The following transactions are subject to VAT:
Some other transactions are deemed supplies of goods or supplies of services for consideration and, as such, are subject to VAT (e.g. gifts of small value and non-return within one year of goods sent for consignment).
The following transactions are considered to fall outside the scope of VAT:
A taxable person for VAT purposes is any person who, independently, carries out an economic activity or that carries out one single taxable transaction that falls within the scope of the personal or corporate income tax.
State, regional and local government authorities and other bodies governed by public law shall not be considered taxable persons in respect of the activities or transactions in which they engage as public authorities.
Supplies of goods
Supplies of goods are subject to VAT in Portugal if the goods are located in Portugal at the moment their transport or dispatch to the costumer begins or, if there is no transport or dispatch, if the goods are located in Portugal at the moment on which they are put at the disposal of the costumer.
Supply of services
Supplies of services are subject to VAT in Portugal if provided to:
Independently of the place where the service provider and the acquirer are established and independently of the acquirer being a taxable person or not, the supply of the following services is subject to VAT in Portugal if physically carried out in Portugal:
The supply of the following services is subject to VAT in Portugal if physically carried out in Portugal and if the acquirer is a non-taxable person:
Telecommunications, broadcasting, television and electronic services supplied to non-taxable persons are taxed in Portugal when the customer, a non-taxable person, is established, has his permanent address or usually resides herein.
Some transactions are exempt from VAT. Exempt transactions that do not grant a right to deduct the input VAT are “incomplete exemptions”. The transactions that, although exempt, grant a right to deduct the input VAT are “complete exemptions”.
The supply of hospital and medical care, the provision of education, the supply, leasing or letting of immovable property, subscriptions by non-profit making organisations, certain financial services, insurance and reinsurance transactions and the supply of restaurant and catering services by the employer to its employees are the main transactions exempt from VAT.
For some of these transactions, if certain conditions are met, it is possible to opt to charge VAT. Waiving the VAT exemption allows that the VAT incurred is deducted.
Are also exempt from VAT the supply of services (and the supply of goods closely linked thereto) provided by:
The following transactions are exempt from VAT:
VAT becomes chargeable when the goods are put at the disposal of the customer and when the services are supplied.
Having the obligation to issue an invoice/simplified invoice, the VAT becomes chargeable no later than on the 5th working day in spite of the stipulated on the VAT cash regime.
When a payment is made on account before the goods or services are supplied, the VAT becomes chargeable on receipt of the payment.
The taxable amount includes everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party.
The taxable amount includes taxes, duties, levies, charges and incidental expenses.
Special rules apply on the calculation of the taxable amount for transactions carried out between taxable persons with special relations, according to nr. 4 of article 63.º of the Corporate Income Tax Code.
The intermediate rate is applicable to supply of some foods, to some food and beverages services, pre-cooked meals and to the admission to concerts, shows, theatre, cinemas, circus and bullfighting.
Only VAT mentioned in an invoice / simplified invoice issued in a legal form or in an import document issued by the Portuguese Tax and Customs Authorities in which the reverse charge mechanism does not apply can be deducted by the taxable person.
Mixed taxable persons
Taxable persons performing simultaneously activities that give the right to deduct VAT and activities that do not give such right, should use the direct allocation method and/or the deductible proportion in order to determine the amount of deductible VAT.
VAT on capital goods is subject to an adjustment period which is 5 years in case of movable property and 20 years for immovable property.
If, within the referred period, the goods are allocated temporarily or permanently to exempt transactions, an adjustment shall be made in respect of one-fifth or one-twentieth of the deducted VAT for each remaining year of the adjustment period.
Restrictions on the right of deduction
VAT is not deductible in respect of the following expenses:
If the expenses of transportation, food and accommodation relate to the organization of congresses, fairs, expositions, seminars, conferences and similar events, 50% of the incurred VAT is deductible. If these expenses relate to the participation in the referred events, 25% of the incurred VAT is deductible.
Taxable persons should issue an invoice (or “invoice – receipt”) for each supply of goods or supply of services or, in some situations, a simplified invoice.
If the taxable amount or VAT amount of a transaction changes due to any reason (including errors or discounts), a correcting document of the invoice should be issued (a “debit note” or “credit note”).
Issue of invoices
Invoices and amending documents should be issued using an invoicing software previously certified by the Portuguese Tax and Customs Authorities.
These documents are issued in one or more series, conveniently referenced according with business needs and must be dated and numbered progressively and continuously, within each serial, for a period not less than one fiscal year.
The use of pre-printed invoices with a pre-printed sequential numbering is only allowed if certain conditions are met.
Self-billing is allowed if there is a prior agreement between the two parties and if the acquirer can prove that the supplier was informed of the document issuance and has accepted its content.
The self-bill has to mention “autofaturação”.
Invoices and other fiscal relevant documents can be issued by electronic means, subject to acceptance of the recipient, provided that the authenticity of the origin, the integrity of the content and respective legibility is assured, from the moment of issuance until the end of the archive period. Adequate control allowing a reliable audit trail between the relevant document and the supply of goods or services should be implemented.
The authenticity of the origin and the integrity of the content of the documents issued by electronic means is ensured if one of the following procedures is adopted:
Communication of issued documents
Taxable persons that have established their business, a fixed establishment or have their residence in Portugal and that carry out transactions subject to VAT, are obliged to communicate to the Portuguese Tax and Customs Authorities, by electronic means, the elements of documents issued under the VAT Code (invoices, simplified invoices, debit notes and credit notes) as well as the data of working documents and the receipts.
The referred communication should be done up to the 12th of the following month:
Accounting and archiving
The accounting records should be organized in order to guarantee that the VAT can be calculated and that all relevant information is available for completing the periodical VAT return.
A register of the capital goods should be kept in order to allow the control of the VAT deductions and adjustments.
All records and supporting documents, including documents relating to analysis, programming and execution of information systems, should be kept for 10 years.
It is allowed to proceed with an electronic archive of both electronic invoices and paper invoices issued by an invoicing software, considering that in the last situation all the conditions provided in Ministerial Order are complied.
Dúvidas e questões
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