General Resolution No. 4622/2019 was published in the Official Gazette on October 30, 2019, creating new VAT and Income Tax withholding regimes (the "Regimes") applicable to parties that manage electronic payment and collection on behalf of third parties services, including through the use of mobile devices and/or any other electronic devices, including virtual ones.
The Regimes will be applicable to liquidations made to merchants and provider of services for the use of such payment systems.
I. Entrance into force
The Resolution will enter into force on October 30, 2019, and will be applicable with respect to payment liquidations made as of November 19, 2019.
Merchants and providers of services are subject to these withholdings, assuming that:
a. they are VAT registered.
b. they do not demonstrate their registered, exempted or out of VAT scope condition, or that they are under the Simplified Regime for Small Taxpayers.
Income tax withholding will be applicable as long as the profits of merchant or providers of services are not exempted or out of the scope of such tax.
III. Applicable withholding rate
a. In the case of VAT, the applicable withholding rate will be:
- 0.5 for VAT registered taxpayers.
- 1% when the payment is made with a credit and/or purchase card, and the taxpayer is included within Annex I of General Resolution No. 2854 (as amended), and petrol stations and retail points of sale, authorized to work as such; if not the applicable withholding rate will be 3%
- 10.5% for taxpayers not registered for VAT purposes.
b. In the case of Income Tax, the applicable withholding rate will be:
- 0.5% for VAT registered taxpayers.
- 1% when payments are made using a credit and/or purchase card.
- 2% for taxpayers that are not registered or without the scope of VAT.
IV. Mechanisms for reporting and remission of withholdings
The reporting and remission of the withheld amounts will have to be made using the procedure established by the SICORE. Withholdings will have to be made upon the payment of the liquidations corresponding to the users of such systems.