VAT

Question 1

Single stage taxes

Answer 1

levied on one stage of the production/distribution process (no cascade effect)

Question 2

Multi stage taxes

Answer 2

levied on the actual value of the output at each stage of the production process (some have cascade effect; VAT do not)

Question 3

What can VAT operate through

Answer 3

• direct substractive method
• direct additive method
• indirect subtractive method
• indirect additive method

Question 4

Fórmula for tax to be paid

Answer 4

tax to be paid = tax on sales - tax on purchases

Question 5

Main types of VAT systems

Answer 5

• credit invoice method
• substraction method
• addition method

Question 6

Which VAT system is most common

Answer 6

credit invoice method

Question 7

What is output VAT?

Answer 7

tax charged on sales by a taxable person

Question 8

What is input VAT?

Answer 8

tax incurred on purchases used for taxable supplies

Question 9

how is VAT payable calculated=?

Answer 9

VAT payable = Output VAT - Input VAT

Question 10

When does a VAT refund occur?

Answer 10

when input VAT exceeds output VAT

Question 11

Who must register for VAT?

Answer 11

Businesses whose turnover exceeds the registration threshold

Question 12

What is the effect of VAT registration

Answer 12

the business becomes a taxable person and must charge VAT on supplies

Question 13

What is the difference between mandatory and voluntary registration?

Answer 13

Mandatory is required when the threshold is met, voluntary is chosen below the threshold

Question 14

What are taxable supplies

Answer 14

supplies on which VAT is charged (standard-rated, reduced-rated, and zero-rated)

Question 15

What are exempt supplies

Answer 15

Supplies in which no VAT is charged and input tax cannot be recovered

Question 16

Can VAT be recovered from exempt supplies

Answer 16

NO

Question 17

Why is the place of supply importnat?

Answer 17

It determines which country’s VAT rules apply

Question 18

What is the general rule for the place of supply for goods?

Answer 18

the place where goods are located at the time of supply

Question 19

What is the general rule for the place of supply for services

Answer 19

usually its where the supplier or customer is established depending on the rule applied

Question 20

What is a VAT invoice

Answer 20

document that shows the VAT charged on supply

Question 21

What must a VAT invoice include

Answer 21

Supplier details, VAT number, customer details, description, amount, VAT rate, and VAT amount

Question 22

Why is keeping VAT records important?

Answer 22

to support VAT returns and audits

Question 23

what is a VAT return?

Answer 23

a periodic report to the tax authority showing output VAT and input VAT

Question 24

When are VAT returns usually due

Answer 24

monthly or quarterly, depending on the law

Question 25

What happens if VAT is not paid on time

Answer 25

penalties and interest may be applied

Question 26

What is the VAT treatment of exports?

Answer 26

Typically zero-rated

Question 27

What is VAT treatment of imports?

Answer 27

VAT is usually payable at the border, treated as input VAT if the importer is registered

Question 28

What is a cascade effect in taxation

Answer 28

when tax is charged on tax due to multiple taxation layers without deduction of prior tax

Question 29

Does VAT have a cascade effect?

Answer 29

NO, it avoids it by allowing input tax deduction

Question 31

What is the indirect substractive method?

Answer 31

VAT= output - input (used in EU)

Question 32

What is the direct substractive method?

Answer 32

tax is applied directly to the difference between outputs and inputs without invoices

Question 33

What is the additive method?

Answer 33

Tax is calculated by applying a rate to the sum of wages and profits

Question 34

What does VAT neutrality mean?

Answer 34

VAT should not distort business decisions or competition domestically or across borders

Question 35

why was neutrality important in the EEC’s VAT choice

Answer 35

to ensure fair trade and tax consistency between member states

Question 36

What types of transactions are taxable under VAT code art.1

Answer 36

supplies of goods, supply of services, imports, and intra community acquisitions

Question 37

What principle governs the international commerce under VAT

Answer 37

the destination principle: tax is due where goods/services are consumed

Question 38

Who is considered a VAT taxable person

Answer 38

anyone independently carrying out economic activity, even one taxable transaction

Question 39

Are public bodies taxable?

Answer 39

No, unless their non-taxation would distort competition or they engage in certain commercial activities

Question 40

Name activities where public entities are taxable under VAT

Answer 40

telecom, water/gas/electricity distribution, transport, broadcasting, fairs, storage, etc.

Question 41

What qualifies as a supply of goods under VAT

Answer 41

transfer of tangible property for consideration, including electrics, gas and heat

Question 42

What are specific scenarios considered supply of goods

Answer 42

Permanent personal use of company goods, consignment not returned, transferred between sectors

Question 43

Where is VAT due for goods dispatched in Portugal

Answer 43

in portugal, where transport to the customer begins

Question 44

How is VAT handled for Azores and Madeira

Answer 44

tax is applied based on local jurisdiction rates if goods are made available there

Question 45

How is B2B service VAT determined

Answer 45

taxed where the customer is located (destination principle)

Question 46

How is B2C services VAT determined?

Answer 46

taxed where the supplied is located (origin principle)

Question 47

What are some exceptions to place of supply for services?

Answer 47

real estate services, event admissions, food/beverage onboard transport, short-term vehicle rentals

Question 48

VAT exceptions for transport services

Answer 48

passenger transport is taxed for distance traveled in Portugal

Question 49

VAT rates for mainland Portugal?

Answer 49

Standard: 23%, intermediate: 13% reduced: 6%

Question 50

What is the complete exemption

Answer 50

Transactions exempt from VAT but still allow input VAT recovery (i.e exports)

Question 51

What is an incomplete exemption?

Answer 51

Transactions exempt from VAT with no right to deduct input VAT (medical services, rent)

Question 52

Can VAT be deducted for private vehicle expenses?

Answer 52

No, unless vehicles are exclusively for commercial use like public transport or agriculture

Question 53

Can VAT on fuel be deducted?

Answer 53

partially deductible (50%) or fully deductible for heavy vehicle or tractors used commercially

Question 54

When must an invoice be issued?

Answer 54

by the 5th working day after tax is due, or the 15th of the next month for intra-EU services