Operating a restaurant in Porto presents unique challenges, particularly for expat business owners. Understanding and correctly applying VAT (IVA) rates is vital for compliance and maximizing profitability. At Elevate Accounting, we help you navigate these complexities, ensuring your business succeeds.
It is very important to review the system you use to manage your restaurant to ensure the VAT rates are set correctly. Errors can result in thousands of dollars of lost profits or government fines.
An “On-premise” sale in Portugal means that the customer will be using your tables, chairs, or other facilities. In Porto, restaurant and beverage services consumed on-premises are subject to the following VAT rates:
– Intermediate VAT Rate (13%): Applies to most food and non-alcoholic beverages (except soft drinks).
– Maximum VAT Rate (23%): Applies to alcoholic beverages and soft drinks.
The VAT treatment for takeaway and delivery services in Porto differs from on-premises services:
– Intermediate VAT Rate: Applies to ready-to-eat meals prepared for immediate consumption.
– Reduced VAT Rate (6%): Applies to basic food items listed in Annex I of the VAT Code, such as certain fruits, vegetables, and dairy products.
– Maximum VAT Rate (23%): Applies to items not listed in Annex I or II, like certain pastries and individually sold ready-to-eat snacks.
Here are some practical examples of how VAT rates apply to different products and services in Porto:
– Apple Juice: Intermediate rate for on-premises consumption; reduced rate for take-away.
– Chocolate or Unflavored Milk: Intermediate rate for on-premises consumption; reduced rate for take-away.
– Savory Snacks and Ice Cream: Intermediate rate for on-premises; maximum rate for individual take-away items.
Navigating VAT complexities in Porto can be daunting, but Elevate Accounting is here to assist. Our team of English-speaking accountants specializes in supporting expat business owners. We understand the confusion and frustration that comes with being a foreign business owner in Portugal, and we go out of our way to help you and your business thrive in Portugal.
Correctly understanding and applying VAT rates is essential for compliance and profitability. At Elevate Accounting, we offer expert guidance and comprehensive bookkeeping services tailored to expat business owners in Porto. Contact us today to simplify your financial management and maximize your business potential.
Contact us today for a free consultation and let us show you how Elevate will help you take your business to the next level.