Sewerage services. Ombudsman recommends equality in the application of VAT to the Tax Authority

The Ombudsman has made a recommendation to the Tax and Customs Authority (AT), urging it to review its current interpretation of Article 2(2) of the Value Added Tax (VAT) Code, with regard to the provision of wastewater sanitation services. According to the AT’s position, VAT is not levied on the provision of these services by public entities, unlike if they are provided by private concessionaires, in which case VAT is 6 per cent.

The Ombudsman considers that this interpretation is inconsistent with the legal system and creates unjustified inequalities between consumers. She therefore recommends that the AT abandon this interpretation, which lacks a substantial basis in justice and is inadequate in the face of the imperatives of good administration.

Among other things, the Ombudsman emphasises in the recommendation that, in the light of European Union and Portuguese law, the provision of sanitation services by public entities does not constitute the exercise of powers of authority, contrary to the AT’s interpretation.

To read the full Recommendation click here [in Portuguese only].