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VAT Portugal 2023
- Last update: 19.09.2023
- Published: 07.04.2023
- Read in: 5 min
VAT, known as value added tax, is applicable to both goods and services. It is mandatory within the European Union member countries, with a minimum standardVAT rate established at 15%. Nevertheless, each country has a degree of flexibility in shaping the specific VAT regulations within its jurisdiction. This also holds true for Portugal, and this article will delve into the particular regulations applicable in Portugal.
In this article you will learn about:
- What is the standard rate of VAT in Portugal?
- What are the reduced VAT rates in Portugal?
- How does VAT registration in Portugal look like?
- What are the deadlines for filing VAT returns in Portugal?
- What is the address of the Portuguese tax office?
- What Intrastat threshold do imports and exports of goods in Portugal fall under?
VAT in Portugal
In Portugal, currently there exist three distinct Portuguese VAT rates:
- 23% – The standard VAT rate in Portugal, which applies to all products and services not eligible for the reduced rates of 13% and 6%.
- 13% – The first reduced VAT rate.
- 6% – The second reduced VAT rate.
Reduced VAT rates in Portugal
In Portugal, there are two reduced VAT rates in effect. The first one is 13% and applies to:
- Some food items
- Mineral water
- Catering and restaurant services
- Selected agricultural products (e.g., diesel fuel)
- Tickets for selected cultural events
On the other hand, the 6% VAT rate in Portugal applies to:
- Selected food products
- Selected pharmaceutical products
- Selected medical and dental services
- Medical equipment for people with disabilities
- Books (including e-books) and newspapers
- Passenger transport
- Hotel services
- Home care services
- Water supplies
- Social housing
- Some works of art, collectibles, and antiques.
Temporary suspension of VAT on basic food items
As early as February and March of 2023, initial reports indicated that the Portuguese Government, along with the country’s Prime Minister, were actively exploring measures to lower the VAT applied to essential food items. This initiative was prompted by the increasing inflation, which had led to a decrease in the purchasing power of consumers in Portugal.
Ultimately, in April, the decision was made to temporarily exempt VAT on food items throughout the country. Prime Minister Antonio Costa and his government determined that this exemption would be effective from April 18th and remain in place until October 31st, 2023.
It is estimated that this reduction in VAT on food products could result in savings of approximately €400 per month for an average Portuguese household.
VAT Madeira, VAT Azores, and VAT Portugal
It’s important to mention that despite being autonomous regions of Portugal, Madeira and the Azores have separate VAT rates.
In Madeira, the standard VAT rate stands at 22%, while reduced rates of 12% and 5% apply accordingly.
In contrast, in the Azores, the standard VAT rate is 18%, with a reduced rate of 9% and a super-reduced VAT rate of 4%.
VAT registration Portugal
If you intend to engage in the sale of goods and the provision of services in Portugal, it’s necessary to undergo VAT registration, and there’s no requirement to establish a business branch there.
Furthermore, VAT registration in Portugal becomes necessary when your sales of goods to other EU countries exceeds 10,000. In such cases, you must either settle the excess VAT locally in the respective country or opt for the VAT OSS procedure, which allows you to settle VAT for all EU countries simultaneously.
Moreover, if you store your goods within an EU country, VAT registration is also a prerequisite. For a deeper understanding of various warehousing options, you can explore services like Call-Off Stock and Consignment Warehousing.
To register for VAT in Portugal, you have the option to do so in person at any tax office or through the Tax and Customs website: https://eportugal.gov.pt/en.
VAT returns and settlements in Portugal
In Portugal, individuals and businesses subject to VAT have two choices for submitting their VAT returns: on a monthly or quarterly basis.
The monthly VAT return option is for businesses with an annual turnover exceeding €650,000. These entities are required to file their monthly VAT returns within a window of one month and 10 days.
On the other hand, those with an annual turnover of less than €650,000 can opt for quarterly VAT returns. Under this arrangement, these businesses must fulfil their VAT obligations every quarter, completing the process within one month and 15 days.
Furthermore, the Portuguese tax system mandates all taxpayers to complete an annual VAT return, which must be submitted by the 15th of July in the following year.
The tax office in Portugal
The official tax authority in Portugal is known as the Autoridade Tributária e Aduaneira.
Intrastat in Portugal
Foreign businesses who have registered their businesses in Portugal must not only file VAT returns but also fulfil Intrastat statistical reporting requirements. This requirement becomes applicable when the annual threshold of €400,000 for imports and exports of goods in intra-Community transactions with other EU nations is exceeded.
VAT Portugal - Summary
VAT plays a significant role in e-commerce in Portugal, just as it does in various other EU countries, including Germany, Spain, Belgium, Bulgaria, or Romania. Therefore, it is advisable to proactively address this matter before initiating sales in the Portuguese market.
If you wish to ensure the accurate execution of your VAT, VAT OSS, or EU VAT registrations, or if you are considering outsourcing these tasks, we encourage you to schedule a free consultation with us. This consultation will provide you with valuable insights into the services offered by our VAT Compliance specialists and how they can assist you!