The Accounting Standardization System for Public Administrations – SNC-AP – is the accounting model to which all entities with public participation must ensure compliance.

In 2015, the foundations for the Public Accounting Reform were laid through Decree-Law No. 192/2015, which established an Accounting Standardization System for Public Administrations – the SNC-AP.

This standardization of the accounting model and financial reporting for public entities, based on the International Public Sector Accounting Standards (IPSAS), implies a profound transformation in the accounting processes of public entities. They will abandon the accounting systems used until then and adopt a common system for all entities, regardless of their subsector of operation: the SNC-AP.

What is SNC-AP?

Single accounting framework for all Public Administrations

The Accounting Standardization System for Public Administrations (SNC-AP) establishes a set of 27 Public Accounting Standards (NCP) applicable to Public Administrations.

The SNC-AP put an end to the POCP and sectoral plans.

This decree, prepared by the Accounting Standardization Committee, establishes the foundations for the reform of Public Finances, alongside other subsequently approved legal instruments, as it repeals the Official Plan of Public Accounting (POCP) and its respective sectoral plans:

• Official Accounting Plan for the Ministry of Health | POCMS
• Official Public Accounting Plan for the Education Sector | POC-Education
• Official Accounting Plan for Local Authorities | POCAL
• Official Accounting Plan for Public Institutions in the Solidarity and Social Security System | POCISSSS

Harmonization with international public accounting standards

The SNC-AP is aligned with the international public accounting standards issued by the International Public Sector Accounting Standards Board (IPSASB), as well as with the accounting standards used by the European Commission.

4 key points of SNC-AP to remember:

1. The SNC-AP includes subsystems of budgetary accounting, financial accounting, and management accounting.
2. Set of 27 Public Accounting Standards.
3. Detailed Chart of Accounts for budget reporting, financial reporting, and statistical reporting.
4. Harmonized templates for presenting financial statements and budget reporting.

Why this change?

Embracing all entities of Public Administrations within a unified accounting framework is a crucial step towards transparency in the management of public funds and a decisive milestone towards achieving the long-awaited presentation of consolidated financial statements of the State.

The absence of financial information or, on the other hand, the presence of inappropriate, insufficient, or even incomparable financial information inevitably led to an unrealistic view and a lack of true performance control of these entities.

The implementation of a standardized accounting system aimed precisely to promote harmonization of public accounting models across all entities, leading to transparency and comparability of results universally.

What changed with the SNC-AP regulations?

With the entry into force of the SNC-AP, the accounting practices of these entities are guided by a set of 27 Public Accounting Standards that introduce new concepts and govern public accounting practices.

Here are some of the changes:

• Implementation of a single accounting framework in Public Administration, harmonizing accounting practices.
• Significant improvement in the quality of budgetary and financial information.
• The State becomes the Reporting Entity, responsible for reporting individual and consolidated budgetary and financial statements.
• Increased production of budgetary and financial performance indicators based on management accounting.
• Simplified procedures and enhanced reliability in the consolidation of accounts.

Public Accounting Standards

The Public Accounting Standards, developed based on the International Public Sector Accounting Standards (IPSAS), establish new rules for the accounting treatment of the following areas:

Reporting

New model and content for presenting financial, budgetary, and management reporting.

Non-current assets

Standards related to non-current assets, such as tangible and intangible assets, leases, investment properties, and impairment of cash-generating assets.

Transactions

Standards related to typical transactions of public entities, such as inventories, revenue from exchange transactions (sales, etc.), financial instruments, provisions, and employee benefits.

Consolidation of controlled entities

Standards related to the consolidation of controlled entities, investments in associates, and other investments.

Assets

Standards regarding historical heritage, assets of the public domain and infrastructure, concessions (from the grantor’s perspective), revenue without consideration, and impairment of non-cash generating assets.

Financial statements

Model of financial statements and budgetary reporting aimed at harmonizing procedures and future consolidation of public accounts.

Law No. 56/2023, dated October 6, introduced several changes regarding the Municipal Tax on Onerous Property Transfers (IMT), among which we highlight the exemption from this tax for properties purchased for resale when the buyer is engaged in the business of buying for resale.

To benefit from the IMT exemption on the purchase of properties for resale, the property must be resold within one year (previously three years). If the properties acquired for resale are put to a different use or are not resold within the one-year period, or if they are resold again for the purpose of resale, the IMT exemption is forfeited.

The Tax Authority has now clarified, through binding information related to Cases No. 25744, 25651, and 25694, that this change in the deadline represents a significant modification in one of the essential assumptions of the regime for purchasing properties for resale, significantly limiting it. Therefore, it constitutes a substantive rule of a material nature. Since substantive rules that imply changes in the regime have an innovative character, determining that their scope of application applies to situations arising after their entry into force, the Tax Authority correctly concluded that this change to a shorter resale period is to be applied prospectively. It only applies to purchases for resale made from October 7, 2023, onwards.

Additionally, to benefit from the exemption on the acquisition of properties, beyond the requirement for the buyer to prove that they are habitually engaged in the resale of properties through a certificate issued by the Tax Authority showing that, in each of the two previous years, they resold properties purchased for that purpose, the property in question cannot be resold for further resale nor can it undergo any construction, improvement works, or other alterations that could change its Taxable Asset Value.

In cases where IMT was paid upon the acquisition of the property due to the legal conditions for exemption not being met, if the property has been resold, not for further resale, within one year, the tax is annulled by the head of the tax office upon the request of the interested party, accompanied by a document proving the transaction.

Order No. 176/2024-XXIII, dated March 14, by the Secretary of State for Tax Affairs, extends the deadline for the submission of the Model 22 Corporate Income Tax (CIT) declaration for the tax period of 2023, as well as the deadline for the payment of the tax assessed therein, until July 15, 2024.

“Sick leave” is the term used to refer to the days of justified absence that the worker is entitled to for mourning the death of a family member.

The number of bereavement days to which the worker is entitled.

According to the current wording of Article 251 of the Labor Code (in force since May 1, 2023), the number of justified absences varies with the degree of kinship between the worker and the deceased person.

1. Up to 20 consecutive days for the death of the spouse, not legally separated, or equivalent, children, or stepchildren (1st-degree relatives).
2. Up to 5 consecutive days for the death of parents, stepparents, in-laws, sons-in-law, and daughters-in-law (other 1st-degree relatives or relatives by marriage).
3. Up to 20 consecutive days in the event of the death of a person who lives in a de facto union or common economy with the worker.
4. Up to 2 consecutive days for the death of siblings, brothers-in-law, grandparents, great-grandparents, grandchildren, and great-grandchildren (2nd-degree relatives or relatives by marriage).
5. Up to 3 consecutive days for gestational mourning.

No caso de primos, tios e sobrinhos a lei não atribui dias de nojo, ou seja, a possibilidade de falta justificada. No entanto, para comparecer ao funeral, com uma declaração comprovativa (da agência funerária, por exemplo) essa falta estará justificada.

Entitlement to psychological support in the event of the death of children and other close family members.

In cases of the death of descendants or first-degree relatives in the direct line, both parents have the right to request psychological support from the attending physician of the National Health Service (SNS). This support should commence within five days after the death.

This right, in effect since January 2022, also applies in cases of the death of close family members, namely spouse and ascendants.

From which day do the bereavement days begin to count?

The counting of bereavement days starts on the day of the death, unless a different time is agreed upon with the employer or established by collective labor regulation.

If the death occurs after the worker has completed their normal daily work period, the counting starts on the following day.

Does the counting of vacation days suspend?

The death of a family member postpones or suspends the enjoyment of vacation days, as it does not depend on the worker’s will and prevents the enjoyment of the right to vacation, which aims at rest and physical recovery. When the bereavement days end, the vacation resumes.

Are justified absences paid?

When the mourning days provided by law are fulfilled, the absences taken by the worker are justified and do not imply loss of remuneration (Article 249, paragraph 2, subparagraph b) and Article 255, paragraph 1 of the Labor Code).

Notification to the employer and justification of the absence

As a rule, absences should be communicated with a 5-day notice. However, in this case, as the event is unforeseeable, the law only requires that the notification of the death of the family member to the employer be made as soon as possible.

Within 15 days following the notification of the absence, the employer may require the worker to provide proof of the invoked fact for justification, i.e., proof of the death of the family member (Article 253, paragraph 2, and Article 254, paragraph 1 of the Labor Code).

That proof could be a statement of attendance at the funeral issued by the funeral agency, which also states the worker’s relationship to the deceased person.

The Decree-Law No. 115/2023, dated December 15, was published, coming into effect on January 1, 2024, amending the legal frameworks of the work compensation fund and the work compensation guarantee fund.

Due to this decree, it became mandatory only to identify the FGCT (Work Compensation Guarantee Fund) and no longer the FCT (Work Compensation Fund). However, the obligations related to FCT were suspended during the validity of the medium-term agreement for the improvement of income, salaries, and competitiveness. Consequently, the obligation to make monthly payments to the FGCT remains in effect.

The FGCT remains a mechanism designed to ensure workers’ rights to receive half of the compensation amount due upon termination of the employment contract, calculated in accordance with Article 366 of the Labor Code.

With the entry into force of the changes to the mentioned regime, it is expected that the FCT will be converted into an accounting closed fund, consisting of the overall accounts of employers to be used by them for the following purposes:

a) Support the costs and investments related to housing for workers;

b) Support other investments made by mutual agreement between employers and representative structures of workers;

c) Finance the qualification and certified training of workers;

d) Ensure workers’ rights to receive half of the compensation amount due upon termination of the employment contract, calculated in accordance with Article 366 of the Labor Code, in cases where employers have contributed to the FCT.

The balance of the FCT can be utilized by the employer from the last quarter of 2023 until December 31, 2026.