Who must pay VAT in Portugal

In Portugal, as in most countries of the world, VAT (IVA) is a tax on the value added of a product or service and in the vast majority of cases is subject to mandatory payment, since it is already included in the purchase price.

First of all, VAT in Portugal directly affects imported goods, trade turnover in the domestic market and various international trade transactions with Portuguese people who have retained citizenship outside the country.

According to current legislation, VAT in Portugal must be paid once every three months, but this period directly depends on the turnover of the enterprise. At the same time, tax rules are so loyal that they provide temporary deferments and discounts to not very successful companies in the hope that their owners will be able to correct the current situation. First of all, this concerns the cost of gasoline and entertainment expenses, although this “number” will not work a second time.

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It must be borne in mind that Portugal, although not one of the leading countries in the European economy, is in ninth place in the European Union in terms of VAT for founders of companies and enterprises. For them, it exceeds on average 21%, and for hired workers – almost 24%.

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What are the VAT rates in Portugal

The value of VAT tariffs in Portugal depends on the category of goods. Thus, essential goods are sold at a minimal markup (this includes most food products, such as drinking water or milk).

There are very tangible benefits for those who are directly involved in the medical industry, transport services and the sale of vital goods. Those foods and drinks that you can do without, as well as visits to various entertainment events, are taxed at an average rate, and luxury goods, luxury goods and services, which can be characterized by the word “luxury,” are sold at the highest markup .

Due to the geographical features of Portugal, which consists of continental and island parts, there are certain features in the calculation of VAT. Thus, the highest VAT in Portugal occurs on the mainland, and the lowest in the Azores.







Type of VAT Mainland
Madeira Azores
Ordinary
23%
22% 18%
Average 13%
12%
18%
Abbreviated
6%
5%
4%

Who is exempt from VAT in Portugal

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However, according to the Portuguese Value Added Code (CIVA), a number of professional workers who meet at least one of the conditions are exempt from VAT. Such employees, according to Article 53 of this Code, include representatives of a business/company/individual entrepreneurs whose annual income in the first year from the start of work does not exceed 10 thousand euros without deduction of taxes. Considering that left-wing forces have been in power in Portugal for many years, this decision seems quite aimed at the development of small businesses.

Article 9 of this Code (CIVA) exempts representatives of socially significant professions from paying VAT in Portugal – for example, doctors, social workers, housekeepers, etc. Thus, civil servants working in the field of health care, education and protection of citizens are one of the most highly paid and at the same time socially secure and protected group of the population.

Portugal is one of the few European countries where not only the level of annual income of a citizen or resident is taken into account, but also the social significance of his profession for society.

In addition, non-EU citizens visiting the country for tourism purposes are also exempt from paying VAT in Portugal on goods purchased here. In contrast to neighboring Spain, the total tax-free purchase amount is very lenient – 61.35 euros, which is about a third less than in Spain.

The main thing is that after purchasing a particular product, present your passport as a Russian citizen at the airport of Lisbon, Porto or Faro and proceed to the Tax Free counter. VAT refunds are made at special cash desks, although you should be prepared for the fact that local customs officers will want to make sure that the goods were purchased in Portugal and not imported from abroad.

You can find out more about the real estate market in Portugal on our website.



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