The National Government modifies the VAT deductible credit for personal service providers

On the 7/11/22 the Executive Power (onwards, the “Government”) dictated the Decree Nr. 8175/2022 (onwards, the “Decree”), that has the following novities.

By Decree, the Government finally modified the discussed article 19 of Decree Nr. 3107/2019 Value Added Tax regulations (VAT), Through which is regulated the use of the credit VAT for the acquisition of goods and services for the independent personal service providers.

The Decree is issued within the framework of the discussions regarding the “Law Project that amplifies the Law Nr. 6380/19” approved by both chambers of the National Congress, through which, in between other discussions, the deduction of 100% of VAT was foreseen Credit from the acquisition of certain goods and services, such as foods, drinks, vacations, tickets, business gifts, among others, which eduction does it is not admitted in accordance with the provisions of the current tax code.

In this regard, having repeatedly expressed its opposition to the aforementioned project, the Government stepped forward announcing its veto and issuing the Decree, by which it expands the goods, as well as the provision of services whose VAT for their acquisition will be usable for the provider of personal and/or professional services against VAT Debit.

In this sense, the Decree allows the deduction of VAT Credit in accordance with the following:

  • Regarding personal health, for the purchase of medicines and medical treatments contracted by the taxpayer, as well as for the payment of prepaid medicine.
  • For the purchase of food, including non-alcoholic beverages, up to 30% of the VAT Credit.
  • Regarding the services of electricity supply, water supply, sewerage, waste collection or telecommunications services, it is clarified that up to 50% of the VAT Credit can be deducted when these are jointly used for the private use of the taxpayer.
  • Likewise, it is clarified that the taxpayer may deduct up to 50% of the VAT Credit corresponding to the office lease when the property is also used for private purposes.
  • For the acquisition of servers, computer and telecommunications equipment, professional equipment and tools, including their maintenance. This gives greater clarity to the previously admitted deduction of “office supplies and furniture, professional equipment and tools”.
  • With respect to the taxpayer’s clothing, the VAT deductibility is required. Credit corresponding to the acquisition of suits, overalls, special footwear, safety protectors, without it being an exhaustive list but an enunciative one.
  • By contracting advertising or marketing services.

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