Ombudsman applauds change to previous years income tax regime

The Ombudsman, Maria Lúcia Amaral, welcomes the change in the income tax regime from previous years. The amendment to article 74 of the IRS Code, enshrined in Law No. 119/2019, published this week in Diário da República, is in line with what has been claimed by the Ombudsman for over a decade.

Since 2005, this state body has received more than 150 complaints – 31 of which this year – from taxpayers who, without their fault, faced years of late payment of allowances or pensions and were then doubly penalized with aggravated taxation and even with loss of social benefits (eg exemption from moderating fees).

The regime still in force – which will remain as an option only – will apply to past income and those of the year itself the tax rate in force at the time of payment.

Although the most perverse effects of this regime were mitigated after a first recommendation, in 2008 it continued to produce situations of profound and incomprehensible fiscal injustice.

The most recent recommendation for legislative amendment was sent in October 2018 by the Ombudsman to the Minister of Finance, and its implementation was deemed untimely.

Law 119/2019, which will come into force on October 1, creates conditions that will allow us to correct situations of fiscal injustice. At the parliamentary initiative, the new wording states that taxpayers may charge income to the previous years to which they actually relate, with the limit of the fifth year immediately preceding the payment or making available to income.