YOUR money

RICARDO CHAVES IS HERE TO HELP PEOPLE UNDERSTAND AND DEAL WITH WHAT IS ALLOWABLE –AND NOT – WHEN IT COMES TO PERSONAL AND BUSINESS FINANCIAL MATTERS. THIS MONTH HE ANSWERS QUESTIONS ABOUT DEALING WITH UNPAID INVOICES, CLAIMING BACK OVER PAYMENTS AND DONATING MONEY TO CHARITY

I am having problems getting invoices settled by a client (ex-client now), which is making my tax commitment here extremely worrying. What is the best way to deal with this?

You must be firm with your clients and tell them you will charge interest for late payments. When clients owe you money, sometimes a letter from a solicitor motivates the client to make the payment quicker.

If the debt from this ex-client is less than €15,000, your solicitor should be able to start a court injunction, which is usually quick and, without any trial, will allow you to collect the debt through an enforcement agent.

Regarding the VAT, there is a Cash VAT regime that makes it possible to pay the VAT only after receipt of invoices issued to customers. This means that companies who adhere to this regime can postpone the payment of VAT until it is made by the customer (or after one year, in case the customer does not pay).

Adhering to the VAT Cash Regime is optional and requires allowing access to your bank account (lifting bank secrecy). Very few businesses in Portugal use the Cash VAT Regime.

A local man quoted on doing some works in my house last year. I agreed to pay him €3,000 upfront to cover the cost of materials he said he needed to buy. There was nothing in writing. He finished the job (spread out over months) and has now demanded a further €6,000 – again nothing in writing.

I have called in two other companies who have estimated around €5,000 in total for the work he did. When I told him that, he got very irate, which makes me nervous. I know I handled this badly with nothing in writing but can I charge the money I have spent to my taxes, without a receipt or a written quote?

It is advisable to always ask for a written quote detailing the work to do, the price, the time frame, and the payment terms, amongst other conditions.

When signed by the client and the supplier, a written quote could be considered a contract. The fact that there was no written quote makes the situation unclear. It’s advisable to seek legal advice in these circumstances.

The fact that no invoice was issued makes it impossible to use this payment in your taxes. When you are making any property refurbishments, please be aware that you need a legal invoice that includes your NIF, the property’s address and the work done. Only with this in place will the cost be deductible from your capital gains tax.

I had read a few articles in AlgarvePLUS from charities looking for funding. How does this work, tax-wise, and is it the same if I donate to someone taking part in charity fund-raising event through Just Giving? Is there any particular paper work I should be aware of?

In the case of company donations, these are considered deductible expenses for the respective financial year. Depending on the entity that receives the donation, the company may deduct up to 140% as a cost but is limited to 8/1000 of the yearly turnover.

As far as individuals who decide to make donations, these are also deductible on their IRS (Personal Income Tax). The tax deduction is usually 25% of the amount given, with a cap of 15% of that year’s taxable amount.

The donation may be paid in cash or through any other app, such as Just Giving. But please make sure that the Charity is registered and issues a Donation Receipt with the following data: Name, NIF, and address of the entity or person that donated and the donation amount made. It is also required that this receipt includes all the details of the Charity.

Are speeding and parking fines chargeable to my business? Also, it would be interesting to know if others are getting repeated speeding notices, always in the same place.

In Portugal, fines and other charges issued due to infractions of any nature that do not have a contractual origin are not accepted as tax deductible expenses.