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VAT in Portugal — Important Rules and Considerations

The Value Added Tax (IVA) is an indirect tax applied to the consumption of goods and services in Portugal. It is a fundamental component of the Portuguese tax system, generating significant revenue for the State. In this article, we will provide a complete guide to VAT in Portugal, covering its main features, application rules and important considerations for businesses and consumers.

1. VAT structure in Portugal

In Portugal, VAT is divided into different rates, based on the nature of the goods or services. The most common VAT rates are the standard rate (23%), the intermediate rate (13%) and the reduced rate (6%). Understanding which VAT rate applies to each specific transaction is essential to ensure compliance with tax obligations.

2. Invoicing and VAT Collection Rules

Businesses are subject to specific rules regarding VAT invoicing and collection. It is necessary to issue correct and duly detailed invoices, including the mandatory information required by the tax authorities. In addition, companies must collect VAT on sales made and subsequently declare and settle this amount to Finance, in accordance with the defined deadlines.

Any invoicing system must be certified by Tax authorities.

3. Special VAT Regimes

There are special VAT regimes that apply to certain situations or specific sectors. For example, the VAT exemption regime can be applied to small companies with a turnover below a certain threshold. There are also specific regimes for sectors such as agriculture, real estate and tourism. It is important to understand the conditions and requirements to benefit from these special schemes.

4. VAT Deductions and Refunds

Companies that are subject to VAT have the right to deduct the VAT paid on purchases related to economic activity. This deduction is carried out in the periodic VAT return. In addition, it is possible to request a refund of the VAT paid in the case of exports or intra-community transactions. It is critical to keep proper accounts and keep accurate records to ensure compliance with these obligations.

Final considerations

VAT is a complex tax that requires careful attention from businesses and consumers in Portugal. It is essential to understand the applicable rates, follow the VAT invoicing and collection rules, and be aware of the special regimes and the rights of deduction and reimbursement. Consultation with an accountant or tax specialist is recommended to ensure proper fulfillment of VAT-related obligations and to avoid potential penalties or problems with the Treasury.

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