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Portugal extends VAT reverse charge

The Portuguese Autoridade Tributária e Aduaneira tax office has extended the application of the Value Added Tax domestic reverse charge for non-resident businesses and B2B supplies of goods or services. This significantly reduces the use cases where foreign suppliers have to charge Portuguese VAT – instead leaving the reporting to their customer. This came into effect on 27 April 2021.

The outcome is that non-residents will no longer charge VAT when their customer is Portuguese VAT registered. Previously, if the foreign supplier was Portuguese VAT registered, they would be responsible for charging and collecting VAT from their business customer. The exception is where a Fiscal Representative for the supplier is in place to ensure proper calculation, charging and remittance of the VAT.

Where this means that the foreign business is not charging VAT on any transactions, it should deregister for VAT.

How the reverse charge works

The reverse charge is a method used to switch VAT reporting from a supplier to its business customer. In the case of non-residents, it can reduce the risks of fraud but also reduce the occasions where it may require a VAT registration. The reverse charge was originally introduced as a VAT simplification tool. If has since been adopted on domestic supplies of goods prone to VAT fraud, including: laptops; mobile phones; previous metals; carbon trading; electricity and gas.

Make accurate Portuguese VAT calculations on individual or batch transactions with our Advisor and Auditor services.

EU VAT General and Domestic Reverse Charge rule by country

Country General RC (art 194) Domestic Reverse Charge (art 199)
Domestic goods * Immoveable Property Installation Construction Scrap metal Mobile Phones Gas & electrcity Carbon Trading
Austria Yes Yes Yes Yes Yes Yes Yes Yes
Belgium Yes Yes Yes Yes - - Yes Yes
Bulgaria - - Yes - Yes - Yes -
Croatia Yes Yes Yes Yes Yes - Yes Yes
Cyprus - - Yes Yes Yes Yes Yes -
Czech Republic Yes - Yes Yes Yes Yes Yes Yes
Denmark - - Yes - Yes Yes Yes Yes
Estonia Yes Yes Yes - Yes - Yes -
Finland Yes - Yes Yes Yes - Yes Yes
France Yes - Yes Yes Yes - Yes Yes
Germany - Yes Yes Yes Yes Yes Yes Yes
Greece Yes - - - Yes Yes Yes Yes
Hungary  - Yes Yes Yes Yes - Yes Yes
Ireland - Yes Yes Yes Yes - Yes Yes
Italy Yes Yes Yes Yes Yes Yes Yes Yes
Latvia - - Yes Yes Yes Yes Yes -
Lithuania Yes - Yes Yes Yes - Yes -
Luxembourg - - - - - - Yes Yes
Malta Yes - Yes Yes - - Yes -
Netherlands Yes Yes Yes Yes Yes Yes Yes Yes
Poland Yes - Yes Yes - - Yes -
Portugal Yes Yes Yes Yes Yes - Yes Yes
Romania Yes Yes Yes - Yes Yes Yes Yes
Slovakia Yes Yes Yes Yes Yes Yes Yes Yes
Slovenia Yes Yes Yes Yes Yes - Yes Yes
Spain Yes Yes Yes Yes Yes Yes Yes Yes
Sweden  Yes - Yes Yes Yes Yes Yes Yes
Non-EU
Norway - - - - - - - -
Switzerland Yes - Yes - - - Yes -
UK - - Yes - - Yes Yes Yes
* Further local rules on the VAT status of the supplier and their customer need to be considered to determine if RC applies

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