Portugal – Lovat Compliance

VAT Standard Rate

Standard VAT rate (2024) – 23%.

VAT Reduced Rates

13% – applies to some food and wine, certain fossil fuels, musical instruments, etc.
6% – applies to primary food products, certain books and newspapers, certain pharmaceutical products, medical equipment, passenger transportation and hotel accommodation, among others.
0% – applies to standard supplies, such as exports or intra-community supplies, are taxed at 0%.

In addition, certain items are exempt from VAT, in particular, healthcare services, public education and financial services.

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VAT rates in the autonomous regions of Portugal

Madeira according has:

Standard rate: 22%;
Reduced rate: 12%;
Super reduced rate: 5%.

For Azores:

Standard rate: 16%;
Reduced rates: 9%, 5%;
Super reduced rate: 4%.

Thresholds

As of July 2021, the distance selling thresholds were removed and replaced with a unified threshold of EUR 10,000 for all EU members.

Deductible VAT

Input VAT is generally deductible if the goods or services are used for business purposes.

Registration Procedure

To register for VAT in Portugal:

Prepare all necessary documentation.
Complete the required forms.
Submit them to the Portuguese tax authority via the government’s e-Portugal website.
Apply to the National Register of Corporate Entities.

After registration, a Portuguese VAT number in the format “PT123456789” will be assigned, essential for all VAT-related transactions.

Tax Representative

Companies outside Europe cannot register for VAT directly in Portugal. These companies must use a VAT representative – a local company that will fulfil all VAT obligations on the company’s behalf. This representative is liable for the VAT responsibilities, which may necessitate a deposit or bank guarantee.

Keeping Records

All records and supporting documents, including those related to analysis, programming, and execution of information systems, must be kept for 10 years.

VAT Payment Dates

Periodic VAT payments are due either quarterly or monthly.

Monthly: VAT must be paid by the 15th day of the second following month.
Quarterly: VAT must be paid by the 20th day of the second following month.

Filing VAT Returns

In Portugal, all tax-related documents must be submitted electronically. Taxpayers are required to file tax returns, submit invoices, and fulfill other tax obligations through digital means. The LOVAT platform supports digital submission.

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This guide covers only the taxation of digital services. If you sell goods, this guide does not apply.

The effective date is 1 July 2003 for B2C supplies of e-services to consumers in Portugal from suppliers established in a non-EU country and 1 January 2015 for B2C supplies of e-services to consumers in Portugal from suppliers established in another EU member state.

VAT Standard rate

The standard VAT rate in Portugal in 2024 is 23%.

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VAT Reduced rate

The vat reduction rate in Portugal is 6% (e-books).

Threshold

From the 1st of July 2021, the distance selling thresholds were withdrawn and replaced by a unified threshold of EUR10,000 for all EU members.

In other words, VAT should be charged at the VAT rate of the customer’s country of residence by companies whose annual taxable cross-border turnover is over EUR 10,000.

Pieces of evidence

To identify customer location merchant has to collect at least two items on non-contradictory evidence. And if two of them are in Portugal, the customer may be determined as Portuguese:

Customer’s permanent address;
Billing address (bank or electronic payment operator);
IP address;
Telephone number;
The location of the customer’s fixed landline through which the service is supplied to him ;
Other commercially relevant information.

E-services list

As defined by EU law, a digital product is any product that’s stored, delivered, and used in an electronic format. These are goods or services that the customer receives via email, by downloading them from the Internet, or through logging into a website, in particular:

E-books, images, movies, and videos, whether buying a copy from Shopify or using a service like Netflix. In tax language, these products are in a category usually called, «Audio, visual, or audio-visual products»;
Downloadable and streaming music, whether buying an MP3 or using a service like SoundCloud or Spotify. Of course, these products also fall into the audio category;
Cloud-based software and as-a-Service products, such as Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS);
Websites, site hosting services, and internet service providers;
Online ads and affiliate marketing.

Registration pocedure

If a company not established in Portugal is providing ‘taxable supplies’ digital services in Portugal, it may have to obtain a non-resident VAT registration with AT – autoridade tributaria e aduaneira.

A business established in a country outside the EU must appoint a tax representative to register for VAT in Portugal.

The MOSS is also available. The Mini One Stop Shop (MOSS) is a special scheme that aims to facilitate the compliance of all obligations relating to telecommunications services, broadcasting, and television and electronically supplied services to non-taxable persons in the EU in which they do not have an establishment to account for the VAT. If the supplier is established outside the European Union and does not have a fixed establishment in Portugal (nor in any Member State), and is not registered nor is legally required to register for VAT purposes in any Member State, it may choose Portugal as the Member State of Identification for MOSS purposes.

VAT returns filing date

VAT returns filing is up to the 20th of the month following the quarter to which the services were provided. For instance:

20 April, for Q1 ending 31 March;
20 July, for Q2 ending 30 June;
20 October, for Q3 ending 30 September;
20 January, for Q4 ending 31 December.

VAT payment date

The same date as for filling (see above).

Penalties

Failure or late filing of VAT return can arise a penalty from €300 to €3750 as well as a slack or delay in payment of the tax due – up to 30% to 100% of the tax due.

VAT rates in the autonomous regions of Portugal

Portugal’s autonomous regions, Madeira and the Azores, implement their Value Added Tax (VAT) rates, differing from the mainland.

Azores: Standard rate is 16%, with reduced rates of 9% and 4%.
Madeira: Standard rate is 22%, with reduced rates of 12% and 5%.

Keeping records

All records and supporting documents should be kept for 10 years.

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