The Value Added Tax (VAT)
is a type of indirect tax levied in Portugal on the supply of goods and services. The implementation of this tax is based on several EU directives and Portuguese companies must comply with the taxation regulations enforced in the country.
Both a standard rate and a reduced VAT rate
are applicable in Portugal. Foreign investors who are interested in doing business in one of Portugal’s largest cities can request the services of a law firm in Portugal
and those provided by local tax experts.
The VAT rate in Portugal
The value added tax is imposed on the provision of services, goods and also on imports. A standard rate of 23% applies, together with an intermediate rate of 13% and a reduced one of 6%. Different rates apply in the autonomous regions of Portugal: 22%, 12% and a lower rate of 5% in in Madeira and rates of 18%, 9% and 4% in the Azores.
Service providers and suppliers are required to register for VAT purposes in Portugal. Monthly returns are required when the annual turnover exceeds a certain amount and the VAT returns have a filing deadline. Monthly and quarterly VAT returns are applicable in Portugal.
Certain VAT refunds
may apply for non-resident companies that are providing services in the country but are unable to register for a Portuguese VAT number
. You can talk to an expert in tax laws, like one of our lawyers in Portugal
, to find out more about the requirements for foreign companies operating in the country.
Taxation in Portugal
Companies in Portugal
are taxed on their profits which include the business income, the passive income, and any capital gains. Resident companies are taxed on their worldwide profits whereas non-resident companies only on their profits derived from the country.
The corporate income tax in Portugal is 21% and a reduced rate applies for the first 15,000 EUR for small and medium-sized companies. Apart from VAT other taxes like e real property tax, the stamp duty or the transfer tax apply to corporations. A withholding tax on dividends, interest, and royalties also applies.
Portugal has more than 60 double tax treaties
in force that allow for the avoidance of double taxation in case of companies or individuals that derive income both from a foreign source and from a Portuguese one.
For more information about tax laws and various tax provisions, please contact our law firm in Portugal
. One of our experts will be able to answer your questions.