“There should be no VAT on legal fees” say Portugal’s lawyers

Portugal’s lawyers are seeking equality with political parties which shortly are to be exempted from VAT payments in new legislation currently under consideration by President Marcelo Rebelo da Sousa.

António Jaime Martins, President of the Lisbon Regional Council of the Portuguese Bar Association, says that, in addition to political parties, there are others that deserve “such VAT exemption by the State” – such as lawyers.

António Jaime Martins wrote an open letter explaining that political parties already benefit from a wide range of tax exemptions, including VAT, and argued that legal services also should be exempted.

The right of a citizen to have access to the courts, “implies the right to information and legal consultation, as well as the right to judicial decisions,” as provided for in the Constitution, argues Martins, adding that this right is thwarted due to the cost of justice when VAT is added.

Regarding court costs, which went up under the austerity period thus penalizing poorer citizens, António Jaime Martins said the situation is “all the more glaring” in divorce cases where parental responsibilities and the assignment of the family home are being argued over, adding VAT reduces the amounts left to distribute.

Martins warned of a similar problem in unfair dismissal cases where public entities do not have to pay VAT on legal fees and the sacked worker does.

The lawyer points out that the right to information and legal advice is “severely curtailed” by the application of VAT at 23% in various situations, including administrative and tax actions where the individual is defending their rights when accused by the State and other public bodies.

António Jaime Martins says citizens should not be required to pay VAT on justice as if they were buying a consumer item, “Justice is, like health, a fundamental and essential commodity and not a consumer good whose acquisition should be taxed with VAT.”

The decree law approving the amendment to the Law on the Financing of Political Parties and Electoral Campaigns was approved by the Assembly of the Republic on 21 December in a vote, with opposition from CDS-PP and PAN. It is now in front of the President for his decision.

Until now, parties could request VAT refunds on activities directly related to advertising.

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