The Value Added Tax (VAT) Code was implemented in Portugal in 1984 and the country adopted the provisions of the EU Directive 2006/112/EC three years later. The related rules are based on two main sources: the Código do Imposto sobre o Valor Acrescentado (CIVA) and the Regime do IVA nas Transações Intracomunitárias (Intra-Community VAT Regime).
The Tax and Customs Authority is responsible for the supervision of taxes and duties in Portugal.
The applicable VAT rates are the following:
There are certain supplies for which output VAT cannot be charged, however input tax may be reclaimed by the supplier; and there are also exempt transactions without the right to deduct input VAT.
There is no pre-determined threshold for registration, thus businesses supplying goods or providing services must notify the Tax Authorities about their activities and liability to pay VAT, before starting their activities falling in the scope of VAT, by submitting a declaration of commencement of activity. The declaration can be submitted either online on the Tax and Customs Authority website or on paper at any department of the responsible governmental body. Companies registered at a business registry are required to submit this declaration within 15 days of the registration, regardless of starting their activity at a later date.
The same rules must be followed by entities not resident in Portugal, except for businesses without a fixed establishment.
It is important to note that VAT group registration is not allowed in this jurisdiction.
Invoices must be issued as a duplicate – the customer should receive the original one and the copy should be held by the supplier.
The main items to be indicated on an invoice are as follows:
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The filing frequency of the VAT return depends on the taxable person’s turnover in the previous calendar year: if the turnover is below €650,000, then quarterly returns need to be submitted, while above this threshold, businesses must file their report on a monthly basis.
Intrastat returns are submitted on a monthly basis, upon reaching the respective thresholds which are different in mainland Portugal and the Azores (i.e. €350,000 for Arrivals and €250,000 for Dispatches) and in Madeira (i.e. €25,000 for both reports).
The reporting of intra-Community supply of goods or services must be submitted in line with the VAT reporting period, on a monthly or quarterly basis. If the value of the intra-Community supply of goods, however, exceeds €50,000 in any of the previous four quarters, the filing frequency will change from quarterly to monthly.
Different deadlines apply for the monthly and quarterly VAT returns – the reports shall be submitted one month and 10 days or one month and 15 days after the end of the reporting period, respectively. As for the payment deadlines, taxpayers are provided with an extra 5 days after the VAT return submission deadlines.
Intrastat reports need to be submitted by 15th of the month following the filing period, while EC Sales List is reportable by the 20th day from the end of the reporting period.
An annual return is also due to be filed by 15 July of the following year.
VAT returns, EC Sales lists and Intrastat reports must be submitted electronically.
Appointing a legal representative is obligatory for non-established companies who perform taxable transactions and they are mutually responsible for paying VAT. Businesses who are not residents in Portugal but have an establishment in another EU Member State, are not required to appoint an agent.
Import One Stop Shop (IOSS) was introduced by Law 47/2020 in Portugal and it is applicable from 1 January 2021. IOSS is applicable to goods imported from Non-EU countries and the price of which is below €150 (excise goods are not included). This scheme enables third country suppliers to register in one EU Member State only and report and remit VAT there, without the obligation to register in each Member State they supply goods to.
SAF-T (Standard Audit File for Tax) is required to be submitted on both a monthly (invoicing SAF-T) and annual basis (accounting SAF-T) by the 12th day from the end of the previous month and 30 April following the previous year, respectively.
The purpose of this standardized XML file – generated by the OECD – is to facilitate tax data provision and collection (i.e. accounting and invoicing records) by the taxpayers and the authorities in a coherent way. The SAF-T requirement is applicable to taxable persons conducting commercial, industrial or agricultural activities. An electronic system is required to provide the Tax Authorities with the SAF-T accounting file.
As of 2022 the non-established businesses are also subject to the SAF-T obligations in Portugal.
October 2022: Portugal SAF-T Updates
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