(a) system of the VAT Code can be framed as an exceptional instrument for encouraging aid to pandemic victims of the new Coronavirus – COVID- 19.
It has been determined that:
- Under the principles of systematic coherence and neutrality, and for as long as the emergency period in Portugal motivated by the pandemic of the new Coronavirus – COVID-19 lasts, the exemption provided for in Article 15(10) of the VAT Code also applies to the transmission of goods free of charge to the State, private institutions of social solidarity and non-governmental non-profit organisations , for subsequent making available to persons in need, even if they remain in the property of those bodies, and Article 20(1)(b) IV) of the VAT Code shall apply;
- For the purposes of Article 15(10)(a) of the VAT Code, those who are receiving health care in the current pandemic context, who are considered victims of disaster, are also considered to be considered to be deprived of health care.
Moreinforms that the content and instructions of said Seaf Order were also the subject of additional disclosure through the publication, by the Tax-VAT Management Area, of the Circulation Letter No. 30220, 2020-04-29.