PortugalManual

VAT Registrations and Simplifications in Portugal

When do I need a Portuguese VAT number? 

Generally, a foreign business must register for VAT in Portugal as soon as a taxable supply is made. The following are the usual examples of taxable transactions:

  • Domestic supply of goods not reverse charged: A supply of goods located in the Portugal where reverse charge does not apply requires a VAT registration of the supplier.
  • Supply of services not reverse charged: Foreign non-established businesses supplying services on which Portuguese VAT is due by the supplier must register for VAT. These services are rather exceptional, as the general B2B rule would apply.
  • Export: Exporting goods to a non-EU country requires a VAT number before the export is made.
  • Intra-Community acquisition: Acquiring goods from another Member State where all conditions for intra-Community movements are met requires the customer to register for VAT.
  • Intra-Community supply: Supplying goods another Member State is also a taxable transaction that obliges the supplier to register for VAT. 
  • Distance sales: When applicable in case the Seller has not joined OSS. See the E-commerce manual for more information.

Backdated registrations are possible in Portugal. However, this involves the payment of a penalty at the moment of registration.

There is no registration threshold for Portuguese established companies. All companies must submit a declaration of commencement of activities (Declaração de início de atividade) before performing any taxable transactions, as indicated in articles 29 and 31.1 CIVA. The only exception to this rule is that the entities performing sporadic transactions which do not exceed EUR 25,000 (atos isolados). When these entities exceed the EUR 25,000 threshold, the need to VAT register, although they are exempted from submitting periodic VAT returns.

Input VAT incurred previous to the VAT registration may be deducted in certain circumstances, provided that the cost complies with the VAT deduction limits in Portugal. This input VAT will be included in the first VAT return submitted by the taxpayer.  

Fiscal representative requirements in Portugal 

Non-EU businesses need to appoint a fiscal representative when registering for VAT purposes in Portugal. For businesses established in the EU and the European Economic Area (EEA) the appointment of a Portuguese fiscal representative is just optional.

Marosa provides the fiscal representation service through our Portuguese entity.

The requirement for non-EU businesses of appointing a fiscal representative is regulated in the local legislation in art. 126.º do CIRC e art. 19.º da LGT.

VAT groups in Portugal

VAT grouping is not possible at the moment in Portugal.

Consignment and Call-off stock in Portugal

The EU introduced a call-off stock simplification that all EU Member States must implement. This was put into place so that businesses that operate under a consignment stock structure do not have to VAT register in the country of destination. Portugal has introduced the consignment stock simplification.

Check out our article on the EU call-off stock simplified VAT rules for more detailed information.

Portuguese Bad Debt Relief

Bad debt regime applies on sales where an invoice has been issued with VAT, reported in the VAT return and the VAT amount has been paid to the tax authorities but the whole price has not been collected from the customer.

This is often due to the client´s bankruptcy, insolvency or simple missed payments to suppliers. In these cases, most countries allow to recover the VAT initially paid to the authorities, however, the conditions change from one country to another.

Portugal allows for bad debt relief by adjusting the out VAT paid in the periodic VAT return. In order to be able to deduct the bad debt, also known as créditos de cobrança duvidosa in the local language:

  • The credit is overdue for more than 12 months and there are proofs about the payment being due.
  • The credit is overdue for more than 6 months when the debtor is a private individual or a VAT exempt taxable person without the right to deduct VAT, provided that the VAT credit per invoice is not higher than EUR 750.
  • Also, the bad debt relief is allowed before those timelines in case of execution procedures or insolvency.

The bad debt relief regime is regulated in Article 78 CIVA.

Portuguese Import Deferral and Postponed VAT Accounting.

Portugal has introduced a postponed import VAT accounting mechanism where import VAT can be reported as input and output VAT (reverse charged) in the VAT return instead of being paid to the authorities upon importation.

Import VAT deferral, meaning delaying the payment of VAT for a given period, is not applicable in Portugal. You should however be aware of the difference as postponed import VAT accounting is sometimes referred as deferral import VAT.

For postponed import VAT accounting to apply, a business must meet the following criterium:

  • Submit VAT returns on a monthly basis;
  • Should not have any outstanding tax debts;
  • Only carry out transactions which are subject to VAT, or exempt transactions with the full right to deduct the input VAT.

The application shall be submitted by the 15th day of the month previous to the desired start of the postponed import VAT accounting application.

Have a look at our general article about postponed import VAT accounting.

Portuguese Customs and VAT warehouses

Customs or bonded warehouses are available for goods that have not cleared customs in the EU (T1). VAT and excise duties are not due when these goods are directly placed in the Customs warehouse. As soon as they exit this regime, these amounts are due. Sales within the customs warehouse are zero-rated.

VAT warehouses are available for cleared goods (T2). These goods have already paid customs duties. The conditions are similar to those of Customs warehouses. The goods allowed are those included in Appendix V of the VAT Directive. In addition, the following goods may also be subject to this suspension regime: certain wood items, gold, iron and steel product and non-ferrous metal.

Find here more information about special customs regimes in Portugal.

Finally, find here official EU guidelines on Customs’ special regimes.

Special VAT Schemes in Portugal

There are two different VAT schemes for small businesses in Portugal:

  • The exemption scheme, or Regime de isenção, (Article 53 CIVA) and
  • Simplified scheme for small retailers, or Regime dos pequenos retalhistas (Article 60 CIVA).

Apart from the above special VAT schemes for small businesses, there are the following special VAT schemes in Portugal:

  • Farmers
  • Travel agents
  • Margin scheme
  • Investment gold

The special VAT schemes applicable in Portugal are regulated in Section IV CIVA.

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