In July 2025 Portugal’s tax authority (AT) made substantial changes to the countries VAT rules, specifically focused on who must be VAT registered. If you own a local company, use independent activity (“green receipts”), or own an Alojamento Local (AL), these changes may effect you.
The new framework tightens turnover thresholds, sets faster filing deadlines, and—crucially—forces non-EU residents into the normal VAT regime while giving EU residents a brand-new cross-border option. This article is your starting point to determine if you can continue VAT-free, when you must start charging (and recovering) VAT.
| What Changes | Who feels it first | Practical Impact |
|---|---|---|
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15-day January deadline – if your 2025 Portuguese turnover ends between €15 001 and €18 750, you must become VAT-registered within the first 15 working days of January 2026 and charge VAT from 1 January 2026.
|
AL Owners, freelancers, micro-businesses
|
January becomes a sprint; price lists must change on New Year’s Day |
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Real-time trigger at €18,750 – the invoice that pushes your annual total over €18,750 must already show VAT; the declaration follows within 15 working days. |
AL Owners, freelancers, small-businesses
|
No grace period – you need live sales tracking.
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Non-EU residents must become VAT-Registered – beginning in July 2025 anyone based outside the EU/EEA (UK, US, Brazil, etc.) must become VAT-registered and start charging VAT when appropriate.
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Foreign-owned ALs, SaaS vendors, consultants |
Begin charging VAT on Portuguese operations and gain the right to deduct input VAT. |
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EU residents keep a choice – stay in Portugal’s normal regime or close the Portuguese business activity and use the cross-border exemption via the home tax office. |
EU owners of AL’s |
Flexibility, but missed deadlines can create issues. |
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“Turnover” definition widens – certain domestic exempt sales (health-care, education, finance) now count toward the €15,000 cap |
Clinics, coaches, fintech start-ups |
Some businesses will discover they tipped the scale in 2025. |
|
Quarterly SME return – anyone using the cross-border exemption files a short Quarterly SME Declaration in their home state instead of a Portuguese VAT return |
EU-based e-commerce and service exporters |
A new form, but lighter than the full periodic return.
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Are you an AL owner in Portugal? Know all about “How do the New VAT Rules Impact My AL?”
No. Only Portuguese-located sales are tested.
Invoices to foreign clients normally fall under the reverse-charge rule (invoice code M40) and carry 0 % Portuguese VAT. They stay outside the €15,000/€18,750 calculation.
| Date | Obligation | Who must act |
|---|---|---|
|
1 July 2025 |
Reform takes effect. Non-EU residents move into the normal regime; EU residents choose regime. |
All foreign-owned Portuguese businesses |
|
Invoice that breaks €18 750 |
Show VAT on that invoice; submit alteration within 15 working days.
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Anyone breaching the 25 % buffer during 2025
|
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First 15 working days of January 2026 |
File alteration if 2025 Portuguese turnover sat between €15 001 and €18 750.
|
Businesses & freelancers near the annual cap |
|
1 January 2026 |
Start charging VAT if the above alteration was required. |
Businesses & freelancers near the annual cap |
| Question | If Yes | If No |
|---|---|---|
|
Will your Portuguese turnover exceed €15 000 in 2025? |
Track the €18 750 trigger; VAT may kick in mid-year and the January 2026 declaration will be due.
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You remain exempt – but still issue invoices coded M10.
|
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Are you resident outside the EU/EEA? |
Register for Portuguese VAT on 1 July 2025; consider appointing a fiscal representative. |
You may choose between Portugal’s normal regime and the cross-border exemption.
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Do you invoice mainly foreign clients |
Turnover outside Portugal does not affect the limit, but watch any domestic work. |
Domestic sales alone matter. |
Understanding when to charge VAT, file the new declarations or reclaim input VAT can be daunting. An Accountant in Portugal who works daily with international owners can review your figures, handle the paperwork and keep you compliant—without the jargon.
This article is based on the OCC “Guia Prático – Regime Especial de Isenção do IVA” (July 2025). It is for general guidance only; always confirm your specific circumstances with a professional adviser.