What are the VAT rates in Portugal?
Portugal applies three VAT (IVA) rates on the mainland: 23% standard rate for most goods and services, 13% intermediate rate for certain food products, restaurant services, and agricultural inputs, and 6% reduced rate for essential foodstuffs, books, newspapers, pharmaceutical products, and public transport.
Portugal's Value Added Tax, known locally as IVA (Imposto sobre o Valor Acrescentado), is a consumption tax applied at each stage of the supply chain. As an EU member state, Portugal's VAT system follows the EU VAT Directive, but with specific national rates, thresholds, and reporting obligations that businesses must understand thoroughly. Portugal is notable for its three-tier rate structure, its reduced rates for the autonomous regions of Madeira and the Azores, and its early adoption of mandatory electronic invoicing through the SAF-T reporting framework.
This guide covers VAT registration, rates, filing obligations, the SAF-T system, cross-border transactions, and compliance requirements for businesses operating in Portugal in 2026.
For corporate tax obligations, see Portugal Corporate Tax (IRC). For company formation and initial tax registration, see How to Register a Company in Portugal.
VAT Rates
Mainland Portugal
| Rate | Percentage | Application |
|---|---|---|
| Standard | 23% | Most goods and services not covered by reduced rates |
| Intermediate | 13% | Certain food products, restaurant and catering services, agricultural inputs, wine, entry to cultural events |
| Reduced | 6% | Essential foodstuffs (bread, milk, fruit, vegetables), books, newspapers, pharmaceutical products, public transport, hotel accommodation, electricity (reduced portion), medical equipment |
| Exempt | 0% | Financial services, insurance, healthcare (public), education, certain real estate transactions |
Autonomous Regions
The autonomous regions of Madeira and the Azores apply lower VAT rates than the mainland:
| Rate Category | Mainland | Madeira | Azores |
|---|---|---|---|
| Standard | 23% | 22% | 16% |
| Intermediate | 13% | 12% | 9% |
| Reduced | 6% | 5% | 4% |
The lower VAT rates in Madeira and the Azores reflect the EU's recognition of the economic challenges facing ultra-peripheral regions. For businesses selling goods or services to consumers in these regions, the applicable rate is determined by the place of supply, not the location of the business. A Lisbon-based company delivering goods to a consumer in the Azores charges the Azores rate, while the same company selling to a consumer in Lisbon charges the mainland rate. This requires VAT-compliant invoicing software capable of handling multiple rate schedules, which all major Portuguese accounting platforms support.
Recent Rate Changes
Portugal has made several VAT rate adjustments in recent years as part of cost-of-living measures:
- Essential foodstuffs moved from 6% to 0% temporarily, then restored to 6%
- Restaurant and catering services at 13% (previously 23%, reduced as a COVID recovery measure and retained)
- Electricity for domestic consumers partially at 6% reduced rate
VAT Registration
Automatic Registration for Companies
All Portuguese companies (Lda, Unipessoal Lda, SA) are automatically registered for VAT as part of the company formation process. When you register a company through Empresa na Hora or the traditional route, the company receives its NIF (which also serves as the VAT number with the PT prefix for EU transactions) and is enrolled in the VAT system.
The company must declare its expected activity type and estimated turnover at the time of registration. Based on this information, the tax authorities assign a filing frequency (quarterly or monthly).
Small Business Exemption (Regime de Isencao)
Sole traders and freelancers with annual turnover below EUR 14,500 may opt for the VAT exemption regime under Article 53 of the IVA Code. Under this regime:
- No VAT is charged on sales
- No VAT recovery is possible on purchases
- Simplified reporting obligations
- Invoices must state "IVA - regime de isencao, artigo 53"
The threshold is monitored annually. If turnover exceeds EUR 14,500 in any calendar year, the taxpayer must register for the normal VAT regime from January 1 of the following year.
Non-Resident Registration
Non-resident companies making taxable supplies in Portugal must register for Portuguese VAT. The registration can be done:
- Directly: For EU-established businesses, direct registration through the Portal das Financas is possible without a fiscal representative
- Through a fiscal representative: Non-EU businesses must appoint a Portuguese fiscal representative who is jointly liable for VAT obligations
- Through the One-Stop Shop (OSS): For cross-border B2C digital services and distance sales, the OSS system allows registration in the home member state
VAT Filing and Payment
Filing Frequency
| Annual Turnover | Filing Frequency | Filing Deadline |
|---|---|---|
| Up to EUR 650,000 | Quarterly | By the 20th of the second month following the quarter |
| Above EUR 650,000 | Monthly | By the 10th of the second month following the period |
| Voluntary monthly filing | Monthly | Same as above |
Companies in their first year of activity file quarterly unless they opt for monthly filing or the tax authorities assign monthly filing based on estimated turnover.
Quarterly Filing Deadlines
| Quarter | Period Covered | Filing Deadline | Payment Deadline |
|---|---|---|---|
| Q1 | January - March | May 20 | Same |
| Q2 | April - June | August 20 | Same |
| Q3 | July - September | November 20 | Same |
| Q4 | October - December | February 20 | Same |
Monthly Filing Deadlines
Monthly filers must submit their VAT return by the 10th of the second month following the reporting period. For example, the January VAT return is due by March 10.
Quarterly filing is available to companies with turnover below EUR 650,000, but some businesses voluntarily opt for monthly filing to accelerate VAT refunds. Companies that consistently claim VAT refunds, such as exporters or companies making significant investments, often prefer monthly filing because refunds are processed per period rather than accumulating over a quarter. The trade-off is increased administrative workload and accountant fees. Most certified accountants include VAT filing in their standard monthly fee, but some may charge a modest supplement for monthly versus quarterly filing.
VAT Return (Declaracao Periodica de IVA)
The VAT return is filed electronically through the Portal das Financas. The return reports:
- Output VAT (IVA liquidado) collected on sales
- Input VAT (IVA dedutivel) paid on purchases
- VAT due (or refund claimed)
Payment of VAT due must be made by the filing deadline via direct debit, MB WAY, Multibanco, or bank transfer.
SAF-T Reporting
Portugal was one of the first countries in the world to mandate SAF-T (Standard Audit File for Tax Purposes) reporting, and the requirements have been progressively expanded.
Monthly SAF-T Invoicing File
All companies must submit a monthly SAF-T file containing all invoices issued during the month. The file must be submitted through the Portal das Financas by the 5th of the month following the invoicing period.
This monthly submission allows the tax authorities to cross-reference invoices between suppliers and customers, forming the basis of Portugal's e-fatura system for automatic tax deduction matching.
Annual SAF-T Accounting File
The annual SAF-T accounting file contains the complete general ledger, customer and supplier records, and all accounting entries for the fiscal year. It must be submitted together with the IES (Informacao Empresarial Simplificada) annual filing by July 15.
Software Requirements
All invoicing and accounting software used in Portugal must be certified by the Autoridade Tributaria (AT) for SAF-T compliance. The AT maintains a registry of certified software. Companies cannot use non-certified software for invoicing purposes.
Major certified platforms include:
- PHC Software
- Primavera BSS
- Sage Portugal
- Moloni
- InvoiceXpress
- Jasmin by Primavera
Invoicing Requirements
Portuguese VAT invoices must contain the following mandatory elements:
| Element | Requirement |
|---|---|
| Supplier identification | Name, address, NIF |
| Customer identification | Name, address, NIF (mandatory for B2B and B2C above EUR 1,000) |
| Invoice number | Sequential, unique, from certified software |
| Date of issue | Date the invoice is generated |
| Description of goods/services | Clear and specific description |
| Quantity and unit price | For goods |
| VAT rate(s) applied | Applicable rate(s) per line item |
| VAT amount | Total VAT per rate and grand total |
| ATCUD code | Unique document code from AT-certified software |
| QR code | Mandatory on all invoices for AT verification |
The ATCUD (Codigo Unico de Documento) and QR code requirements were introduced to enhance tax compliance and allow real-time verification of invoices by both the tax authorities and consumers.
Simplified Invoices
Simplified invoices (faturas simplificadas) are permitted for retail transactions below EUR 100 and for certain services below EUR 100. Simplified invoices have reduced information requirements but must still be generated by certified software and include the ATCUD code.
Input VAT Recovery
General Rules
Companies can recover input VAT on purchases of goods and services used for taxable business activities. The right to deduction arises in the period in which the invoice is dated and must be exercised within four years.
Non-Deductible Input VAT
Certain categories of input VAT cannot be recovered:
- Expenses relating to passenger vehicles (except for taxi, rental, or driving school businesses)
- Entertainment and hospitality expenses (50% deductible for IRC purposes, but VAT not recoverable)
- Expenses relating to exempt activities
- Personal expenses of directors or employees
- Fuel for passenger vehicles (except diesel, which is 50% deductible)
Partial Exemption (Pro Rata)
Companies that make both taxable and exempt supplies must apply the pro rata method to determine the proportion of input VAT that can be recovered. The pro rata percentage is calculated as the ratio of taxable turnover to total turnover and must be recalculated annually.
Cross-Border Transactions
Intra-EU Sales of Goods
Sales of goods to VAT-registered businesses in other EU member states are exempt from Portuguese VAT (zero-rated) under the intra-Community supply rules. The Portuguese seller must:
- Verify the customer's VAT number through the VIES system
- Include the transaction on the Recapitulative Statement (Declaracao Recapitulativa) filed monthly by the 20th of the following month
- Maintain proof of shipment
Intra-EU Acquisitions
Purchases of goods from other EU member states are subject to the reverse charge mechanism. The Portuguese buyer self-assesses Portuguese VAT on the acquisition and recovers it as input VAT on the same return (assuming full right to deduction).
Services (B2B)
For B2B services, the general rule is that VAT is due in the country where the customer is established (reverse charge). The Portuguese provider issues an invoice without VAT, and the foreign customer self-assesses VAT in their jurisdiction.
Exports Outside the EU
Exports of goods to non-EU countries are zero-rated. The exporter must retain customs documentation proving that the goods have left the EU.
Cross-border VAT compliance is one of the most common areas where businesses make errors, particularly when dealing with the distinction between goods and services, B2B and B2C transactions, and the various place-of-supply rules. Companies engaged in cross-border trade should ensure their certified accountant has specific expertise in EU VAT rules and should consider investing in accounting software with built-in EU VAT compliance features. Errors in cross-border VAT treatment can result in double taxation, penalties in multiple jurisdictions, and significant administrative burden to correct.
One-Stop Shop (OSS)
For B2C cross-border sales of goods and digital services within the EU, Portugal participates in the EU One-Stop Shop system:
- EU OSS: For distance sales of goods and B2C services to other EU member states, companies can report and pay VAT for all EU member states through a single Portuguese registration
- Import One-Stop Shop (IOSS): For imports of goods valued up to EUR 150 from non-EU countries sold directly to EU consumers
The OSS threshold is EUR 10,000 in annual cross-border B2C sales. Below this threshold, the supplier may continue to charge Portuguese VAT rates.
VAT Refunds
Companies that have more input VAT than output VAT in a given period can claim a refund. Refunds are processed by the tax authorities and are typically paid within 30 to 90 days, depending on the amount and complexity. Refund claims above EUR 10,000 may be subject to additional verification.
Regular exporters or companies making significant investments may apply for the special refund regime, which provides faster processing for habitual refund claimants.
Penalties for Non-Compliance
| Violation | Penalty Range |
|---|---|
| Late filing of VAT return | EUR 150 to EUR 3,750 |
| Late payment of VAT | Interest at the legal rate + penalty of 10% to 100% of VAT due |
| Failure to register for VAT | EUR 300 to EUR 7,500 |
| Incorrect invoicing | EUR 150 to EUR 3,750 per invoice |
| Failure to submit SAF-T file | EUR 200 to EUR 10,000 |
| VAT fraud | Criminal prosecution, fines up to EUR 165,000, and imprisonment |
Companies that voluntarily correct errors and pay outstanding VAT before being notified by the tax authorities benefit from reduced penalties.
For banking and payment options for VAT payments, see Portugal Payment Methods. For the broader compliance framework, see Portugal Business Laws and Compliance.
SAF-T (PT) Submission Requirements
Portugal was one of the first EU member states to implement the OECD Standard Audit File for Tax (SAF-T). The Portuguese implementation (SAF-T PT) is mandatory and strictly enforced.
| Submission | Scope | Deadline |
|---|---|---|
| Monthly SAF-T invoicing file | All invoices, credit notes, receipts issued | 5th of following month |
| Annual SAF-T accounting file | Complete accounting records | With IES filing (15 July) |
| ATCUD code on every invoice | Unique document code assigned by AT | From 2023 onwards |
| QR code on invoices | Required for consumer-facing invoices | From 2022 onwards |
| Certified invoicing software | Required for annual turnover > EUR 50,000 | Always |
According to the Portuguese Tax and Customs Authority (Autoridade Tributaria e Aduaneira) Decree-Law 28/2019, all invoicing software used by Portuguese taxpayers with annual turnover exceeding EUR 50,000 must be certified by the AT, produce SAF-T (PT) files on demand, and issue documents with unique document codes (ATCUD) and QR codes - requirements that represent one of the most prescriptive e-invoicing regimes in the EU [5].
VAT Recovery for Foreign Businesses
Portuguese companies can recover VAT paid in other EU member states through the electronic refund procedure under Directive 2008/9/EC. Non-EU businesses can recover Portuguese VAT under Directive 86/560/EEC subject to reciprocity.
| Procedure | Applicant Type | Deadline | Minimum Refund |
|---|---|---|---|
| EU Cross-Border Refund (8th Directive) | Portuguese company reclaiming EU VAT | 30 September following year | EUR 50 (annual) / EUR 400 (quarterly) |
| Non-EU Refund (13th Directive) | Non-EU company reclaiming Portuguese VAT | 30 September following year | EUR 50 (annual) |
| Portuguese input VAT on imports | Resident importer | With monthly / quarterly return | N/A |
| OSS reverse claim | Declarant in non-Portugal OSS | Through OSS country | N/A |
OSS and IOSS Practical Guide
Portuguese companies selling B2C to consumers across the EU use the One-Stop Shop (OSS) regime rather than registering for VAT in each destination member state. Our business formation team advises on the three OSS schemes:
- Union OSS: For intra-EU B2C services and distance sales of goods. Portuguese companies register once at the Portal das Financas.
- Non-Union OSS: For non-EU businesses providing B2C services to EU consumers. Portugal may serve as the Member State of Identification.
- Import OSS (IOSS): For distance sales of imported low-value goods (consignments up to EUR 150).
Thresholds changed materially in 2021: the EUR 10,000 micro-business threshold now applies cumulatively across all EU destinations, above which Portuguese sellers must apply destination VAT via OSS.
Common VAT Pitfalls We See
- Failing to issue a Portuguese-compliant invoice to a Portuguese customer: Invoices from foreign suppliers must include Portuguese particulars (NIF, NIPC, ATCUD where applicable) for the customer to claim input VAT.
- Misclassifying intermediate-rate supplies: Restaurant, hospitality, and specific food items are intermediate rate; errors trigger assessments.
- Late registration above threshold: Businesses exceeding EUR 14,500 threshold (certain sectors) or EUR 15,000 (general) must register retroactively and pay back-VAT.
- Forgetting to communicate final electronic invoice transmission: From 2026, mandatory B2G e-invoicing extends to SMEs; preparations must be completed.
- Reverse charge errors: Failure to reverse-charge on intra-EU services leads to VIES mismatches detected through automated EU cross-checking.
VAT Rate Comparison Across EU Member States
Portuguese VAT rates are mid-range within the EU. Our business formation team uses the following snapshot when modelling cross-border pricing strategies.
| Member State | Standard Rate | Reduced Rates |
|---|---|---|
| Portugal (mainland) | 23% | 13% / 6% |
| Portugal (Madeira) | 22% | 12% / 5% |
| Portugal (Azores) | 16% | 9% / 4% |
| Spain | 21% | 10% / 4% |
| France | 20% | 10% / 5.5% / 2.1% |
| Germany | 19% | 7% |
| Italy | 22% | 10% / 5% / 4% |
| Netherlands | 21% | 9% |
| Ireland | 23% | 13.5% / 9% / 0% |
| Luxembourg | 17% | 14% / 8% / 3% |
| Hungary | 27% | 18% / 5% |
According to Council Directive 2006/112/EC, harmonised across the European Union, each member state can set its own standard rate (minimum 15%) and up to two reduced rates (minimum 5%), subject to specific derogations - Portugal's autonomous regions benefit from such derogations under Article 105 of the VAT Directive and Protocol No 9 to the Act of Accession [6].
Related Corpy Resources
- Portugal business guide for a full overview of doing business in Portugal
- Corporate tax in Portugal for related articles on this topic
- Company formation in Portugal to explore adjacent considerations
- Business laws in Portugal to explore adjacent considerations
- Free zones in Portugal to explore adjacent considerations
How to register a company with VAT in Portugal?
Portuguese VAT (IVA - Imposto sobre o Valor Acrescentado) registration is part of company formation with Autoridade Tributaria e Aduaneira (Tax and Customs Authority) via Portal das Financas. Portuguese Lda formation via Empresa na Hora costs EUR 360 in state fees + EUR 1 minimum share capital + 1-hour instant registration. Post-formation, register for IRC (corporate tax) automatically upon CIPC/Empresa na Hora registration. IVA registration is separate: mandatory above EUR 12,500 annual turnover for services or EUR 15,000 for goods; voluntary below these thresholds. IVA registration is free via Portal das Financas, 3 to 10 business days. Portuguese IVA rates: standard 23% (mainland), reduced 13%, intermediate 6%, zero-rated 0% (exports, intra-EU B2B, specific items). Azores standard rate 18%, Madeira 22%. Monthly IVA returns for businesses above EUR 650,000 turnover, quarterly below. For Portuguese Lda owners, IVA-registered status enables intra-EU B2B VAT-exempt sales via reverse charge mechanism and EU VAT OSS (One Stop Shop) filing for B2C digital services. Cross-border EU freelancers and SaaS founders benefit from Portugal's 23% IVA rate (lower than Germany 19%, France 20%, UK 20%) and Portugal's Madeira International Business Centre (MIBC) 5% corporate tax regime for qualifying activities.
How to register a company in Washington state for Portuguese founders?
Portuguese founders register Washington LLCs online through the WA Secretary of State portal at sos.wa.gov for $180 state filing fee + $60 annual report (due each April 15). Washington requires registered agent with WA physical address ($50 to $150/year commercial) - Portuguese founders must appoint a WA-based registered agent since Portugal address is not acceptable. Timeline 2 to 7 business days. No state income tax in WA, but Business & Occupation (B&O) tax on gross revenue (0.138% to 3.0% depending on activity category) applies to WA-sourced income. Alternative for Portuguese founders without WA operations: Delaware LLC ($110 + $300/year) or Wyoming LLC ($100 + $60/year) with no WA filing. Post-formation, obtain free EIN from IRS (4 to 8 weeks by fax for Portuguese founders without SSN). Open business bank at Mercury (remote, 5 to 10 days, free) or Relay (remote, 5 to 10 days, free). Portuguese-US tax treaty prevents double taxation on dividends, interest, and royalties. For Portuguese founders with Amazon FBA or e-commerce operations in WA warehouses (Amazon has major WA logistics presence in Bellevue and Kent), forming a WA LLC may trigger nexus benefits. Without WA physical presence, Delaware or Wyoming formation with WA as foreign-qualified entity only when nexus is established is more efficient. Portuguese Lda + US LLC dual-entity setup typical cost: EUR 360 + USD 160 to 460 first year.
References
- Autoridade Tributária e Aduaneira (Portuguese Tax Authority). https://www.portaldasfinancas.gov.pt/
- Portugal Corporate Income Tax Code (CIRC). https://info.portaldasfinancas.gov.pt/
- OECD Inclusive Framework on BEPS. https://www.oecd.org/tax/beps/
- World Bank Doing Business Archive. https://archive.doingbusiness.org/
- Portuguese Decree-Law 28/2019 on SAF-T PT and certified invoicing software. https://dre.pt/
- Council Directive 2006/112/EC on the common system of value added tax. https://eur-lex.europa.eu/
- Portuguese VAT Code (CIVA). https://info.portaldasfinancas.gov.pt/
Frequently Asked Questions
What are the VAT rates in Portugal?
Portugal applies three VAT (IVA) rates on the mainland: 23% standard rate for most goods and services, 13% intermediate rate for certain food products, restaurant services, and agricultural inputs, and 6% reduced rate for essential foodstuffs, books, newspapers, pharmaceutical products, and public transport. The autonomous regions of Madeira and the Azores apply lower rates: Madeira uses 22%, 12%, and 5%, while the Azores uses 16%, 9%, and 4%.
When must a company register for VAT in Portugal?
Companies are automatically registered for VAT when they register with the tax authorities as part of the company formation process. Sole traders and freelancers must register for VAT when their annual turnover exceeds EUR 14,500 (the small business exemption threshold updated in recent years). Non-resident companies making taxable supplies in Portugal must register before commencing activity, either directly or through a fiscal representative.
What is SAF-T and is it mandatory in Portugal?
SAF-T (Standard Audit File for Tax Purposes) is a standardized XML file format for exporting accounting and invoicing data. In Portugal, SAF-T is mandatory for all companies. Monthly SAF-T invoicing files must be submitted to the tax authorities by the 5th of the following month. An annual SAF-T accounting file must be submitted together with the IES annual declaration by July 15. All Portuguese accounting and invoicing software must be SAF-T compliant.