Portugal is required to implement the value added tax (VAT) rules of the European Union (EU). However, Portugal can set its own standard VAT rate provided it is above 15%. The current standard rate of VAT in Portugal is 23%.

Suppliers of goods or services VAT registered in Portugal must charge the appropriate VAT rate, and collect the tax for onward payment to the Portuguese tax authorities.

Businesses must submit a periodic declaration to pay VAT. The declaration must be submitted quarterly for businesses with a turnover of less than €650,000 in the previous calendar year, and monthly for businesses with a turnover exceeding €650,000 in the previous calendar year.

Periodic declarations are submitted via the Portuguese Tax and Customs Authority (Autoridade Tributária e Aduaneira) website.

Details on Portuguese VAT rates are below:

A small number of services are VAT exempt in Portugal. These include certain health, education, and financial services.

Businesses and taxable persons must register for VAT in Portugal if sales of taxable supplies exceed €25,000. 

There is no threshold for overseas businesses. Foreign businesses must register for VAT as soon as they begin operating in Portugal, and must comply with local rules on accounting, invoices, and applicable VAT rates. This includes:

• Preparing invoices with the disclosure details outlined in the Portuguese VAT Code
• Maintaining accounts and records, which must be held for at least eight years
• Correctly invoicing customers for goods or services in accordance with the Portuguese time of supply VAT rules

EU businesses supplying digital services in Portugal must register for VAT when taxable sales exceed €10,000. Once registered, businesses will receive a Portuguese VAT number.

Non-EU businesses operating in Portugal are required to appoint a fiscal representative.

The tax point (time of supply) determines the point when VAT is due. The tax point in Portugal for goods is the date when the goods are delivered or made available to the customer. The tax point for services is the date when the service was performed or completed. VAT is then payable to the tax authorities seven days after the VAT reporting period end (monthly or quarterly).