Portuguese VAT rates and VAT compliance

Portuguese VAT rates

Whilst Portugal is required to implement the VAT rules of the European Union, it still sets the level of its own VAT rate.  The only condition is that it is above 15%.  Suppliers of goods or services VAT registered in Portugal must charge the appropriate VAT rate, and collect the tax for onward payment to the Portuguese tax authorities through a VAT filling: see Portuguese VAT returns briefing.

The current rates are:

Portiguese VAT rates

Rate Type Which goods or services
23% Standard All other taxable goods and services.
13% Reduced Some foodstuffs; admission to certain cultural events; restaurant & cafe food; some agricultural supplies; wine; mineral water; diesel for agriculture.
6% Reduced Some foodstuffs; 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; renovation and repair of private dwellings; certain agricultural supplies; hotel 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; construction work on new buildings; some legal services.
0% Zero Intra-community and international passenger transport.

Portuguese VAT compliance

Foreign traders who have a non-resident VAT registration in Portugal must comply with the local rules on accounting, invoices and VAT rates.  This includes:

  • Preparing invoices with the disclosure details outlined in the Portuguese VAT Code.
  • Electronic invoices with proper signature, authenticity and agreement by the recipient.
  • Maintenance of accounts and records, which must be held for at least 8 years.
  • Correct invoicing of customers for goods or services in accordance with the Portuguese time of supply VAT rules.
  • Processing of credit notes and other corrections.
  • Use of approved foreign currency rates.

What is the tax point for Portuguese VAT?

The tax point (time of supply) rules in Portugal determine when the VAT is due.  It is then payable to the tax authorities 7 days after the VAT reporting period end (monthly or quarterly).

For most goods, it is the time of delivery or passage of title.  For services, it is the completion of the service.

 

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