Portugal Introduces VAT Grouping Regime Effective July 2026 for Linked Corporate Entities

Portugal Introduces VAT Group Regime: Key Features and Regulations Under Law No. 62/2025

• Introduction of VAT Group Regime (RGIVA): Law No. 62/2025 in Portugal establishes the VAT Group Regime, allowing entities with financial, economic, and organizational ties to operate as a single taxable person for VAT reporting, with a commitment to remain grouped for a minimum of three years.
• Intra-Group Transactions and Reporting: Unlike other European VAT group schemes, intra-group transactions in Portugal are still subject to VAT, with each entity responsible for its own tax assessment, while the dominant entity manages the consolidated periodic VAT declaration.
• Key Advantages and Regulatory Rules: The regime offers benefits such as immediate clearing of VAT credits and debits, reduced reimbursement requests, improved internal control, and increased administrative efficiency. However, it also imposes rules like pre-completion of group declarations by the tax authority, requirements for communicating changes in group composition, and limitations on VAT credit carry-forward prior to joining the group.

Source Nuno Raposo Jacinto

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• Portugal has approved a VAT grouping regime effective July 1, 2026, allowing closely linked companies to be treated as a single taxable entity for VAT purposes.
• To qualify, companies must have strong financial, economic, and organizational links, and commit to the group for at least one year.
• Each group member files its own VAT return, but the tax authority consolidates these into a single group return under one VAT number; the controlling entity is responsible for payments or refunds, and all members are jointly liable.
• The regime aims to improve cash flow and administrative efficiency, but intra-group transactions are not fully disregarded for VAT, and input VAT deduction restrictions may still apply.
• Companies should assess eligibility and update their accounting systems to comply with the new rules.

Source: meridianglobalservices.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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