With the objective of contributing to the eco innovation and efficiency in the use of natural resources by promoting sustainable economic growth, it was published the Law No. 82-D/2014, of 31st December, which approves the reform of Green Taxation in Portugal. It takes effect from the date of its entry into force on 1st January 2015.
With the law of Green Taxation changes were made in the environmental tax rules in the sense of extend the scope of taxes on pollution and degradation of natural resources, in order to increase the tax benefits in energy efficiency projects.
Then, we present a short summary of some tax relief measures introduced in the sectors of energy and transport, environment and land planning.
Energy and transport
• Depreciation of vehicles (Corporate Income Tax – CIT)
Are not accepted as tax expenses, the depreciation of passenger or mixed vehicles, acquired in tax periods beginning on 1st January 2015 or thereafter, in the part corresponding to the cost of acquisition exceeding €25,000.
With the law of Green Taxation are introduced new limits from which are not accepted for tax purposes, depreciations expenses carried out for exclusively electric-powered vehicles, hybrid vehicles plug-in and gas powered vehicles (VNG) and (LPG).
Thus, the tax limits currently in effect for the depreciation of passenger and mixed vehicles, are the following:
• Autonomous Taxation (CIT)
Expenses related to light passenger and goods vehicles, motorbikes and motorcycles, except vehicles exclusively powered by electrical energy are subject to autonomous taxation.
For this achievement, expenses related to vehicles, are considered the expenses with depreciation, rents or leases, insurance, maintenance and cleaning, fuel, tolls, parking and taxes on the possession or use of the vehicle.
With the law of Green Taxation, the rates of this autonomous taxation are significantly reduced for hybrid vehicles plug-in and for vehicles powered by gas (VNG) and (LPG), being the taxation rates based on the vehicles acquisition cost.
In light of this, the autonomous taxation rates currently in force which affect the costs of passenger and goods vehicles, motorbikes and motorcycles, are as follows:
• Tourism vehicles (VAT)
Are excluded from the right of the VAT deduction, the tax supported with expenses related to the purchase, rental, leasing and repair of vehicles, motorbikes and motorcycles. For this purpose it is considered tourism vehicle any vehicle that is not used exclusively for the carriage of goods or, being a mixed or passenger vehicle, has no more than nine seats, including the driver.
With the law of Green Taxation, has extended the VAT deduction on expenses related to acquisition, rental, use and repair of passenger or mixed vehicles when considered tourism vehicles provided they are exclusively electric, plug-in hybrid or gas powered (VNG) or (LPG) and whose cost does not exceed €62,500, €50,000 and €37,500, respectively.
Therefore, VAT deductible on these expenses is currently possible in the following proportions:
Environment and land planning
• Provisions for repair of environmental damage (CIT)
For CIT purposes, are deductibles the provisions made by the companies belonging to the extractive industries or of removal and treatment residuals, which are booked to cover remedying expenses of environmental damages on the assigned locals of exploration, whenever this is required under applicable law.
With the law of Green Taxation, is extended to all sectors of activity, the possibility of being accepted for tax purposes the provisions established to meet the repair costs of environmental damages in the same terms in what was already permitted for the extractive industries sector and for the residuals treatment sector.
The annual allocation of this provision which is tax deductible, corresponds to the value that results from dividing the estimated charges of repair environmental damage by the number of estimated years referred to natural resources exploration.
• Urban properties subject to rehabilitation (IMI and IMT)
With the law of Green Taxation is extended from two to three years, the period of exemption from Municipal Property Tax (IMI) granted to urban properties rehabilitation. It is also extended the concept of urban rehabilitation, which actually includes an additional requirement related to the property energy rating.
For this purpose, the concept of urban rehabilitation comprises the execution of construction, reconstruction, alteration, extension, demolition and maintenance of properties, with the aim of improving their conditions of use, preserving its fundamental nature, as well as the set of urbanization works to recover historical areas and urban restructuring of critical zones.
For Municipal Property Transfer Tax (IMT) exemption purposes, was also extended from two to three years, the deadline to start the rehabilitation of these works on properties. So, are exempt from IMT the acquisition of real estate destined for urban rehabilitation, provided that, within three years from the date of purchase, the customer start the respective works.
• Urban properties for the purpose of energy production from renewable sources (IMI)
With the law of Green Taxation is granted an additional tax benefit for IMI purposes, to urban properties used for energy production from renewable sources. Therefore, the urban properties exclusively affects to the production of energy from renewable sources shall benefit from a reduction of 50% of the IMI rate.
The rate reduction begins at the year when the property is allocated to the energy production, inclusively, being applicable for a period of five years. This exemption should be recognized by the Tax Office where the building is located, upon request to submit within 60 days as of the verification of the fact that determining the exemption, that is, the start of energy production.