Difference between Receipt and Settlement Note

Receipt and Settlement Note. Two terms that are related. But do you really know what sets them apart?

The Finance Portal

If a while ago, you had to leave the comfort of your home in order to go to the Finance services to consult and deal with tax processes... with the advancement of technology, and with the creation of the Finance Portal, this nightmare came to an end!

Thanks to the creation of the Finance Portal, all your tax charges are now much more simplified, and just a click away! A portal that brings together more than 700 online services, and that saves time and money for all citizens who need to deal with tax matters related to their assets and their taxes.

What are the main features of the Finance Portal?
It is on the Finance Portal that you can resolve and consult the most diverse processes, such as:

• IRS returns;
• Single Circulation Tax (IUC);
• Municipal Property Tax (IMI);
• Electronic Income Receipts.
• Through the Finance Portal, your receipts and your tax status can be consulted in the comfort of your home. This way, you have more control over your tax information and your missing payments, for example.

Do you own a leased property? It is on the Finance Portal that you can register your lease contracts and issue rent receipts for your owners. Want to start working on your own? Do you already? On the Finance Portal, green receipts are issued simply without having to go to a tax office. Have you seen how it is more practical?

However, the reason that most Portuguese use the Finance Portal is, without a doubt, the treatment of issues related to the IRS. Whether to consult the settlement notes, refunds or to deliver the declaration itself.

Receipt and Settlement Note: what are the main differences?

We are going to try to clear up some doubts related to this type of tax matters that, at times, may seem complex to you. Do you know what a receipt is? A settlement note? And an IRS settlement note?

From a commercial point of view, both the Receipt and the Settlement Note are proof of payment. They are two identical documents, but with different purposes!

The Receipt is valid for tax purposes and serves as proof of sale, while the Settlement Note has no validity and only represents value adjustments. However, there are some differences between the two! Know what sets them apart.

What is a Receipt?

Receipts are proof of payment that are valid for tax purposes. It is the document capable of proving that you received or paid the value of the products/services sold. For the customer, among other things, it also serves as proof of payment.

The constituent parts of a Receipt

In the business context, the receipt must consist of:

• Transaction date;
• Name, address and TIN of the merchant;
• Customer data (if requested), such as NIF, address and name, so that receipts can be synchronized on the finance portal;
• Detailed listing of products sold (price, tax and no fee, quantities and total);
• What is a Settlement Note?
• It is a document very similar to the receipt, however, it has no accounting value. The settlement note is useful to settle balances or settle accounts, in case there has been a mistake in the accounts with a certain customer, for example. As it has no accounting value, it will not be sent in the SAFT file to the Tax Authority.

Similar to the receipt, and despite the difference between the two, the constituent parts of the settlement notes are the same: transaction date, name, address and VAT number of the merchant, customer data, and detailed listing of the products sold.

However, perhaps the term “Settlement Note” is more familiar to you than you think. If you join the IRS, the answer is right!

What is the IRS Settlement Note?

It is through the IRS Settlement Note that you can, between extensive calculations and lists of values, check the accounts that the Tax and Customs Authority made, in order to determine the amount of IRS that you will pay/receive.

As mentioned above, the IRS settlement note can be consulted on the Finance Portal but, as a rule, it is sent to the taxpayer by mail.

How You Can Get Your IRS Settlement Note Certificate

If you need to obtain your certificate of the IRS settlement note on the Finance Portal, you will need to:

• Access the Finance Portal;
• Authenticate with your access data;
• On the left side of the page, click on “All Services”;
• A list will appear, in which you should search for “Documents” and then click on “Request Certificate”;
• In the white space presented, you should look for and select the option “IRS settlement”;

• Then, choose the corresponding year in the blank field;
  When the “Request for IRS Settlement Certification” option appears, click on the “Get” button.

After following all these steps, a document will be generated in a new tab of your browser, and you will be able to consult it or download a copy.

If you have already followed the steps mentioned above, Portal das Finanças will already have an active certificate. You will not be able to request one again, but you will be able to consult the existing Certificate, without any problems.

How to read your IRS Settlement Note?

At the moment you receive your IRS Settlement Note, we know that the information presented in it may not be the clearest at first sight. But let's give some help so that you can demystify some of the parts contained therein.

Here is some of the much information you can find in the document:

• Global Income: total income earned by the taxpayer;
• Specific Deductions: amount taken from the global amount;
• Recoverable Losses: amounts that can be recovered from the following year's IRS, when there are more expenses than income, for example;
• Collectable Income: income that determines the level and tax rate to be applied:
• Family Quotient: division of income according to the number of taxpayers to be declared, depending on the marital status and the option of having (or not) a joint declaration;
• Total Collection: amount that the taxpayer would pay if, during the previous year, the withholding tax had not been made;
• Collection Deductions: value of expenses assessed by Finance (general expenses, education…) subtracted from the total amount payable;
• Addition to collection: in case the taxpayer moves amounts in investments with tax benefits before the scheduled date, being subject to penalty;
• Net Collection: amount payable from IRS, after all deductions have been made;
• Withholding taxes: amounts withheld from the issuance of an income;
• Amount to be refunded or payable: amount that the taxpayer will receive, or pay if there is any missing tax.

If you want to know more about reading your personal income tax notice, you can do so on the website of the Portuguese Association for Consumer Protection (DECO). You can find more information here, in order to find out how you can decode each of the installments presented in your IRS Settlement Note.

Electronic Receipt of Rent: what is it? What is it for?

Did you know that, with few exceptions, landlords who tax their income under IRS category F are required to issue electronic income receipts? Is it your case?

Landlords who receive more than €877.62 per year in rent (twice the reference value of the Social Support Index), or €73.14 per month, are required to issue electronic rent receipts for the amounts on the finance portal received.

However, it can only issue rent receipts if the lease contract has been previously communicated to the Finance Department, since the rent receipt is automatically generated from the moment it is registered in the Finance Portal. Receipts will be available for you to issue after completing the pre-filled form that will be presented to you.

But there are exceptions:

If the landlord is over 65 years of age, he can submit a tax return by January of the following year;

• Those who receive less than the €877.62 referred to above;
• If covered by the Rural Lease Regime.
• And if the tenant does not pay the rent, am I obliged to issue the rent receipt on the Portal das Finanças?
• The income receipt represents proof of payment, therefore, it is only necessary to submit to the Finance Portal the receipts that effectively register the receipt of the agreed amount.

How to issue an income receipt on the Finance Portal?

If you don't know how you can issue an income receipt through the Portal das Finanças, know that it doesn't take more than 2 minutes!

To do so, you must first register the lease, if you have not done so already. It's very simple:

• Access the Finance Portal

Access the Finance Portal with your access data. In the top menu, go to the "Citizens" area and then click on "Lease" and then on the option "Communicate Contract Start".

• Identify the contract

To continue issuing your rent receipt, you will need to identify the type of contract in force by entering the following elements:

• Characterization of the Contract;
• Type of Contract (lease, sub-lease…);
• Purpose of the Contract (permanent, non-permanent housing contract…);
• Contract start and end date;
• NIF of lessors (landlord);
• TIN of tenants (tenants);
• Frequency of income;
• Value of expenses, namely the value of the condominium;

• Submit the Contract

After completing the steps described above, you can submit the contract. After submission, you will be asked to pay the amount referring to the Stamp Duty, which corresponds to 10% of the rent, and which must be done by the end of the month following the beginning of the lease.

After having submitted the contract, you can issue monthly income receipts on the Finance Portal in an equally simple way:

• Access the Finance Portal, entering your access credentials;
• To be directed directly to the Lease section, you can search for "Lease" in the search bar.
• Next, look for the option “Issue income receipt”;
• From the list presented, select the contract for which you want to issue the receipt;
• Finally, all you have to do is complete the pre-filled form that you will need to validate in order to finally have your issued income receipt on the Portal das Finanças.
• Green Receipts: let's talk about them!

Are you self-employed and are you in the habit of issuing green receipts? Do you know, in theory, what these represent?

Green receipts state that a worker received an amount for a particular service he performed. The most practical way to issue green receipts is, without a doubt, through the Finance Portal. Receipts that are essential if you work independently and want to issue an invoice to your client.

It should be noted that, in order to be able to do so, self-employed workers will be required to open activities in Finance. Your receipts can be issued on the Finance Portal. If you are self-employed, know that you should also have some notion of VAT and IRS regimes so that you can act and proceed correctly.

How to issue a Green Receipt?

Through the Finance Portal, green receipts can be issued in a very simple and intuitive way!

After logging into the Finance Portal, just follow the steps below:

• In the left-hand menu, click on “All Services”;
• Scroll down until you find the option “Green Receipts”, and then click on “Issuing”.
• You will have to choose between “Invoice or Invoice-Receipt” or just “receipt”;
• You must select “Invoice or Invoice-Receipt”.
• A filling form will appear where you will have to put all the information regarding the invoice (Dates, TIN, values ​​of the service provided, etc.);
• Among the information that requires more knowledge, you will only have to choose the VAT regime, the Income Tax Base and the IRS withholding tax.
• Finally, just click “issue” and the receipt is complete!

In short…

You have already managed to realize that, in a concrete way, what distinguishes the receipt from the settlement note is the tax validity. However, both have their importance in different moments of business transactions.