VAT: self-settlement in the transmission of forestry goods and services


Decree-Law No 165/2019 of 30 October amended the VAT Code, establishing a VAT outage mechanism for certain transmissions of forestry goods, which enters into force on 1 January 2020.

This mechanism consists in the application of the reversal charge, with the vat being settled, which is due to certain transmissions of forestry goods, to be carried out by the respective acquirer, provided that it is a taxable person tax entitled to total or partial deduction.

At the same time, the obligation to self-invoicing was introduced in transactions in which taxable persons acquire that type of goods to individuals who, by their transmission, become tax liabilities.

Thus, Articles 2, 19, 29 and 36 of the VAT Code were amended for the implementation of this new measure, the instructions and rules of application contained in The Circulationed Office No: 30217, 2019-12-23, issued by the TAX MANAGEMENT AREA-VAT.

Who is subject to the reversal of the taxable person

The reversal of the taxable person provided for in point (m) of Article 2(1) of the VAT Code applies to taxable persons with registered office, permanent establishment or domicile in national territory and practice transactions entitled to total or partial deduction when they make purchases of cork, wood, pine cones and pine nuts with bark located in the national territory.

This means that the purchaser, taxable person, shall settle the VAT which is due in those transactions.

What assets are subject to the reversal of the taxable person?

The mechanism for reversing the taxable person provided for in Article 2(1) of the VAT Code applies to transmissions of cork, wood, pine forests and pine nuts with bark.

To this end, it is considered:

  • Cork: product resulting from the extraction of the hull to the cork oak, which has not been the subject of any processing, including cooking;
  • Wood: product resulting from the slaughter, pruning or cleaning of woody plants, including their overlooking, which has not been the subject of any transformation beyond cutting. This concept covers firewood, as well as sparations, slums and other vegetable surpluses resulting from the corresponding farm or forestry;
  • Pine cones: Pine pine forests, in any state (green or dry);
  • Barked pinhon: meek pine seed, peeled.

When the transferee is a taxable person who performs an activity of habitualcharacter.

According to the taxable person’s inversion rule, the seller of the goods issues an invoice without VAT settlement, which must contain the expression “VAT – Self-settlement”. In turn, the acquirer settles tax due by acquisition, applying the fee in force, and the settlement may be made on the invoice issued by the supplier or in an internal document issued for that purpose.

The tax thus settled entitles to deduct pursuant to article 19(1) (c) of the VAT Code, without prejudice to Article 23 of that Code, in the case of a taxable person with limitations on the right to deduct.

Where the transferee becomes a taxable person for carrying out one of the transactions referred to in point (m) of Article 2(1) of the VAT Code

In such cases, it is for the purchaser to draw up the invoice entitled to the transaction, and shall settle the corresponding tax in the same case, which entitles the deduction in accordance with that paragraph above.

The constraints provided for in Article 36(11) of the VAT Code shall not apply, no prior agreement or proof is required that the transferor of the goods became aware of the issue of the invoice and accepted its content.

In view of Article 5(1) and Article 7(4) of Decree-Law No 28/2019 of 15 February, those invoices shall be issued on behalf of and on behalf of the transmittant, in a conveniently referenced series, and shall be dated and numbered progressively and continuously for a period of not less than one fiscal year.

In view of the changes found and when it comes to filling out periodic declarations, the following should be observed:

  • Where the transferee is a taxable person of the normal scheme performing an activity of customary nature, he shall enter these transactions in field 8 of Table 06 of the periodic VAT declaration.
  • When the transferee becomes a taxable person for carrying out one of these transactions and its value is equal to or less than €25,000, there is no declarative obligation in vat.

Where that value exceeds €25,000, the transferee shall deliver a declaration of start-up (pursuant to Articles 31 and 35 of the VAT Code) before carrying out the transaction, marking for this purpose field 7 of its Table 08. In such cases there is no obligation to deliver the periodic VAT declaration.

The purchaser
With the purchaser being liable for the settlement of the tax by applying the reversal of the taxable person, the respective amounts shall be entered in the periodic declaration, in fields 1 or 3 (tax base) and 2 or 4 (settled tax), all in Table 06, depending on the rate applicable to the goods.

At the same time, you can enter the deductible tax in fields 21, 22 or 24, all of Table 06, depending on inventories (stocks) or other goods and services.

Finally, in the case of transactions which, despite the legal obligation to settle the tax, are not part of the declarant’s turnover, its taxable amount must still be entered in Table 06A of the periodic declaration.

If there is no specific field for this purpose and until it is created, that amount shall be entered in field 105 (Greenhouse Gas Emission) of that Framework.

Article prepared by the Moneris Tax Technical Committee

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