Portuguese VAT rules are based on regulations drawn up by the EU, of which Portugal was a founding member. The standard Portuguese VAT rate is currently 23%. As member state of the EU, Portugal is obliged to implement the VAT Directives, which provide guidance on VAT. Where there is a conflict, the European Directive takes precedence.
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:
- importing goods into Portugal
- organising live events, conferences, etc, in Portugal
- holding goods in a warehouse in Portugal as stock for resale longer than three months
- ‘supply and install’ services over 12 months
- selling goods from Portugal to other EU countries
- distance selling to private individuals, e.g. internet retailing.
Registering for Portuguese VAT generally takes two weeks, although this can vary.
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 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.
The current rates on the mainland, does not include Madeira or Azores they are:
|Rate||Type||Which goods or services|
|23%||Standard||All other taxable goods and services|
|13%||Reduced||Some food items of main; admission to certain cultural events; restaurant & cafe food; some agricultural supplies; wine; mineral water; diesel for agriculture|
|6%||Reduced||Some food items of main necessities ; water supplies; certain pharmaceutical products; medical equipment for disabled persons; children’s car seats; children’s diapers; domestic passenger transport; some books (excluding e-books); certain newspapers and periodicals; TV licence; social housing; certain agricultural supplies; hotel and holiday lettings accommodation; some social services; some medical and dental care; collection of domestic waste, minor repairs of bicycles; domestic care services; fruit juices; firewood; cut flowers and plants for decorative use and food production; some legal services|
|0%||Zero||Intra-community and international passenger transport|