VATupdate

VAT rates: Portugal

Quick overview

Standard Rate Other Rates
23% 13% and 6%

The local name for VAT in Portugal is Imposto sobre o valor acrescentado (IVA).

Recently, the 6% reduced VAT rate supplies of PPE’s was made permanent.  Further the VAT rate on (certain) supplies of electricity was amended (to 13%) some time ago.  For more information about (recent) rate change developments in Portugal, please click here.

Standard rate: 23%

This is in place since 1 January 2011.  Before that, the standard rate was 21%. This rate applies for all transactions that take place in Portugal, unless an exception applies (such as a reduced rate, the zero rate or an exemption, or a reason to treat the transaction as outside scope of VAT).  Please note that special VAT rates apply in the Autonomous regions of Azores and Madeira (see below).

Zero rate (0%)

On 24 March 1992 Portugal abolished the zero rate. All goods and services previously zero-rated are now taxed at 6%. Further, Portugal applies various exemptions with a refund of tax paid at preceding stages (zero rates), such as intra-Community and international transport, intra-Community supplies of goods, exports of goods (and related services) to non-EU countries, and services to goods and goods under customs control.

Reduced rate 1: 13%

Examples of transactions subject to this rate are:

  • Certain foodstuffs
  • Admission to cultural services (shows, cinema, theatre), unless it concerns admission to obscene or pornographic shows
  • Restaurant and catering services (except alcoholic drinks, soft drinks, juices, nectars and bottled water)
  • Certain supplies of electricity (supplies of low voltage electricity (up to 6.9 kVA) for consumption not exceeding 150 kWh per 30-day period, when purchased for consumption by large households, defined as having five or more persons (applicable for consumption as from 1 March 2021)).

Reduced rate 2: 6%

Examples of transactions subject to this rate are:

  • Certain foodstuffs
  • Water supplies
  • Pharmaceutical or similar products and the respective active substances indicated below: a) Medication, pharmaceutical specialities and other pharmaceutical products intended exclusively for therapeutic and prophylactic ends; b) Condoms; c) Pastes, gauzes, cotton wool, foil and adhesive dressings and other similar aids impregnated or coated in any substances, for hygienic, medicinal or surgical; d) Medicinal plants, roots and tubers; e) Glycaemia, glycerine and acetone strips, needles, syringes and pens for the administration of insulin used in the prevention and treatment of diabetes. Vitamines are subject to the standard rate.
  • Medical equipment for disabled persons
  • Children’s car seats
  • Transport of passengers
  • Books, newspapers, and periodicals (including if on other physical means of support), unless they contain mainly publicity, private advertisements, obscene or pornographic material
  • TV licence
  • Construction services on social housing or houses with controlled costs; construction services whose promoters are housing and construction cooperatives, including those carried out by cooperative housing and construction unions and their associates within the scope of the exercise of their statutory activities, where the dwellings fall within the scope of the social housing policy, specifically with regard to the concept and parameters of cost-controlled housing, to a maximum of 20%, where certified by the National Housing Institute.
  • Renovation and repairing of private dwellings
  • Hotel accommodation
  • Waste and street cleaning, other than the supply of such services by bodies referred to in Article 13 of the Directive 2006/112/EC
  • Minor repairing (including mending and alteration) of bicycles
  • Supplies of home help services to children, the elderly, drug addicts, the sick or the disabled

Parking rate: 13%

Member States which, at 1 January 1991, were applying a reduced rate to the supply of goods or services other than those specified in Annex III may apply the reduced rate to the supply of those goods or services, provided that the rate is not lower than 12 %.

In Portugal, the parking rate of 13% applies to:

  • Wine
  • Agricultural tools and utensils, mobile silos, tractors, pumps and other machinery designed exclusively or mainly for the purpose of agriculture, cattle breeding or forestry.
  • Diesel for the agriculture

Special VAT rates/territories:

Special rates apply in the Autonomous regions of Azores and Madeira:

In the Azores:

  • 4%: reduced rate;
  • 9%: reduced rate / parking rate;
  • 18%: standard rate;

In Madeira:

  • 5%: reduced rate;
  • 12%: reduced rate / parking rate;
  • 22%: standard rate.

For a description of how the VAT rates are structured in the European Union, please see here.  The European Commission has also made an EU VAT rate database available where you can find the applicable VAT rate by entering the CN/CPA code of the goods respectively services (you can find more information here).

A global VAT/GST rate overview can be found here (note this is a work in progress).

This post was last updated on 6 April 2021.

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