New Article 53 of the Portuguese VAT Law: What Small Businesses Need to Know

The new Article 53 of the Portuguese VAT Law (CIVA) changes the Special Exemption Regime (SER) for small businesses. These changes affect both Portuguese residents and non-residents and they determine whether or not a business must start charging VAT on its invoices. Here’s a simple guide to the most important points.

What Is the Special Exemption Regime (SER)?

The Special Exemption Regime (SER) is designed for small businesses and freelancers whose annual turnover is below a certain limit. Under this regime, they are exempt from charging VAT on their invoices and do not deduct VAT on their business expenses.

In simple terms:

You don’t charge VAT to your clients.
You can’t claim VAT back on purchases.
You must stay under the turnover limit to keep the exemption.

This regime helps very small businesses and independent professionals reduce administrative work and remain competitive on price.

Turnover Limits

In 2025, small businesses can stay in the SER if their turnover is less than €15,000.
There is a temporary limit of €18,750 during the transitional period.
If a single invoice makes turnover go over these limits, you must add VAT immediately.

Example: You have €14,500 turnover. You issue a €1,500 invoice. You must charge VAT on that invoice because it increased your revenue above €15,000.

Have you registered for VAT in Portugal? Know all about “When do I have to register for VAT in Portugal in 2025?”

Non-Residents

A major change in 2025 affects people and businesses who do not reside in Portugal , in other words, those that do not have a registered office or tax address in Portugal.
These businesses can no longer use the Special Exemption Regime (SER), and they must register for VAT and start issuing invoices with VAT included. This is true, even if they are making less than €15,000 per year.
Key points:
- Non-residents (no office or tax residence in Portugal) must register for VAT. They are no longer eligible to use the SER exemptions any more.
- They must submit a declaration of changes by 15 business days after July 1, 2025, even if their turnover is small.
- All non-resident clients must be informed and supported to comply with this rule.

Exempt and Non-Exempt Activities

Not all activities are treated the same way under VAT law. The type of service you provide determines whether you can use the SER.
- Medical consultations are always VAT exempt, no matter how much you earn.
- Training or education services are not exempt, so you need to check if the SER can be applied.
Tip: Keep exempt and non-exempt services separate in your accounting and sales invoices.

Exports and EU Sales

Some businesses sell outside Portugal, and these transactions can affect VAT obligations.

Exports outside the EU: are VAT exempt and do not count toward your SER turnover limit, but you must keep proper documentation.
Sales within the EU (intra-community supplies): usually require VAT reporting and may remove your eligibility for the SER, depending on your activity type.

If you sell to other EU countries or outside Europe, it’s best to discuss your specific case with an accountant in Portugal who understands international VAT rules.

Practical Tips

Monitor turnover closely to avoid going over limits.
Separate exempt and non-exempt services in invoices and accounts.
Help non-resident clients submit their declaration on time.
Keep clear records of one-off and international transactions.

Summary

The new Article 53 makes rules clear for small businesses:

Turnover(revenue) limits : €15,000 in 2025, €18,750 in the transitional period.
Non-residents must submit a declaration and cannot use the SER.
Special rules for one-off transactions, business restarts, exports, and EU sales.

Small businesses should check their VAT setup carefully and update invoicing to stay fully compliant.

At Elevate Accounting, our team of English-speaking accountants in Portugal helps clients understand these changes, stay compliant, and avoid unnecessary tax surprises.