1 – The beginning of the story
Further to the COVID-19 pandemic and the need to support and stimulate particularly affected sectors (such as housing, culture and catering), a temporary programme called IVAucher was set up. The concept was based on the possibility of accumulating the VAT (Value Added Tax) spent during a quarter in these sectors and subsequently discounting that amount on consumption in these areas. This scheme was created by Law no. 75-B/2020 of 31 December 2020 (State Budget for 2021, more precisely in its Article 405). In it, the general modus operandi for the settlement of VAT paid was determined; its nature as a co-payment in respect of future consumption; the way in which consumers (those to whom the economic burden of VAT is passed on) adhere to it; the general rules on the access, or not, to banking, personal and Tax and Customs Authority data; the impossibility of considering such VAT for the purpose of deducting it from PIT (Personal Income Tax); authorisation for the Government to make the necessary budgetary amendments for the operationalisation of the programme; setting up the expenditure programme and determining the possibility of adjustments to the time plan for its implementation. It is therefore clear that there are rules of a tax and budgetary nature, with the concern to determine in a general way the operation of the foreseen mechanism that embodies a true reimbursement under condition. In the specific case, the consumption in a certain area.
Besides the general regulations, it was necessary to determine its specific rules of operation, which was established in the Regulatory Decree No. 2-A/2021 of 28 May 2021. These rules are quite developed and determine essential elements of the IVAucher itself, such as the stages of assessment of the amount and its use by consumers; the determination of the managing entities’ characteristics; the consumers who may benefit from the scheme; as well as the traders who may be covered; but beyond that, it determines the way to determine the amount of the benefit; and even the rule of its use.
It appears clear that in defining these specific conditions for the operation of the IVAucher programme the regulatory decree determines elements that can be considered as being innovative and more than a mere development of the regime determined by Law.
One could even consider that its determination might be difficult to reconcile with the principle of legality expressed in article 103(2) of the Portuguese Constitution. Indeed, it should not be forgotten that the incidence, rates and also tax benefits fall under the scope of this principle. This latter element should be understood in a broad sense at a material level, encompassing items such as exemptions, deductions, amortizations, accelerated reintegration and other items that may be similar to these (Article 2(2) of the Statute of Tax Benefits). The question in this regard is precisely whether the determination of the possibility of discounting VAT paid on future purchases should be understood as a tax benefit. Should the tax benefit be considered in an immediate sense, the answer will be negative. Should the option be for a more open perspective of the benefit that considers its determination in a more mediated way, the answer will be positive. On this level, it seems that the best would be to admit a stricter vision of the concept of tax benefit and thus consider that the determination of this regime is not limited by the elements of tax legality. Does this reasoning lead to the conclusion that the regime can be determined with ample freedom by means of purely administrative regulations?
This does not appear to be the case. This measure has the character of a financial instrument that can benefit consumers using a legal relationship based on a tax perspective. Therefore, it seems that the budgetary forecast must be as complete as possible, both as regards the plan for the VAT mechanisms to be used and the consequences of this matter for state expenditure. The hybrid nature of this forecast cannot remove its budgetary nature and the need to respect its principles.
Thus, this conditional reimbursement which ingeniously falls within the limits acceptable under EU rules may allow for adaptation to other circumstances.
2 – Continuation of the story
This is precisely what was determined in the new AUTOvoucher regime provided for in Decree-Law 92-A/2021 of 8 November, which assumes the use of the IVAucher support platform to allow the existence of “benefits in consumption at petrol stations”. The benefit in this case corresponds to a financial subsidy. It also has a financial nature and is based on the public interest of supporting citizens and families in a situation of an extraordinary increase in fuel prices caused by the COVIV-19 disease pandemic.
It is curious that the stages of the AUTOvoucher are expressly delegated to an order from the member of the Government responsible for finance, using the base of consumers who have joined the IVAucher, naturally determining a new set of eligible traders (naturally the traders licensed as petrol stations) and defining the benefit, which in this case is the creation of a credit from the moment of registration. This legislation makes an express reference to the structuring diplomas of the IVAucher. The Government in this case has already determined the budgetary expenditure for the years 2021 and 2022 through an ordinance and through an order establishing the time limits for this benefit.
One should note that with this decision the legislator has demonstrated the potential of the “voucher schemes” for different cases of benefits that may be applied.
3 – Scenes from the next chapters
Clearly, this idea of voucher related to VAT demonstrates an enormous flexibility regarding the methods of financial intervention, to applicable cases, and its possible extension in time. Thus, considering the current situation, if it is already predictable that the AUTOvoucher will be extended in time, it is also natural that the pressure for its application for longer periods of time and with more effective aid may be more and more clear. This shows that these solutions can be maintained, but also diversified into other situations. Possibly using the already existing databases – despite all the issues related to the strict application of the legality principle – for the possibility of enhancing this aid through taxation.
It is highly likely that these temporary measures will become recurrent and respect for the principle of legality will be consistently assumed in different State Budgets. In the meantime, the need to balance different interests will naturally lead to these solutions. Greater stability in these solutions will lead to greater certainty and stability in the legal technique to be used.
Diogo Feio
15/03/2022