VAT GUIDE IN PORTUGAL
PORTUGUESE VAT GUIDE FOR BUSINESSES
VAT, known in Portugal as Imposto sobre o Valor Acrescentado (IVA), is a general consumption tax applied to the sale of goods and services, as well as to imports. VAT in Portugal is governed by the Portuguese VAT Code and is largely aligned with the European Union VAT Directive, as Portugal is a member of the EU.
VAT registration is generally mandatory for businesses and individuals who carry out taxable activities in Portugal. Once registered, taxable persons are required to charge VAT on their sales, submit periodic VAT returns, and maintain appropriate records.
Portugal also participates in EU-wide VAT mechanisms, such as the reverse charge, intra-Community supplies, and the One Stop Shop (OSS) for cross-border e-commerce services.
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VAT Rates
Who Needs to Register for VAT?
In Portugal, a taxable person is any business or individual making taxable supplies, intra-Community acquisitions, or distance sales (above the threshold) in the course of business.
There is no general VAT registration threshold, except for one-time taxable events under EUR 25,000.
All businesses must notify the tax authorities before starting taxable activities.
Special registration rules apply to non-established (foreign) businesses.
VAT Obligations
VAT Invoicing Requirements
VAT invoices are required for all taxable supplies, including exports and intra-Community transactions. These invoices support input tax deduction and VAT refund claims.
Goods in transit must be accompanied by delivery notes or invoices, which must be electronically reported to the Portuguese Tax Authority (PTA) before transport begins.
All taxable persons with a presence or VAT registration in Portugal must electronically report invoice data to the PTA by the 5th of the following month.
Issuing invoices via certified invoicing software is mandatory for businesses that:
- Are VAT registered in Portugal
- Exceed EUR 50,000 in turnover
- Use invoicing software
- Maintain organized accounting
Even non-resident entities registered for VAT in Portugal must comply if they meet the above criteria.
Communication of invoice data can be done through:
- Real-time transmission from certified invoicing software
- SAF-T (PT) file format
- Direct input on the PTA website
Required records: VAT invoices, returns, ledgers, and other supporting documents for input/output VAT must be maintained.
Storage location:
- Paper records must be archived in Portugal.
- Electronic records can be stored in any EU country, as long as they are accessible via terminals in Portugal.
Retention period: Records must be kept for 10 years, or until VAT deregistration if sooner.
Electronic archiving is permitted, including scanned versions of paper documents, as long as:
- Quality and legibility are preserved.
- Integrity and authenticity are ensured.
- The system prevents alteration or deletion.
- Files are numbered in a continuous sequence based on an archiving plan (XML format).
VAT Deadlines
Filing frequency:
- Monthly returns: Required if previous year’s turnover exceeded EUR 650,000.
- Quarterly returns: Allowed if turnover was EUR 650,000 or less.
Filing deadlines:
Both monthly and quarterly returns must be filed by the 20th day of the second month following the period end.
Payment deadlines:
- Monthly regime: VAT must be paid by the 25th day of the second month after the transaction month.
- Quarterly regime: VAT is due by the 25th day of the second month after the quarter ends.
Non-resident taxable persons can pay VAT via direct debit, MBWay, or bank transfer.
VAT Refund
Non-established and non-registered businesses may reclaim Portuguese VAT under the same conditions as VAT-registered entities.
Voluntary VAT registration is possible if the business incurs expenses related to taxable activities in Portugal, as refunds may otherwise be slow.
EU Businesses: Refunds are processed under EU Directive 2008/9/EC and Decree-Law no. 186/2009.
Conditions: No taxable supplies in Portugal during the refund period (except reverse charge and exempt transport).
Procedure: Submit electronically via the tax portal of the country of establishment. Must include invoices/import documents.
Submission deadline: 30 September of the following year in Portuguese or English.
The minimum refund: is EUR 50.
Non-EU Businesses: Refunds follow the EU 13th Directive and Decree-Law no. 186/2009.
Portugal applies the reciprocity principle—refunds are only given if the business’s home country offers the same to Portuguese entities.
Procedure:
- A tax representative in Portugal must be appointed.
- The claim is filed online or on paper by the representative.
- Must include: Proof of being subject to a general sales tax. Confirmation of reciprocity (unless a formal agreement exists).
Penalties for non-compliance
Penalties for Late VAT Registration
Non-intentional: EUR 600 to EUR 7,500
Intentional: EUR 600 to EUR 15,000
Penalties for Late Payment and Filing of VAT Returns
Late submission of returns:
Non-intentional: EUR 300 to EUR 3,750
Intentional: EUR 300 to EUR 7,500
Late payment of VAT:
Non-intentional: 30% to 100% of VAT due, max EUR 45,000
Intentional: 200% to 400% of VAT due, max EUR 165,000
Interest at 4% annually applies to late payments.
Penalties for Errors
No distinction between errors and omissions; penalty depends on negligence or willful misconduct.
Reverse charge not recorded:
Fault: up to 200% of output tax not recorded
Negligence: 30% to 100% of VAT not self-assessed
Maximum penalties:
Negligence: EUR 45,000
Willful misconduct: EUR 165,000
Intrastat penalties:
Individuals: EUR 250 to EUR 25,000
Legal persons: EUR 500 to EUR 50,000
Late or no notification of VAT registration changes: EUR 600 to EUR 7,500
Penalties for Tax Fraud
Defined as unlawful acts to avoid tax payment or improperly gain tax benefits.
Examples include concealment of facts, false accounting, or simulated businesses.
Penalties:
Up to 3 years imprisonment or fines up to 360 days.
Aggravated fraud (e.g., public official involved, patrimonial advantage > EUR 50,000):
1 to 5 years imprisonment for individuals; fines of 240 to 1,200 days for legal persons.
Severe cases (patrimonial advantage > EUR 200,000):
2 to 8 years imprisonment for individuals; fines of 480 to 1,920 days for legal persons.
Common VAT Terms
- Taxable Person — Sujeito Passivo
- VAT Registration — Registo de IVA
- Input Tax — Imposto Suportado
- Output Tax — Imposto Liquidado
- VAT Invoice — Fatura de IVA
- Taxable Supplies — Operações Sujeitas a IVA
- Intra-Community Acquisition — Aquisição Intracomunitária
- Distance Sales — Vendas à Distância
- Reverse Charge Mechanism — Mecanismo de Autoliquidação
- VAT Return — Declaração de IVA
- Periodic Return — Declaração Periódica
- Annual Return — Declaração Anual
- VAT Refund — Reembolso de IVA
- Taxable Period — Período de Tributação
- Taxable Base — Base Tributável
- VAT Rate — Taxa de IVA
- Certified Invoicing System — Sistema de Faturação Certificado
- Simplified Register of Operations — Registo Simplificado de Operações
- Intrastat — Intrastat
- Penal Fiscal Code — Código Fiscal Penal
- Split Payment Mechanism — Mecanismo de Pagamento Diferenciado
- Voluntary Registration — Registo Voluntário
- Tax Representative — Representante Fiscal
- SAF-T (Standard Audit File for Tax) — SAF-T (Ficheiro de Auditoria Fiscal Standard)
- Taxable Event — Evento Tributário
- Non-established Taxable Person — Sujeito Passivo Não Estabelecido
- Taxable Turnover — Volume de Negócios Tributável
- Taxable Amount — Montante Tributável
