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Portugal VAT country guide

VAT compliance and reporting rules in Portugal

Below is summary of the major rules provided under Portuguese VAT rules (Mervärdesskattelagen 1994, VAT Act; Regulations and guidelines from the Ministry of Finance), plus adoption of EU VAT Directive provisions. Check our country VAT guides for other jurisdictions.

Our VAT Calculator & VAT Filer products on a single platform, VAT Calc,  are unique in that they come with all of this included out-of-the box for Portugal and scores of other countries around the world.

Portugal VAT country guide

Highlights Local term Imposto sobre o valor acrescentado (IVA)
VAT Rates - standard 23%
VAT Rates - reduced 13%: 6%; 0%
VAT number format PT 123456789
Registration threshold Nil unless single taxable transaction not exceeding €25,000. Nil for non-residents; €10,000 for pan-EU digital services and goods OSS return. Intra-community acquisitions nil
VAT Group No
VAT recovery foreign businesses Yes, but requires reciprocity agreement for non-EU businesses
Fiscal Representative Required of non-EU businesses
Currency Euro €, January 1999
Administration Introduction VAT was introduced into Portugal in January 1986 as part of its accession to the European Economic Community in 1986
VAT laws CIVA (Código do Imposto sobre o Valor Acrescentado) and Intra-Community VAT Regime (Regime do IVA nas Transações Intracomunitárias). Also EU VAT Directive which takes supremacy as part of EU membership
Tax Authorities Autoridade Tributária e Aduaneira (Tax and Customs Authority)
VAT Rates Standard rate 23% (22% Madeira; 18% Azores)
Reduced rates 13%: wine; certain fish. 6% foodstuffs; pharmaceuticals; hotel and overnight accommodation; books, newspapers and journals; bullfighting services; passenger transport
Zero-rated Intra-community passenger travel by air and sea; Exports and intra-community supplies of goods; gold to central banks; services related to vessels and aircraft;
Exempt Education; financial services; health, hospital,  and social welfare; public postal; letting immovable property; betting and gambling; welfare services; international passenger transport; employee food and drink
Scope of VAT Scope of VAT Provision of domestic taxable goods and services; EU imports; intra-community acquisitions; Distance selling of goods B2C (OSS or IOSS); receipt of services or goods via the reverse charge
Time of supply Goods & Services (general rule) Time of supply of the goods or provision of services. Invoices should be issued within five days of the supply, and becomes the tax point. Early payment or advances are tax points, and the supplier should support of invoice on receipt of payment.
Reverse Charge Invoice due within five days of supply which customer should use for VAT reporting. If no or delayed invoice, customer should still self-assess the VAT within five days.
Continuous  Services Based on contract or payment dates. But at least by calendar year of start of supply.
Imports Date of clearance into Portugal from customs. Postponed or deferred import VAT scheme available (see separate).
Goods on approval and return Early of date of acceptance (and invoicing) or twelve months
Registration VAT registration threshold Nil unless single taxable transaction not exceeding €25,000. Nil for non-residents; €10,000 for pan-EU digital services and goods OSS return. Intra-community acquisitions nil
Voluntary VAT registration No
VAT number format PT 123456789
VAT Group No
Non-residents Permitted, but non-EU business will require a Fiscal Representative. No registration thresholds.
Fiscal Representative Required for non-EU businesses seeking a VAT registration. Portugal does not exempt jurisdictions with EU mutual assistance agreements from this (which includes Norway and the UK). Must be resident VAT registered body. Shares VAT liability of their clients. Not required where non-EU business is only trading in bonded VAT warehouses.
Digital Services Portugal participates in the EU single One Stop Shop (OSS) VAT return for digital, telecoms and broadcast services. This was formerly the MOSS regime until 30 June 2021
Pre VAT registration costs Permitted under strict limits of being related to business
VAT Invoices Issuance Within five days of the tax point (supply of goods or services). For intra-community supplies, should be by 15th of the month following the supply of goods or services. See e-invoice section on approved invoicing software. Goods movements should be supported in advance by government reported delivery notes (which include invoice information)
Content Date; unique sequential invoice number; name and address of supplier and customer; Customer VAT number for intra-community supplies or reverse charge; date of supply or advance payment if different from invoice date; Description, quantity or units etc of supply of goods or services; price per unit; taxable amount; VAT charged; rate (broken out if supplies at different rates); total; explanation if zero-rated supply.
E-invoices Portugal e-invoice requirements and QR codes
Simplified invoices Permissible for supplies not exceeding €100. This threshold is set at €1,000 for retail and B2C transactions. Customer details are excluded.
Self-billing Permitted where agreement between both parties. The supplier must acknowledge receipt of the invoice.
Retention of invoices Ten years. Paper invoices must be retained and kept in Portugal. Digital archiving is permitted under strict controls. But otherwise, electronic invoices are satisfactory and these may be stored elsewhere in the EU.
FX rules The VAT due must be stated in €. The European Central Bank daily rate at tax point date should be used for any conversion.
Invoice corrections Credit notes may be used to correct invoices, but must include VAT number of original invoice
Compliance Right to deduct Excluded: passenger vehicles; accommodation, food and drink - some reliefs (e.g. for 50% events and conferences; 100% for staff). Entertainment. Business gifts exceeding €50.
Call-off stock Following the EU's 2020 Quick Fix harmonisation reforms, stock may be transferred from an EU state to an customer location/warehouse in Portugal without triggering a VAT registration and supply for a non-Portuguese supplier. Title has not passed until the customer takes the goods for production and sale. At which time a zero-rated transaction may be effected. This must happen within 12 months of the original movement
Reverse Charge - B2B In addition to cross-border B2B services being subject to the reverse charge, the following is included: general reverse charge on goods provided by non-Portuguese businesses to Portuguese VAT registered and resident customer. Supplies of goods to non-residents does not trigger the reverse charge. Domestic reverse charge on: natural gas and electricity; immovable property; carbon certificate trading; investment gold; construction; scrap.
Cash discounts Available to resident businesses not exceeding €500,000 taxable turnover per annum
Bad debt relief Only available if supplier can demonstrate proceedings against customer. This includes: insolvency; enforcement registration proceedings; or proceedings under the Portuguese distressed business register. Other criteria include debts above €750 including VAT over six months old. 
Import VAT deferment Yes, via VAT return and using the reverse charge. Must file monthly VAT returns and have a clean recent compliance record. Exemption is allowed in the case of an import and immediate (30 days) intra-community supply. The importer must have an Portuguese VAT number (or use representative if EU business without Portuguese VAT number) and be EU resident for customs purposes.
VAT warehouse Portugal operates VAT and customs exempt or bonded warehouses. Goods may be traded within these authorised locations VAT-free. Only certain goods may benefit from this simplification, and is governed by EU VAT Directive Annex V. Services provided within warehouses are generally VAT exempt.
Supply & install Non-residents providing supply and instal services of goods or machinery are not required to VAT register. Instead, they may pass the VAT reporting obligations to their VAT registered customer.
Use and enjoyment services Hire of immovable property; digital services, telecoms and broadcast; 
Capital goods adjustment period Movable property: five years. Immovable property: 20 years
Non-residents VAT recovery EU businesses may apply for Portuguese VAT reclaims through the electronic portal of the tax authorities of their company of residency (8th Directive). Quarterly claims above €400 permitted, with final claim above €50 by 30 Sept of following year.  Non-EU businesses must submit a paper-reclaim with supporting invoices via the Portuguese authorities directly (13th Directive). Portugal does  require a reciprocal agreement with the country of residence of the claimant. Non-EU businesses do have to appoint an Portuguese resident Fiscal Representative for the reclaim process
VAT on Digital Services Portugal follows the EU VAT on digital services regime, introduced in 2015. This includes participation in the One-Stop-Shop (OSS) single EU VAT return (formerly MOSS until 30 June 2021)
Live events No
Distance selling threshold for goods Nil. Following the EU ecommerce VAT package reforms from 1 July 2021, local Portuguese VAT must be charged on all sales by non-Portuguese EU e-commerce sellers shipping from within the EU. Imported distance sales not exceeding €150 liable to Portuguese sales VAT with  IOSS return option
Cash accounting scheme Yes, voluntary. Upper threshold of €500,000 turnover per annum
VAT registered cash tills No
Statute of limitations Four years
Other N/a
VAT Returns Frequency Monthly if annual revenues exceed €650,000; Quarterly otherwise. All taxpayers must complete an annual VAT return by 15th of July in following year.
Filing method Mandatory electronic
Deadlines (inc payments) Monthly returns: return by 10th of the second month following the month period and payment by 15th of second month; Quarterly returns: return 15th of the second month following the quarter end and payment by 20th of second month.
VAT credits Must be rolled over in the VAT return. But apply for refund if over €3,000, but may trigger request for a bank guarantee if above €30,000 credit
Corrections Via corrective returns
Non-residents No significant differences. Non-EU business require a Fiscal Representative. Non-residents are not required to complete annual VAT returns. There are exempted from some of the certified invoice software requirements.
Other filings European Sales Listing (EU Sales Returns) for goods and services supplies without any threshold by 20th of month following VAT return reporting month or quarter.  Intrastat monthly by the 15th of the following month for supply of goods above threshold: dispatches: €250k; arrivals: €350k. Annual VAT returns are required of resident businesses only by 15th July the following year.
SAF-T Portugal SAF-T
Penalties & interest €300 minimum for a missed VAT return, rising to €7,500 for deliberate infringement. Late VAT payments will result in penalty interest of between 30% and 100% with a maximum of €165,000. Interest of 4% of incorrectly or unreported VAT.
B2C Distance Selling returns Portugal participates in the One-Stop-Shop OSS pan-EU VAT return for distance selling, introduced in July 2021.

 

 

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