Key takeaways
- Portugal VAT rates: The standard VAT rate is 23%, with reduced rates of 13% and 6%, plus a 0% rate for intra-EU and international transactions.
- Registration threshold: Businesses must register for VAT once annual turnover exceeds €15,000 (from 2025) or €10,000 for distance sales.
- Filing & penalties: VAT returns are filed monthly or quarterly, and late filings or payments can lead to high fines and interest up to 100% of the unpaid amount.
Expanding your business to Portugal involves understanding the intricacies of the VAT system there. In this guide, we provide an overview of the Portuguese VAT system, covering rates, registration, returns, and other crucial information to help you navigate Portugal's VAT landscape.
What is the Portuguese VAT rate?
In Portugal, Value Added Tax (VAT) is known as Imposto sobre o valor acrescentado (IVA). The Portuguese VAT system has a standard VAT rate of 23%, two reduced rates of 13% and 6%, as well as a 0% rate.
Registering for VAT in Portugal
For businesses based in Portugal, the VAT registration threshold is €13,500. This is part of a phased increase, with the threshold rising to €14,500 in 2024 and €15,000 in 2025.
The distance-selling threshold in Portugal is €10,000. This means that if the annual turnover of your business activities in Portugal exceeds €10,000, you will be required to register for VAT. If you store products in Portugal or participate in an FBA (Fullfilled-by-Amazon) program that includes Portugal, you must also register for VAT.
To register for VAT in Portugal, you should complete the required forms and submit them to the Portuguese tax authority via the government’s eportugal website. Once registered, you will receive your Portuguese VAT number, which is essential for all VAT-related transactions. The application process typically takes a few weeks.
Fiscal representative in Portugal
For non-EU-based businesses conducting taxable activities in Portugal, appointing a fiscal representative in Portugal is mandatory. The fiscal representative will share joint liability for VAT obligations in Portugal.
Portuguese VAT return filing and penalties
VAT returns in Portugal must be filed electronically through the Portuguese tax authority's online platform. The frequency of VAT return filing depends on your business's turnover:
- For businesses with a turnover exceeding €650,000, submit a monthly return. The filing deadline is the 10th day of the month following the end of the reporting period, and the payment deadline is the 15th of that month.
- For businesses with a turnover of less than €650,000, submit a quarterly return. The filing deadline is the 15th day of the month following the end of the reporting period, and the payment deadline is the 20th of that month.
All taxpayers are required to file an annual tax return, due on the 15th of July the following year.
Failing to file a VAT return will incur a fine of €300 to €7,500 depending on the severity of the infringement. The penalty for late payment of VAT is interest of between 30% and 100% and a fine of up to €165,000. The interest rate is 4% for incorrect or unreported VAT.
Portuguese Intrastat declarations
Intrastat declarations are mandatory for both resident and non-resident businesses involved in intra-EU trade in Portugal. These declarations should be submitted electronically through the Portuguese tax authority's portal by the 15th of the following month. The threshold for arrivals is €350,000 and €250,000 for dispatches.
Reverse charge in Portugal
The reverse charge mechanism applies in Portugal for specific transactions, primarily in the context of EU cross-border supplies, but also for certain domestic supplies. This mechanism shifts the responsibility for reporting and paying VAT from the supplier to the recipient of goods or services, with the foreign supplier not needing to be registered for VAT in Portugal.
Frequently asked questions
What is the VAT rate in Portugal?
Portugal’s standard VAT rate is 23%, with reduced rates of 13% (for food, wine, restaurants, and cultural events) and 6% (for essentials like books, medicines, and accommodation). A 0% rate applies to intra-EU supplies and international transport.
When do I need to register for VAT in Portugal?
Resident businesses must register once annual turnover exceeds €15,000 (from 2025). The distance selling threshold is €10,000. Businesses storing goods or using Amazon FBA in Portugal must also register.
How do I register for VAT in Portugal?
Registration is done via the ePortugal government portal. Once approved, you’ll receive your Portuguese VAT number (NIF) within a few weeks.
Do I need a fiscal representative in Portugal?
Yes, if your business is based outside the EU. A fiscal representative is required and shares joint responsibility for VAT compliance.
How often must VAT returns be filed in Portugal?
- Monthly – turnover above €650,000 (file by the 10th, pay by the 15th)
- Quarterly – turnover below €650,000 (file by the 15th, pay by the 20th)
An annual return is also due by July 15 of the following year.
Are Intrastat declarations required in Portugal?
Yes. Intrastat declarations are required for intra-EU trade once thresholds are reached — €350,000 for arrivals and €250,000 for dispatches — and must be filed by the 15th of the following month.
