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Portugal VAT
Portuguese Value Added Tax (VAT) was introduced in 1984 as part of the entry of the country into the European Union.
Approved by Decree-law n.º 394/84, of December 26, focuses on consumption. It was introduced in Portugal with the aim of harmonizing consumption taxation rules, in order to achieve the intended objective, which is the Internal European Market.
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Portugal VAT law
Portuguese VAT law has a specific code, Código do Imposto sobre o Valor Acrescentado (“Codigo do IVA”) and Regime de IVA nas Transacções Intracomunitárias (“RITI”)) and is administered by the Tax Office (Autoridade Tributária).
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Portuguese VAT rates
The standard VAT rate in Portugal is 23%; with a reduced rate of 6% and intermediate rate of 13%. There are also different VAT rates applicable in the Portuguese Islands (Azores and Madeira).
In Azores the standard VAT rate in Portugal is 18%, with reduced rate of 5% and intermediate rate of 10%. In Madeira the standard VAT rate in Portugal is 22%, the reduced rate is 5% and the intermediate rate is 12%.
Portuguese VAT registration
Since the implementation of the European Single Market Initiative in the 1990s, it has been possible to buy and sell goods without a local company; this is known as non-resident VAT trading. There is no VAT threshold in Portugal for the registration of non-resident traders, but you will need one to record transactions and your Portuguese customers will want proof that you have obtained one.
There are strict rules on the situations where a registration is permitted.
Common scenarios which require a Portuguese VAT registration include:
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importing goods into Portugal
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organising live events, conferences, etc, in Portugal
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holding goods in a warehouse in Portugal as stock for resale longer than three months
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'supply and install' services over 12 months
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selling goods from Portugal to other EU countries
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distance selling to private individuals, e.g. internet retailing.
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Registering for Portuguese VAT generally takes two weeks, although this can vary.
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Portuguese VAT fiscal representative
EU companies are no longer required to appoint a full VAT fiscal representative to represent them to the Portuguese tax authorities. However, non-EU companies do.
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Portuguese VAT compliance
There are detailed rules controlling the recording and processing of Portuguese transactions. These include guidelines on:
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Portuguese invoice requirements
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credit notes and corrections.
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Portuguese VAT returns
Companies with a Portuguese VAT number must submit regular returns detailing all taxable supplies (sales) and inputs (costs). The returns are submitted monthly in Portugal if the turnover is equal or higher than € 650,000, and quarterly if the turnover is less than € 650,000.
Monthly VAT returns in Portugal are due by the 10th business day of the second month following the reporting period. Quarterly VAT returns in Portugal are due by the 15th business day of the second month following the reporting period.
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Portuguese Intrastat and EC sales lists
In addition to VAT returns in Portugal, companies may be required to submit additional statistical information. The Portuguese Intrastat return should be filed on the 15th day of the month following the reporting period and the Portuguese EC Sales list should be filed on the 20th day of the month following the reporting period.
Portuguese VAT refunds
If a foreign company is providing taxable supplies in Portugal but is unable to obtain a Portuguese VAT number, or is incurring Portuguese VAT on local goods or services, then Portuguese VAT may recovered through a VAT reclaim.
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