Portuguese FAQ on VAT reverse charge for non-resident taxpayers

Clarifications about reverse charge on supplies made by foreign companies.

Portuguese tax authorities have published clarifications in the format of FAQ on VAT rules applicable to non-resident companies. The FAQs were published in July 2022.

The FAQs focus on the reverse charge mechanism for supplies made by foreign companies introduced in 2021 in Portugal. Among other topics:

  • Definition of the reverse charge as “the rule according to which the legal obligation to settle and deliver the tax to the State is transferred from the taxable person transmitting the goods or service provider to the purchaser, also a taxable person.”
  • Foreign companies only performing domestic sales under the reverse charge rule do not need to be VAT registered in Portugal.
  • Confirmation that foreign taxpayers performing taxable transactions that oblige them to VAT register in Portugal – e.g., intra-Community acquisitions, may exercise the right to deduct the VAT incurred on domestic purchases in the periodic VAT return.
  • Confirmation that the distance sales to Portuguese customers reported in the OSS return are not subject to the country-specific invoicing requirements.

The domestic reverse charge introduced in Portugal corresponds to the country's implementation of reverse charge from Article 194 of the EU VAT Directive (Directive 2006/112/EC). 

Do you want to know more about VAT reverse charge? Have a look at our dedicated article here!


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