Mini gressinos, small toasted bread sticks sold as an appetizer, can benefit from the reduced VAT rate of 6% in Portugal. According to the online newspaper, the Tax and Customs Authority (AT) concluded that this product maintains the nature of bread and, therefore, falls within the legal concept that allows the application of the reduced rate.
The decision comes in the wake of a request presented by a company that intended to sell the mini gressinos on a large national surface. The main doubt was regarding the tax to be applied: the 6% reserved for certain food goods or the normal rate of 23%, used on most industrialized products.
What led the tax authorities to make this decision?
AT’s analysis focused mainly on the manufacturing method. The product is made from traditional bread dough and is subsequently subjected to a drying and toasting process. The tax authority concluded that these steps do not substantially change the nature of the food.
In the binding information published on the Finance Portal, the AT considers that products “obtained from bread dough subjected to toasting or drying processes” continue to be classified as bakery products, as long as they do not acquire characteristics typical of confectionery products or industrial snacks.
Production process was decisive
The absence of fillings, toppings or ingredients usually associated with pastry products was one of the elements analyzed. The publication adds that the composition of mini gressinos continues to be based essentially on bread dough, a factor considered decisive for the tax framework.
AT also maintains that the form of presentation does not change the classification of the product. The fact that it is sold in stick format and has a reduced moisture content is not enough to stop it being considered bread for tax purposes.
Legal definition of bread had weight in the evaluation
To substantiate the understanding, the tax authority resorted to national regulations that define the characteristics of bakery products. This legislation establishes that bread results from the combination of flour, water, yeast and other authorized ingredients, through kneading, fermentation and baking processes.
The decision states that: “Considering the nature of the product, the respective manufacturing process and the applicable regulatory framework, it is concluded that it falls within the concept of bread”.
What changes for the sector?
Although this binding information only produces direct effects for the company that requested the clarification, the understanding may serve as guidance for other manufacturers and distributors that sell similar products.
According to the same source, this type of mechanism allows taxpayers to obtain an official position from the Federal Revenue Service before proceeding with decisions that may have a fiscal impact. In practice, AT is linked to the interpretation provided for that specific case.
Guidance that may influence other products
The legislation provides that this information may lose validity in certain circumstances, namely if there are relevant legal or factual changes. They may also be revoked for future purposes within the deadlines provided by law.
Even so, the now known decision clarifies the way in which mini gressinos are viewed by the Portuguese tax authorities. When considered bakery products and not simple snacks processed, they can now benefit from the same reduced VAT rate applied to bread, a conclusion that can serve as a reference for similar situations in the food market.
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