The Portuguese Tax System for Non-profit Institutions

This chapter explains the Portuguese tax system for the Non-Profit Institutions (NPI or in Portuguese, ESNL), with an emphasis on the Private Institutions of Social Solidarity (PISS or, in Portuguese, IPSS). By comparing the legislation over time and space, the authors find that the current legislation of several Portuguese tax codes is fragmented and that, besides a few individual legislations, no tax regime concentrates on the various regiments, benefits and tax exemptions. A revision of the legal instruments governing the tax regime of the NPI/PISS in Portugal is carried out. These institutions assume various positions in the periodic tax relations within the Tax Administration, as taxpayers of income, wealth and consumption, as well as lenders of taxes and fees. The results show that NPI/PISS have a specific tax system and that their ability to pay tax depends on their social purpose and their public interest. Most institutions have fundraising drives or operate business activities, or both, in order to generate income to carry out their philanthropic activities. The area of NPI/PISS is complex due to the law and legislation. Although with the accurate theoretical framework, this study is not sufficient to provide an empirical evidence of the NPI/PISS tax system in Portugal. The chapter focus on the literature concerning the systematization of the tax system for the NPI/PISS in Portugal, and how these institutions can be proactive in their relationship with the Tax Administration. Thus, the present chapter aims to provide an understanding of the Portuguese tax system for the NPI/PISS, which will helpfully provide the international academic researchers and the professionals with a reference study in order to help them making more informed tax decisions.