An internal message, signed on June 1 by the Secretary of State for Tax Affairs, Nuno Félix, and to which Dinheiro Vivo had access, instructed the services of the Tributary Authority (AT) to update the formula for calculating income support intended for tenants with an annual income of a maximum of 38,632 euros, referring to 2021, and with an effort rate equal to or greater than 35%, modifying the criteria determined by law. For example, benefits will be substantially reduced and some people will not have access to the subsidy. Everything to avoid a hole of one billion euros in the state budget, since the estimated cost of the measure is 240 million euros minus 760 million, the DV found. The tax specialist Luís Leon, co-founder of the consulting firm Ilya, revealed to DN/DV that “the internal standard is illegal because it cannot override the law”.
The government misjudged the impact of the aid and when it realized it would cost much more than expected, it decided to change the rules of the game, as DN/Dinheiro Vivo knows. The resolution of the ministry, overseen by Fernando Medina, which is not public, asks the Treasury to take into account gross income and those subject to special allowances, such as alimony or those related to rent, to determine the value of the subsidy , contrary to Decree-Law No. 20-B/2023 of March 22, which creates the measure – and which dictates that “income for determining the rate determined by the AT in the settlement of the IRS” should be considered. According to Luís Leon, this designation is “the taxable amount, already after certain deductions”, normally 4104 euros.
different readings
But the understanding of Finance is different. “The law in question resorts to a concept of annual income without an express legal definition with correspondence in the tax code and, consequently, with regard to the monthly income of the household,” reads the internal rule sent by the Secretary of State to the AT. .
The inspector disagrees, emphasizing that “the annual income for determining the IRS rate is the taxable amount, net of certain deductions plus exempt income, such as IRS Jovem,” so “the order goes against what the decision says “law”. By the way, in every IRS statement, field 9 is related to income for determining the rate and that is collection and not gross income.
Changing the formula significantly reduces the potential aid that should reach the bank accounts of eligible families, and may even create situations of exclusion from the measure, as the envisaged benefits are much higher than what is set by law.
Complaints from families
Dinheiro Vivo has received dozens of complaints from families who show they meet all the criteria, but then find themselves receiving less monthly support than they should have received. To give an example, a divorced mother with two dependent daughters had a taxable income of $6,951.65 per year in 2021 or $496.54 over 14 months, according to the IRS statement, and pays an income of $464, 88 euros per month, which corresponds to an effort percentage of 93.6%.
After all, to reduce that percentage to 35%, this single-parent family would have to be entitled to the maximum monthly subsidy of 200 euros. But instead, Social Security paid him support of only $44.88, minus $155.12 per month, because the equation took into account his gross income of $11,200.01 per year, which was incorrectly plus alimony. of EUR 5 600, as it was not included in the income, taxed separately. The total is 16,800.01 euros gross per year or 1200 euros/month and an effort percentage of 38.74%. The aid allocated is therefore only EUR 44.88 per month.
arguments
For the government, however, it is about fiscal justice. “In order to ensure equal treatment of different types of income, the aid was calculated on the basis of taxable income, to which was added: 1) the corresponding specific deduction, 2) the income taken into account for the determination of the applicable general IRS rate, and 3) the income considered for the application of special rates,” according to clarifications from the Departments of Housing, Finance and Labor. In practice, the government assumes that gross income is taken into account, but also special taxes such as alimony and income from work.
“The purpose of this support is to provide rents at prices compatible with family income and to help cope with the economic impacts with a direct impact on family income and access to housing. The calculation of the support is thus , under legal conditions, conducted on the basis of income calculated in IRS statements for the last available tax period (2021) or, alternatively, on income from the Social Security system,” the three guardianships responsible for the support clarify, adding that ” The purpose of the diploma is that the most up-to-date information on current income is effectively considered”. Once the IRS campaign ends, on the 30th of this month, referring to 2022 earnings, the executive will update the support based on the most recent income.
Effort percentage above 100%
For families with an effort rate greater than 100%, the government has decided to postpone the payment of the subsidy to see whether, with the income of 2022, that percentage remains. “When the income data sent by the AT and Social Security or IHRU is inconsistent with the data in the leases, which show effort rates greater than 100%, the payment of aid should depend on the verification of that effort rate, at condition that right against the declared income for the period of 2022, in the IRS returns delivered in 2023,” the three guardianships revealed.
Government sends letter to those affected
Of the approximately 185,000 families or 200,000 persons eligible for income support, ‘some 36,000 have to update their IBAN with Social Security Direct (the amount will be transferred in the payment after the update) and about 20,000 have a lower benefit. up to 20 euros, which means that it may not have been processed yet,” said the balance sheet of the three ministries. “All covered persons will receive a letter from the AT with the information that determined the amount to be paid, with the identification of the email ([email protected]) to which they can send any remaining questions”, informing them as well.
Source: DN
