IVA (VAT) Guide for Business in Portugal
IVA (Imposto sobre o Valor Acrescentado) is Portugal's VAT. If you're self-employed or run a business, understanding when to charge, file, and claim back IVA is essential.
Know the rates
Standard: 23% (mainland), 16% (Acores), 22% (Madeira). Intermediate: 13% (food service, some food). Reduced: 6% (basic food, books, medicine, public transport).
Check if you're exempt
Self-employed with annual turnover under 14,500 EUR can opt for IVA exemption (Article 53). You don't charge IVA and can't reclaim it. Good for services to end consumers. Bad if your clients are businesses (they prefer IVA-inclusive invoices they can deduct).
Charge IVA on invoices
If not exempt: add IVA to your prices. The invoice must show the base amount, IVA rate, and IVA amount separately. For B2B services to other EU countries: reverse charge applies (no IVA, client accounts for it).
File IVA declarations
Quarterly (most common for small businesses): due by the 20th of the 2nd month after the quarter (e.g., Q1 due by May 20). Monthly: if turnover exceeds 650K EUR/year. File via Portal das Financas.
Claim back IVA on business expenses
You can deduct IVA paid on business expenses from your IVA owed. Keep all invoices with your NIF. Deductible: office supplies, equipment, professional services. Partially deductible: car expenses (50%), meals with clients (50% for self-employed). Not deductible: personal expenses, entertainment.
Personal IVA claims (e-Fatura)
Even as a consumer, you get IVA deductions on personal expenses through e-Fatura. Categories: health, education, housing, car repair, restaurants, hairdressers, vets, gyms. Always give your NIF when making purchases.
Watch out
- ●Missing IVA filing deadlines results in automatic penalties starting at 25 EUR
- ●If you cross the 14,500 EUR threshold mid-year, you must register for IVA from the following month
- ●VIES registration is needed for intra-EU B2B services — without it, you may be incorrectly charged IVA
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