As mentioned in our Tax News of January 8, the Exceptional Regime for the Regularization of Tax, Customs and Social Security debts foresees that the settlement of said debts, by the initiative of the taxpayers, with reference to taxable events occurred up to 31 December 2017 benefits from interest, penalties and legal charges pardon, in case the settlement of the full debt occurs until 31 December 2019.

Recently, the Tax Authorities have made public the administrative order no. 236/DTF/DSF/AGT/18 with the purpose of clarifying the relevant aspects and the proper application of said Regime.

Below, we highlight the most relevant aspects included in the administrative order no. 236/DTF/DSF/AGT/18.

Scope

The administrative order clarifies that the Regime covers not only the debts the General Tax Administration is already aware off, as well as any unknown debts which have been voluntarily declared by the taxpayer. 

It should be noted that the settlement of the undisclosed debts shall not preclude any additional tax assessment by the General Tax Administration, during a tax inspection.

If the settlement of the tax debt does not comprise any cash disbursement, the taxpayer should, in any case, expressly declare the intention to apply said Regime.

The settlement must be made through compensation, in the event the State is in debt with the taxpayer, provided that such debt is, or is in the process of being, certified by the Public Debt Management Unit (“UGD”).

Enforcement

In order to apply the Regime, taxpayer should deliver a specific application to the local tax office.

The deadline for the submission of said application is June 30, 2019 and the total amount of debt must be paid, in one or more installments, up to December 31, 2019.

If the full settlement of the debt does not occur until December 31, 2019, the taxpayer shall be responsible not only the tax due, but also interest, penalties and legal charges.  

Any administrative or judicial proceeding regarding the abovementioned debts will be suspended.

By accessing the Regime, taxpayers waive their right to challenge the debts to the extent that there is a presumption of confession. Thus, no future challenging of the debts is possible, either at an administrative or judicial level.

For additional information regarding this subject, please refer to the document attached (in Portuguese) which contains the abovementioned Circular Letter.