Circular letter no. 30219, of 2 April 2020, clarifying the most significant changes introduced by the State Budget Law for 2020 (Law no. 2/2020, of 31 March) to the VAT Code, was recently published by the Portuguese Tax Authorities.

Amongst the amendments introduced by the State Budget Law for 2020 and summarized by the Circular Letter now published, we would like to highlight that the transitional regime for the application of the amendment introduced in Article 78-A (2) (a) of the VAT Code – according to which the period after which unpaid debts are considered of “doubtful recovery” and, hence, eligible for the VAT recovery, is reduced from 24 to 12 months – has now been clarified.

The Portuguese Tax Authorities clarified that debts which, at the date of entry into force of the State Budget Law for 2020 – 1 of April 2020 –, were in a situation of nonpayment for more than 12 months but less than 24 months, are considered of “doubtful recovery” as from 1 April 2020 and, hence, eligible for the VAT recovery, provided that the other requirements for this purpose are verified. 

With reference to these debts, it is also foreseen that the six-month period for the submission of the electronic request for the VAT adjustment (“pedido de autorização prévia”) is counted from 1 April 2020.