Value Added Tax (VAT) in Portugal is an integral part of the country’s tax system, affecting a broad spectrum of goods and services. VAT is a consumption tax that contributes to government revenue and supports public services. Portugal’s VAT framework includes various rates and exemptions tailored to different sectors and economic activities.
VAT Rates in Portugal
Portugal’s VAT system features the following rates:
| VAT Rate | Percentage | Description |
|---|---|---|
| Standard Rate | 23% | Applies to most goods and services, providing the primary source of VAT revenue for the government. |
| Reduced Rate | 13% | Applied to specific goods and services, such as some foodstuffs, beverages, and certain restaurant services. |
| Super Reduced Rate | 6% | Used for essential items like books, newspapers, and certain medical supplies. |
| Zero Rate | 0% | Applied to exports and international transport services to support global competitiveness. |
| Exemptions | – | Includes certain financial services, insurance, and some medical and educational services. |
Notes:
- Standard Rate (23%): The general VAT rate applied to most transactions in Portugal.
- Reduced Rate (13%): Targets specific categories like food and some beverages to make them more affordable.
- Super Reduced Rate (6%): Focuses on essential goods and services, such as books and newspapers, to support cultural and educational access.
- Zero Rate (0%): Ensures that exports and international transport services are not subject to VAT, helping Portugal’s international trade competitiveness.
- Exemptions: Cover areas like financial services, insurance, and specific medical and educational services to reduce the tax burden on these critical sectors.
Purpose and Impact
The VAT system in Portugal is designed to:
- Generate substantial revenue to fund public services and infrastructure projects.
- Provide financial relief for essential and cultural goods and services through reduced and super reduced VAT rates.
- Enhance international trade by applying the zero rate to exports and international transport services, supporting Portugal’s global market position.
Understanding VAT in Portugal is essential for businesses and consumers to effectively navigate the tax system and ensure compliance with Portuguese tax regulations.