Portugal joined the European Union in 1986 and also became a member of the Eurozone in 1999, adopting the currency of the Euro. The country has also been part of the Schengen Area since 1991.

VAT rates in Portugal

The standard rate of VAT is 23% on the mainland, 16% in Azores, and 22% in Madeira.

Reduced rates of 13% and 6% on the mainland, 9% and 4% in Azores, and 12% and 5% in Madeira are available.

VAT registration in Portugal

There is no VAT registration limit in Portugal for either established or non-established businesses.

Distance sales have a limit of €35,000 for VAT registration.

The format for a VAT identification number is: PT 123456789. Every company must hold a number like this in order for accurate taxation.

VAT returns can be submitted monthly and quarterly; annual returns are also required.

Are there any Intrastat thresholds in Portugal?

Yes. There is a limit of €250,000 for dispatches and arrivals.

VAT recovery in Portugal

  • Is VAT recovery permitted for non-established non-EU businesses?

Yes, but only if the country holds a reciprocity agreement with Portugal.

  • Are there any non-VAT recoverable expenses?

Yes, recovery of input tax is restricted on certain items, i.e. hotel accommodation and cars.

Reverse charge applies to the majority of cross border services. An extended charge applies to Portuguese customers receiving goods and services from a non-established business, as well as certain domestic transactions between taxable persons.

Requirements and regulations in Portugal

Any company established in a non-EU member country must appoint a tax representative to register for VAT in Portugal.

Use and enjoyment rules apply to tangible property hire in Portugal.

The period of VAT recovery by tax authorities has a timescale of 4 years.

Similarly, there is a period of 4 years for VAT deductions and refunds.

Please contact us for further information about paying taxes in Portugal, and a member of our team will be happy to help you.

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