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Providing More Proof? Companies reporting losses are targeted

Therefore, according to decree-order no. 111-A/2011, dated 18 March 2011, the deductibility of tax losses assessed in previous years will require a certification from a Statutory Auditor (SA) whenever tax losses have been claimed as deductions in the previous two tax years. Only companies that are micro-entities and whose tax losses assessed in the previous two years are less than EUR 150,000 are exempt from this certification. For this specific purpose, micro-entities are companies that meet two of the three following criteria:
? a balance sheet total of not more than EUR 500,000;
? a net turnover of not more than EUR 500,000;
? not more than an average of 5 employees during the financial year.
The company in need of an SA in accordance with this decree will have to inform the Institute of the Statutory Auditors which will appoint an SA to be responsible for certifying the financial statements for the tax period in question and to attest to the reasonableness of the accumulated tax losses. Should the SA come to the conclusion that such accumulated losses are unreasonable, tax authorities may correct previous tax returns. The main purpose of this law is obviously to make fraud less appealing. Nonetheless, for those companies that are really facing economic and financial crisis it will also cost them more to prove it, as SA?s fees in Portugal are usually quite high. In a way, the law is putting an extra burden on the innocent in order to find the guilty.
Author: Fátima Gouveia, Ecovis Comark, Lda. Oporto, Porto, Portugal
www.ecovis.com

Ecovis is a leading global consulting firm with its origins in Continental Europe. It has over 3,300 staff operating in 30 countries. Its consulting focus and core competencies lie in the areas of tax consultation, auditing, legal advice and accounting and management consulting services. The particular strength of Ecovis is the combination of personal advice at a local level with the general expertise of an international and interdisciplinary network of professionals. Every Ecovis office can rely on qualified specialists in its back offices as well as on the specific industrial or national know-how of all the Ecovis experts worldwide. This diversified expertise provides clients with effective support, especially in the fields of international transactions and investments – from preparation in the client-s native country to support in the target country. In its consulting work Ecovis concentrates mainly on mid-sized firms. Both nationally and internationally, its one-stop-shop concept ensures all-round support in legal, fiscal, managerial and administrative issues. The name Ecovis, a combination of the terms economy and vision, expresses both its international character and its focus on the future and growth.
www.ecovis.com