Country Guide: Portugal


Looking to expand your e-commerce business to Portugal, then look no further, here is AVASK's guide to VAT in Portugal:

VAT in Portugal

Portugal is a member of the European Union (EU) and draws up its tax rules according to the laws or directives issued from Brussels by the EU. The current VAT directive applies to all 27 member states of the European Union, and it governs the rules on VAT compliance, and in some part, covers the setting of VAT rates.

As an EU member state, Portugal is obliged to implement the VAT directives, which provides guidance on VAT. Where there is a conflict, the European Union’s directive takes precedence. Portugal is a member of the European single market economy and uses the Euro (€) as its currency.  In Portugal VAT is known as: Imposto sobre o Valor Acrescentado, or IVA.


VAT registration in Portugal

Both EU and non-EU businesses may trade in Portugal without establishing a local presence. This is known as non-resident VAT trading. There is no VAT threshold in Portugal for the registration of non-resident traders, but you will need one to record transactions and your Portuguese customers will want proof that you have obtained one.

There are strict rules on the situations where VAT registration is permitted. Common scenarios that require Portuguese VAT registration include:

  • Importing goods into Portugal;
  • Organising live events, conferences, etc. in Portugal;
  • Holding goods in a warehouse in Portugal as stock for resale;
  • Buying goods within Portugal that are subsequently re-sold in-country;
  • Selling goods from Portugal to other EU member states;
  • Distance-selling to private individuals in Portugal, e.g. internet retailing or trading through an e-commerce platform.

Registering for Portuguese VAT can take around two weeks once all documentation has been submitted to the tax authority, but this varies from seller to seller and will depend on the specifics of an individual company.

Portuguese VAT compliance

There are detailed rules controlling the recording and processing of Portuguese transactions for VAT purposes. This includes guidelines on:

  • Portuguese invoice requirements;
  • When to issue a Portuguese tax invoice;
  • Foreign currency reporting;
  • Credit notes and corrections;
  • Correcting entries from prior returns;
  • Which accounting records must be maintained.

Portuguese VAT rates

VAT RateMainland % RateAzores % RateMadeira % Rate
Standard Rate23%18%22%
Reduced Rate13%
6%
9%
4%
12%
5%
Zero Rate0%0%0%

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Country Profile: Portugal

Portuguese E-commerce facts:

Population10.23 million
(January 2020)
Currency:Euro (€)
Number of e-commerce users:6.9 million
(January 2020)
Revenue in e-commerce market:£2.57 billion
Estimated market growth:6.5% to £3.3 billion by 2024

Portuguese thresholds and additional summary:

Distance Selling Threshold (DST)€35,000
Intrastat Thresholds:

Dispatches:
€350,000

Arrivals:
€250,000

VAT number format:PT 123456789
VAT return period:

Quarterly (if previous year turnover was less than €650k) or Monthly

VAT return deadline10th (Monthly) or 15th (Quarterly)
business day of second month following end of period
Annual VAT filing deadline:Not required
EC sales lists reportingMonthly or quarterly

Read more about International VAT and Compliance:

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