Running a restaurant in Porto comes with its own set of challenges — especially when it comes to understanding how VAT (IVA) works. If you’re an expat business owner in Portugal, it’s important to know how different rates apply to food, drinks, and services, so everything stays in line with local tax rules.
It’s also a good idea to check that your sales system is set up correctly. If VAT settings are off, it could lead to costly mistakes or even penalties. Getting the setup right from the start can save you time, money, and stress down the road.
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 requirements in Porto can be challenging — especially for expat business owners. At Elevate Accounting, our English-speaking team works with international clients to help clarify VAT rules, filing obligations, and how different rates apply across your business activity.
Understanding and applying VAT correctly is important for staying compliant and maintaining clear financial records. We provide structured bookkeeping and accounting support designed to meet the needs of expat-owned businesses operating in Portugal.
If you’d like to learn more about how we can support your business, feel free to reach out.
Contact us today to schedule a free consultation and learn more about how our services can support your business in Portugal.