Tax rate by region Portugal

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VAT on SaaS in Portugal: A Breakdown

Portugal adheres to the EU’s Value-Added Tax (VAT) system, which dictates that SaaS (Software-as-a-Service) and other digital services are subject to a 23% VAT rate. This tax system, adopted in 1986, plays a crucial role in enhancing revenue collection and ensuring compliance across EU member states. However, certain categories of educational services may be exempt from VAT, provided they meet specific criteria related to the educational institution or provider.

Portugal

Portugal adopted the EU VAT system in 1986 to enhance revenue collection and improve compliance.

Official government link: Autoridade Tributária e Aduaneira

23.00%

E-products and services VAT/Sales tax rate

6.00%

Reduced tax rate

Reduced tax rate product categories

E-books have a lower tax rate in Portugal

Exempted product categories

Educational services: Some online courses, e-learning platforms, and educational content might be exempt if they meet specific criteria related to the educational institution or provider.

Reverse charge mechanism for B2B sales

Yes

Tax ID validation required

Yes

When do you have to register

Non-resident companies have to register as soon as goods are being delivered or services are being provided

Online registration possible

Yes

Local representative needed

Yes

Registration procedure

Companies located outside of Portugal who provide taxable digital services there may need to register for VAT with the Portuguese tax authorities (AT). Businesses from non-EU countries must have a tax representative in Portugal to handle this registration.

Alternatively, they can use the Mini One Stop Shop (MOSS) system. MOSS simplifies VAT compliance for businesses providing telecommunications, broadcasting, television, and electronic services to EU consumers where they don’t have an establishment. If a supplier is based outside the EU and not registered for VAT in any member state, they can choose Portugal as their MOSS identification state.

List of digital and electronic services liable for tax

Digital media and entertainment:
E-books, movies, music, images (whether purchased or streamed)
Cloud-based software and services:
SaaS, PaaS, and IaaS
Web-related services:
Websites, hosting, and internet providers
Online marketing:
Online ads and affiliate marketing

Penalties

In Portugal, if you submit your VAT return late or fail to submit it altogether, you could face a penalty ranging from €300 to €3,750.

Additionally, if you delay or neglect to pay the VAT due, you could be penalized with a fine of up to 30% to 100% of the unpaid tax amount.

Registration threshold

No threshold, non-resident companies must register for VAT

Filing interval

Monthly/Quarterly

Filing deadline

20th day of the second month following the reporting period.

E-invoicing requirements

Yes

Record keeping

The following documents must be kept for 10 years:

Here are some of the key tax documents you should retain:

Invoices: Both sales invoices you issue and purchase invoices you receive.
Accounting records: General ledger, subsidiary ledgers, cash books, bank statements, etc.
Tax returns: Copies of filed tax returns and proof of payment.
Import/export documents: Customs declarations, shipping documents, etc.
Contracts and agreements: Any contracts or agreements that have tax implications.
Correspondence: Any correspondence with the tax authorities.

Effortless Subscription Management and Billing

Key Deadlines and Record-Keeping

Businesses operating in Portugal must adhere to specific compliance requirements related to SaaS sales tax. They are obligated to file VAT returns on a monthly or quarterly basis, depending on the individual business’s circumstances. The deadline for payment is the 20th day of the second month following the reporting period. To ensure compliance, it is essential to maintain accurate records for a period of 10 years. These records include sales and purchase invoices, accounting data, tax returns, import/export documents, contracts, and relevant correspondence with tax authorities. Additionally, embracing e-invoicing is highly recommended to streamline the VAT compliance process.

Mastering SaaS Sales Tax in Portugal

To ensure efficient and accurate management of SaaS sales tax in Portugal, seeking guidance from experienced tax professionals is essential. They can provide valuable insights and assistance in navigating the complexities of VAT regulations. Additionally, embracing automation tools and streamlining processes can significantly enhance efficiency and reduce administrative burdens. Remember, the accurate and timely fulfillment of VAT obligations is crucial for maintaining good standing with the tax authorities and avoiding potential penalties.

What is the applicable VAT rate for SaaS in Portugal?

In Portugal, SaaS and other digital services are subject to a standard VAT rate of 23%. However, certain categories of educational services may be exempt from VAT, provided they meet specific criteria related to the educational institution or provider.
How often do businesses need to file VAT returns in Portugal?

Businesses operating in Portugal must file VAT returns on a monthly or quarterly basis, depending on their individual circumstances.
What are the record-keeping requirements for VAT purposes in Portugal?

Businesses must maintain accurate records for a period of 10 years. These records include sales and purchase invoices, accounting data, tax returns, import/export documents, contracts, and relevant correspondence with tax authorities.

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