VAT Registration in Portugal

Updated on Thursday 10th August 2023

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Foreign investors who are interested in doing business in one of Portugal’s largest cities can request the services of our law firm in Portugal and those provided by our local tax experts. We can help them with VAT registration in Portugal, as part of a business incorporation in this country.

On the other hand, those interested in immigration to Portugal can solicit the support of our local representatives.

Quick Facts
We offer VAT registration services	Yes
Standard rate	23%
Lower rates	- 13% for certain foodstuff, restaurants; - 6% for pharmaceutical products, newspapers
Who needs VAT registration	Companies with turnover exceeding EUR 10,000
Time frame for registration	Around 2 weeks
VAT for real estate transactions	No
Exemptions available	- trade and supply of specific goods, - non-profit organisations, - professional services, - cultural activities
Period for filing	Monthly or quarterly
VAT returns support	Yes
VAT refund	Both natural persons and companies can claim VAT refund
Local tax agent required	For foreign companies in Portugal
Who collects the VAT	-retailers, - manufacturers, - wholesalers
Documents for VAT registration	- certificate of incorporation, - identification documents, - standard forms
VAT number format	PT country code followed by 9 digits
VAT de-registration situations	When the company closes its activities
Activities required for VAT registration in Portugal	- selling products to EU countries from Portugal; - importing products into Portugal; - internet retailing; - organizing conferences, events, or related activities; - providing supply and install services for more than just a year etc.
VAT rate in Azores	- 16% (standard), - 9% or 4% (reduced rates)
VAT rate in Madeira	- 22% (standard), - 12% or 5% (reduced rates)
VAT registration in Portugal for cross-border sales	If a company sells and delivers products from another EU member state to clients or firms in Portugal, they are required to register for VAT in Portugal if the total annual value of these sales exceeds EUR 35,000.
VAT registration for sole traders	Sole traders need to register for VAT in Portugal when their annual turnover exceeds EUR 25,000. Our law firm in Portugal can help individuals looking to become sole traders.
Keeping records	Records must be kept for 10 years.
Quarterly filing	If the total sales in the previous VAT year are less than 650,000 euros
Monthly filing	If the total sales in the previous VAT year exceed 650,000 euros
Delayed VAT payments	Fine consisting of 30% to 100% of the tax due
Not submitting VAT returns	Fine between 300 - 3,750 euros
Invoice content	- company name and business address, - company identification number and VAT ID, - details of services/products purchased, - price of products/services with and without VAT, - the total due amount of products/services
Invoice issue time limit	5 working days
VAT applied on vouchers	Depends on whether they are single-purpose vouchers (SPV) or multi-purpose vouchers (MPV)
Special VAT schemes	- special exemption scheme, - special scheme for small retailers, - special scheme for farmers, - taxation scheme for liquid fuels applicable to dealers
Other taxes in Portugal	- corporate income tax, - withholding tax, - social security contributions, - stamp duty, etc.

Portuguese VAT for a foreign company

Foreign investors who want to establish companies in Portugal must comply with the legislation regarding registration for the payment of taxes. Companies that import products into Portugal, those that sell on the Internet to customers in Portugal, as well as those that buy and sell products and services in this country have the obligation to apply for Portuguese VAT for a foreign company. Among the imposed formalities we mention:

The Certificate of Incorporation of the company is required.
VAT certificates from the country of origin of the company are also needed.
The VAT registration is made with the Portuguese tax authority.
Portuguese VAT registration for a foreign company requires a fiscal representative in charge of collaboration with the authorities. Our Portuguese lawyers can represent their clients with a power of attorney.

Considering the above formalities, those interested in applying for Portuguese VAT registration for a foreign company are advised to contact our specialists. They can take care of the formalities so that the clients have a simple and fast registration process.

VAT registration for a local company in Portugal

The registration for VAT in Portugal in 2023 is not subject to a specific threshold and it is imposed on companies having import and export activities, supplying and installing services, organizing live events, selling goods to EU countries, internet retailing and many more. The company’s documents are needed for the VAT registration in Portugal, and the entire process takes around 14 days, depending on the entitled authorities and if the documents are properly drafted.

The legal aspects of VAT registration in Portugal can be explained by one of our Portuguese lawyers who can also assist investors set up their companies in Portugal.

There are cases of companies that are not registered for VAT in Portugal but, in this situation, such companies sell and also deliver products from another member state to clients and/or firms. If the value of these sales surpasses a threshold of EUR 35,000 it is compulsory to register for VAT in Portugal. Make sure you understand all the conditions of VAT registration in Portugal and request professional help from our lawyers in Portugal. Also, the following example regards the VAT registration in Portugal:

companies selling products to EU countries from Portugal must register for VAT;
the import of products into Portugal is subject to VAT;
internet retailing or online product sales of companies with establishments in Portugal must register for VAT;
companies that organize conferences, events or anything related have the obligation of registering the firm for VAT;
companies that deal with supply and install services for more than just a year are subject to VAT.

The VAT rate in Portugal in 2023

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 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 in 2023. Plus, our immigration lawyers in Portugal can offer assistance for those interested in relocation. Below you can discover an infographic with information on this subject:

VAT returns in Portugal

Companies that are subject to VAT in Portugal need to submit regular returns with information about the taxable sales and costs. If the turnover is equal or higher than EUR 650,000, the VAT returns are submitted on a monthly basis, as stated by the VAT Directive and Articles 170-171.

Some companies might need to submit the Portuguese Intrastat return which is a document that comprises additional statistical information. Non-EU companies submitting VAT refunds must offer details of each invoice connected to VAT, the summary of the refund request and claimant details. Extra details in this matter and all the legal aspects can be offered by our lawyers in Portugal. They can also assist foreigners interested in immigration to Portugal.

Other VAT registration conditions

Any company from abroad looking for a business in Portugal must register for VAT purposes as soon as the firm is incorporated in the country. This isn’t a difficult process, but instead of facing problems with the authorities, it is best to have the support of a local team of lawyers in Portugal.

Companies dealing with trading activities, supply, and install, events and warehouse owners must pay attention to the VAT registration in Portugal in 2023. If you are looking for support in terms of VAT registration you can rely on the assistance offered by our team of advisors.

VAT implementation in Portugal

Portugal implemented the VAT in 1986 as an alternative to the transaction tax code imposed for the goods and services meant for sale purposes. This tax was also applied in Madeira and Azores, the autonomous regions of Portugal. All the EU directives regarding the VAT have been implemented in the Portuguese laws since this tax was applied in Portugal.

The scope of the VAT in Portugal involves varied transactions of companies in this country and the tax applies to the supplies of goods and services, intra-community acquisitions of goods, the imports of goods, etc.

We invite you to watch a video presentation on this topic:

Short details about the corporate tax in Portugal

The standard corporate tax rate in Portugal is set at 21% and it is applicable to the profits of the companies established in Portugal, with the exception that small firms are subject to a different tax regime. For example, for the first Eur 15,000 taxable income, a corporate tax rate of 21% applies. It is important to know the rules referring to the taxation regime in Portugal and to ask for complete legal advice if you intend to start a business in Portugal.

In this matter, one of our Portuguese attorneys can stand at your disposal with assistance and legal support. They can also give you information and guidance about the incorporation process of a company, about how to register a trademark or about how you can obtain the EORI number.

Double tax treaties in Portugal

The avoidance of double taxation and fiscal evasion is made with the help of the double taxation agreements signed by Portugal with countries worldwide. Algeria, Barbados, Austria, Brazil, Bulgaria, Belgium, Chile, Canada, Colombia, Cyprus, the Czech Republic, Cuba, China, Cape Verde, Denmark, Estonia, France, Finland, Greece, Hungary, Hong Kong, Iceland, Israel, Ireland, Italy, Guinea-Bissau, Lithuania, Luxembourg, Latvia, Kuwait, Malta, Macau, Morocco, Mozambique, Mexico, Norway, the Netherlands, Pakistan, Panama, Poland, Peru, Russia, Romania, Uruguay, Ukraine, Slovakia, Slovenia, Sweden Singapore, Switzerland, Venezuela, Turkey, and Tunisia are only a few of the countries that signed a double taxation agreement with Portugal.

As for the provisions involved, we mention that the incomes are levied only in one of the states that signed such a treaty. Also, a credit is applicable to revenues levied in both Portugal and the signatory country. You should talk to one of our specialists and ask for complete information about the taxes you need to pay in Portugal and about the double taxation agreements signed by this country. On the other hand, our immigration lawyers in Portugal can manage the formalities for persons interested in moving to this country.

Invoice content required

Invoices are issued when a company's products and services are sold. They must include the following information:

Company name and business address in Portugal.
The company's unique identification number and VAT ID.
Information about the services and/or products purchased.
The price of the products without VAT.
The price of products/services with VAT included.
Total amount due for products bought.

This information is normally included in the program with which the respective invoices are issued, and every company with activities in Portugal must be prepared from this point of view. We remind you that one of our lawyers in Portugal can provide you with information about Portuguese VAT registration for a foreign or local company and can take care of the formalities involved in this process.

Sole traders and VAT in Portugal

If you work as a sole trader in Portugal, you should know that registration for VAT starts when you exceed the threshold of EUR 25,000 in a year. Therefore, if in the course of a year you issue one or more invoices that exceed this amount, you must consider registering for VAT payment in Portugal. If the estimate is that you will exceed EUR 200,000 annually, you must maintain annual accounts.

The formalities are simplified compared to those for a company, but you need to fill in some standard forms with information about the activities you carry out in Portugal and respectively a declaration of commencement of the activity. And in this case, you can benefit from the legal advice offered by our Portuguese lawyer.

VAT for companies without establishments in Portugal

Sole traders or companies without an establishment in Portugal but with an address in another EU member country must prepare a declaration of commencement of the activity with the help of a fiscal representative, at the time of VAT registration. The latter must have a tax address in Portugal to handle such a task.

We remind you that the submission of such a document must be done within a maximum of 15 days from the start date of the respective activities.

VAT de-registration cases

If you want to stop your activities in Portugal, you can notify the tax authorities within 30 days from the date of the decision. In the present case, a declaration of termination of the activities will be drawn up, stipulating the cessation of the payment of taxes, if you are up to date with them. You will need our Portuguese attorney for these formalities, so count on us.

Registration of a company in Portugal

The limited liability company or LDA as it is known in Portugal is the most common business structure in this country. Such an entity can be established by at least two partners or shareholders and a minimum capital of EUR 5,000 for a private LDA in Portugal. The minimum share capital of EUR 50,000 is needed for opening a public limited liability company in Portugal. The Articles of Incorporation comprising information about the owners, the name of the company, the activities, the name of the company representative, the general rules, the date of formation, the voting rights and the ways in which a company can be closed.

The registration for tax purposes and social contributions is mandatory right after the company is registered in Portugal. One of our lawyers in Portugal can give complete assistance and support for foreign investors interested in opening companies in this country, by providing legal advice.

Tax minimization tools in Portugal

Avoiding the overpayment of fees in a company can be done with the help of a proper tax plan which can be created by an experienced accountant or advisor. In this sense, a tax minimization tool can be a suitable option, where all the taxes in the firm can be properly verified. Paying in advance is a useful tool for those wanting to cut the fees in a serious percent and that because creditors can offer different advantages.

Some entrepreneurs might be interested in opening charities in Portugal in order to benefit from several tax deductions. Office supplies, bonuses, and gifts can be used as tax minimization tools for companies in Portugal. The amount of money saved can be used by business persons for future investments in the company or any other project. It is important to pay attention to the tax minimization methods available for your company and solicit the assistance of a specialized consultant in this area.

Why make investments in Portugal

Portugal benefits from an excellent geographic location in the western part of Europe, having complete connections with all continents in terms of business and trading. Import and export companies, touristic agencies, agriculture companies, fishery businesses, IT enterprises and energy companies are only a few business examples that already thrive in Portugal.

International investors have numerous business opportunities in Portugal and can benefit from an appealing and solid business climate encouraged by the Portuguese government interested in attracting more investments in all sectors of interest and placing FDI as a top priority. The Netherlands, Spain, and Luxembourg are the main investors in Portugal and below you can find interesting information and facts about the investment direction in Portugal:

Around USD 869 billion was the FDI flow in Portugal in 2019;
Around 24.6% of the total FDI in Portugal came from the Netherlands;
the technology-driven investments are sustained by several free trade zones in Portugal;
the Golden Visa Program in Portugal grants citizenship for entrepreneurs making investments of at least EUR 250,000;
Portugal ranks 34th out of 190 economies in the world, as stated by the "2019 Doing Business" report provided by World Bank.

It is needed and recommended to have the legal support of an advisor in a matter of business and taxation.

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 and explain the business formalities for 2023.