Variable participation in PIT
Variable participation in the PIT is defined in point c) of article 25 of Law No. 73/2013, of September 3 (financial regime of local authorities and intermunicipal entities), by which municipalities are entitled, in each year, to a variable participation of up to 5% in the IRS of taxable persons with tax domicile in the respective territorial district, relative to income of the immediately preceding year.
VAT Gap
The VAT gap refers to the difference between the expected VAT revenue and the amount actually collected by the Government. It reflects, not only tax evasion, but also, tax optimization, company insolvencies, recovery of VAT debts, and other factors related to the challenges of calculating expected VAT.
VAT municipal participation
The municipal VAT participation introduced in 2020 through the addition of paragraph d) of article 25 of Law no. 73/2013, of 3 September, by Law no. 51/2018, of 16 August, entitles municipalities , each year, to 7.5% of the VAT revenue collected in the accommodation, catering, communications, electricity, water and gas sectors.
Vertical equity (taxation)
Vertical equity is a principle in taxation stating that taxpayers in different situations (e.g., income or wealth) must be treated differently by the tax law. According to this principle, taxpayers with a higher level of income or wealth must bear higher tax rates than those in a less favourable situation.