After joining the European Union, the value-added tax was introduced to the country in 1986. It is called Imposto sobre o valor acrescentado (IVA). As a member state of the EU, it must comply with the EU rules on value-added tax registration, compliance, returns, Intrastat, and EC sales lists. The law backing the registration is stated in the value-added tax code and overseen by the VAT Service Department, under the Directorate General for Taxation in the Ministry of Finance. Value Added Tax registration in the country is no longer subject to a fixed threshold as of July 2021. The tax is usually charged on businesses engaging in import and export trading, provision and install installation of services, organization of live events, sales of goods or products to European countries, involvement in Internet retailing, etc.
Value-added tax thresholds were removed in 2021 and an EU-wide distance selling threshold of EUR 10.000 was adopted instead. All income made from the distance selling lower than the new threshold is subject to value-added tax in the jurisdiction in which the business is located. Companies owned by foreigners importing or trading goods or services in Portugal may have to register as a ‘trader who is not resident in the country’. In addition, it has to follow local compliance, reporting, and payment processes.
If you are interested in VAT registration or looking to learn how to obtain a VAT number, this guide provides information on VAT registration in Portugal and the process to take.
Eligibility of entities
Two types of entities fall under this category namely EU entities and Non-EU entities. European taxpayers get to decide the pattern of their payment, be it before the first taxable transaction or start of the month when the taxpayer wants to register for VAT. New companies whose supply is below the registration level do not pay VAT. For a non-resident who has to pay tax in the country, appoint a tax representative with a letter of attorney that confers due powers. The representative is partly liable to the company it represents for the obligations involving this tax. The following activities require a taxpayer to register for VAT here:
- Import of goods to the European Union through the country
- Buying and selling of products within the territory
- Bulk storage of goods in the country
- Export of goods from the territory to other EU nations
- Intra-Community supplies i.e. transport of goods between and to another EU member state
- Organizing live events
- Owning delivery of goods
Registration for value-added tax
A Foreign business may register for VAT by simply registering as a non-resident. An application for a VAT number is then submitted to the appropriate department. Before starting an activity, a self-employed person or company needs to file a declaration of activity commencement. This document has to be submitted at most 15 days after registering the company with a business registry. The application for VAT registration is done via the website (eportugal.gov.pt). Foreign taxpayers residing abroad may only obtain a Portuguese VAT number when they offer products or services here. Ensure to monitor the accounts, if the yearly earnings exceed EUR 200.000. An applicant shall be issued a value-added tax number after the registration is approved by the authorities. This number can be used for business transactions only after it is issued.
Note that registering for VAT does not apply to every taxpayer. Those who carry out VAT-exempt activities can choose to register. The application form has to include a purpose and description of the transactions subject to tax.
Registration waiting time
The process of getting a VAT number takes no more than 2 months to complete.
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