A VAT Refund Guide to 

VAT Refund Guide in Portugal | VAT IT

How to get VAT Refunds from VAT Refund Guide in Portugal | VAT IT for your business

Are you looking for more information of VAT in Portugal? Read on to learn everything there is to know about VAT regulations in Portugal.
The below information details the requirements needed to be eligible for a VAT refund. This includes claimable expense types, Portugal VAT rates, deadlines and claiming periods.
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Where is your company based?

EU

based businesses

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VAT-registered businesses in an EU member state are eligible to recover VAT on business costs from VAT Refund Guide in Portugal | VAT IT under the EU VAT Refund Directive.

NON-EU

based businesses

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VAT-registered businesses outside of the European Union are eligible to recover VAT on business costs from VAT Refund Guide in Portugal | VAT IT under the 13th Directive.

Portugal’s VAT Rates

Portugal introduced a value added tax (VAT) in 1986 to meet the conditions required to join the European Union, which compels its members to hold a VAT rate of at least 15%. 

At 16%, this EU country’s initial VAT rate (referred to as imposto sobre o valor acrescentado, or IVA) fell just above the EU’s minimum. Despite two slight dips in the 1990s and the late 2000s, the rate has risen slowly through the years. Since 2011, Portugal’s standard VAT rate has remained fixed at 23%—one of the highest VAT rates in the EU.

Current Rates in Portugal

In Portugal, VAT rates fall under three categories:

  • Standard VAT Rate (23%) – The standard rate applies to most goods and services.
  • Intermediate VAT Rate (13%) – This category includes dining and café food, wine, certain foodstuffs, admission to cultural events, and agricultural supplies.
  • Reduced VAT Rate (6%) – The reduced VAT rate covers many essentials, including some foods, pharmaceutical products, books, diapers, and hotel accommodations.

Additionally, while Portugal does not officially list a zero rate, some goods and services have VAT exemption. These include healthcare services, children’s services such as daycares, and services from non-profit organizations. Portuguese companies earning less than 12,500 euros per year are also VAT exempt.

Finally, Portugal’s autonomous regions have slightly lower VAT rates. The adjusted categories are as follows:

  • The Azores – The standard rate is 18%; the intermediate rate is 9%; the reduced rate is 4%.
  • Madeira – The standard rate is 22%; the intermediate rate is 12%; the reduced rate is 5%.

How to Pay VAT Bill in Portugal

If you are a self-employed person or the owner of a legal entity (a company) that does business in Portugal, you must register for VAT.

Once registered, you are required to submit a VAT declaration that follows one of two schedules:

  • Monthly submissions – Those with an annual turnover that exceeds 650,000 euros must submit monthly. You must submit your declaration by the 10th day of the second month following the relevant month and maintain the payment schedule for a minimum of three years.
  • Quarterly submissions – Those with an annual turnover below 650,000 euros should submit quarterly, though opting for the monthly scheme is possible. You must submit your declaration by the 15th day of the second month following the relevant quarter. 

You must log into your account on the Portuguese tax authority website to pay your VAT bill.

Portugal VAT Compliance

Most VAT requirements in Portugal revolve around proper record keeping. For example, you must:

  • Save all transaction records for ten years
  • Back up data for all online billing and accounting programs
  • Keep all paper records and books in Portugal
  • Store all electronic data in the European Union

You must also sign all documents and invoices using an acceptable electronic signature. Additionally, if you want to claim a VAT refund, Portugal requires you to appoint a tax representative within the country.

Should you ever need assistance complying with the above standards or obtaining a Portugal VAT refund, feel free to contact our team of international experts.

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Sources:

Organisation for Economic Co-operation and Development. Consumption Tax Trends – Portugal. https://www.oecd.org/tax/consumption/consumption-tax-trends-portugal.pdf

ePortugal.gov.pt. Value Added Tax (VAT) in Portugal. https://eportugal.gov.pt/en/cidadaos-europeus-viajar-viver-e-fazer-negocios-em-portugal/impostos-para-atividades-economicas-em-portugal/imposto-sobre-valor-acrescentado-iva-em-portugal

Which countries have reciprocity with VAT Refund Guide in Portugal | VAT IT?

All EU countries, Liechtenstein, Macedonia, Norway and Switzerland

For a more detailed explanation on what reciprocity means within the scope of VAT, click here:

What expenses are claimable in VAT Refund Guide in Portugal | VAT IT?

ENTERTAINMENT & HOSPITALITY

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Entertainment

0%
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Hotels & Accommodation

6%
Only in certain circumstances
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Restaurants

23% & 13%

EVENTS

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Conferences, Trade Shows & Exhibitions

23%
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Training Courses & Seminars

23%

GENERAL EXPENSES

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Goods

23%
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Inter-company charges

23%
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Office Expenses

23%
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Marketing Costs

23%
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Professional Fees & AP invoices

23%

TRAVEL RELATED

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Car Rental

0%
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Fuel

0%
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Public Transport

6%
| VAT IT | VAT Refund Guide in Portugal | VAT IT

Taxis

12%

Additional Information

How far back can your business claim VAT from VAT Refund Guide in Portugal | VAT IT?
January to December of the previous year
What’s the foreign VAT deadline in VAT Refund Guide in Portugal | VAT IT?
30 September of the year following the claim year date
How long does it take to receive a VAT refund from VAT Refund Guide in Portugal | VAT IT?
Depending on the complexity of your application and the capacity at the VAT authority, it can take up to 6 months for EU businesses and up to 10 months for Non-EU businesses to receive a VAT refund from Portugal

Need help with your VAT refund from VAT Refund Guide in Portugal | VAT IT?

You don’t have to do this alone. We’ve been helping companies reclaim foreign VAT refunds for over 20 years. We have the knowledge and technology to process your refunds quicker as well as attend to any unforeseen VAT authority queries that may arise.

Download a full international VAT guide and never miss a deadline

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