Portugal VAT Guide: Rates, Registration, Invoicing & Compliance for Businesses

Portugal VAT

Portugal's Value Added Tax (VAT), known locally as Imposto sobre o Valor Acrescentado (IVA), is a key component of the national tax framework. It applies to the sale of goods and services in Portugal as well as to imports, and is aligned with European Union VAT legislation.

This guide provides a complete overview of VAT in Portugal for businesses operating domestically or internationally in 2025.

📊 Portugal VAT Rates

Portugal applies three VAT rates depending on the nature of the goods or services:

📌 Standard Rate – 23%

Applies to most goods and services, including electronics, clothing, consulting, and general retail.

📌 Reduced Rate – 13%

Applies to specific goods such as food, wine, and certain restaurant services.

📌 Super Reduced Rate – 6%

Applied to essential goods and services like books, newspapers, medical supplies, and public transportation.

In the Azores, rates are lower:

• Standard: 16%
• Reduced: 9%
• Super Reduced: 4%

In Madeira, slightly lower than mainland:

• Standard: 22%
• Reduced: 12%
• Super Reduced: 5%

🧾 Who Needs to Register for VAT in Portugal?

🇵🇹 Domestic Businesses:

Must register if they carry out taxable transactions, regardless of turnover threshold.

🌍 Foreign Businesses:

Must register if they supply taxable goods or services in Portugal, especially in the case of distance selling, digital services, or importing goods.

🏷️ Distance Selling (EU):

If annual sales to Portuguese consumers exceed €10,000, VAT registration in Portugal or under the EU OSS scheme is required.

🔢 Portuguese VAT Number Format

• Format: PT123456789
• The number starts with the country code PT followed by 9 digits.

Businesses must include this number on all invoices and VAT returns.

🧾 VAT Invoice Requirements in Portugal

Invoices must include:

• Invoice number and date
• Supplier and customer names and addresses
• Supplier’s VAT number (and customer’s if B2B)
• Description of goods/services
• Net amount and VAT rate applied
• VAT amount charged
• Total invoice value
• Delivery date (if different)

Invoices can be paper or electronic, but e-invoicing is becoming increasingly required in B2B and public sector transactions.

💡 VAT Calculation Example

A company sells software services for €1,000 under the 23% VAT rate:

• VAT = €230
• Total = €1,230

The seller remits the €230 to the Portuguese Tax Authority.

📆 Filing VAT Returns in Portugal

• Monthly filing for businesses with turnover over €650,000/year
• Quarterly filing allowed for smaller businesses
• Returns must be filed electronically using the Tax Authority’s portal (Portal das Finanças)

Deadlines:

• Return: Usually by the 10th or 20th of the following month
• Payment: Usually by the 15th of the following month

Late filing may result in penalties and interest charges.

🌍 Cross-Border VAT in Portugal

• Intra-EU B2B Sales: Zero-rated with valid EU VAT number; reported in EC Sales List
• Intra-EU B2C Sales: Subject to One-Stop Shop (OSS) regulation for distance sellers
• Imports: VAT is due at import, but can be deferred by registered businesses
• Exports outside the EU: Zero-rated, subject to proper export documentation

❌ Exemptions from VAT in Portugal

Some activities are VAT-exempt, such as:

• Medical and dental services
• Education and training
• Financial services
• Certain real estate transactions
• Insurance

Businesses supplying only exempt services may not reclaim input VAT.

🌐 VAT Refunds for Foreign Companies

• EU businesses: Claim refunds via the 8th Directive through their national tax authority
• Non-EU businesses: Apply under the 13th Directive directly with the Portuguese tax authority, often requiring a fiscal representative

✅ Portugal VAT Compliance Tips

• Register as soon as VAT obligations arise
• Use certified invoicing software (required in Portugal)
• Submit accurate VAT returns and payments on time
• Maintain records for 10 years
• Use the VIES system to verify EU VAT numbers
• Consider OSS registration for cross-border eCommerce

📌 Conclusion

Portugal’s VAT system is well integrated with EU regulations but includes local complexities such as regional rate differences (Azores and Madeira) and certified invoicing rules. Understanding when and how to register, invoice correctly, and file returns is essential for smooth operations.

👉 Need help with VAT calculation in Portugal? Use our free 🇵🇹 Portugal VAT Calculator for real-time, accurate results.