Portugal Introduces VAT Group Regime (RGIVA) – Effective 1 July 2026

Summary

New VAT consolidation regime: Law No. 62/2025 (published 27 October 2025) introduces a voluntary VAT group regime (RGIVA) in Portugal, allowing closely linked entities to consolidate their VAT balances (payable and recoverable) into a single group return filed by the dominant (parent) entity, effective for tax periods starting on or after 1 July 2026. [plmj.com], [vatcalc.com]
Strict eligibility criteria: The dominant entity must hold ≥75% of the share capital (conferring >50% of voting rights) for more than one year; all group members must have their head office or permanent establishment in Portugal, be on the monthly VAT regime, carry out (wholly or partly) VAT-deductible activities, and share financial, economic, and organisational links. [cuatrecasas.com], [plmj.com]
Key limitation — intra-group transactions remain taxable: Unlike VAT group regimes in several other EU Member States, the Portuguese model does not neutralise intra-group transactions. Supplies between group members remain subject to VAT, which may reduce the regime’s attractiveness for entities with partial deduction rights and significant intra-group flows. [plmj.com], [cuatrecasas.com]

Click on the logo to visit the website

Article: Portugal’s VAT Group Regime (RGIVA) — A Comprehensive Overview

Legislative Background

Portugal has become one of the last EU Member States to adopt a VAT grouping regime. Law No. 62/2025, published in the Official Gazette (Diário da República) on 27 October 2025, formally establishes the Regime dos Grupos de IVA (RGIVA). The regime becomes operational for tax periods beginning on or after 1 July 2026. [vatcalc.com], [pwc.pt]

The legal basis under EU law is Article 11 of the VAT Directive (2006/112/EC), which allows Member States to treat closely bound persons as a single taxable person.

What Is a VAT Group Under RGIVA?

A VAT group exists when one entity — designated as the dominant (parent) entity — and one or more dependent (subsidiary) entities are closely linked in three dimensions: [plmj.com]

Link	Requirement
Financial	The dominant entity holds ≥75% of the share capital (directly or indirectly) of each subsidiary, conferring >50% of voting rights. Indirect holdings are calculated by multiplying percentages down the chain.
Economic	All entities must pursue similar, complementary, or interdependent economic objectives.
Organisational	All entities must share a common management structure or operate under a single business strategy.

[plmj.com], [cuatrecasas.com], [vatcalc.com]

Eligibility Conditions

All entities wishing to join the VAT group must simultaneously meet the following conditions: [plmj.com], [cuatrecasas.com]

Have their registered office or permanent establishment in Portugal.
Carry out, wholly or in part, transactions giving rise to the right to deduct VAT.
Be subject to the normal monthly VAT regime at the date the option is exercised. (The Portuguese Tax Authority — Autoridade Tributária e Aduaneira, AT — may reclassify quarterly filers to monthly.) [vatcalc.com]
The dominant entity must have held the qualifying participation for more than one year at the date the regime begins to apply. Newly incorporated entities may join from incorporation, provided the minimum shareholding has been held since that date. [plmj.com]
An entity cannot belong to more than one VAT group at the same time, and the dominant entity cannot itself be controlled by another Portugal-established entity meeting the dominant-entity criteria. [cuatrecasas.com]

Opting In and Opting Out

Opt-in: The dominant entity files a declaration of commencement or amendment of activity with the AT, listing all entities to be included. The regime takes effect from the tax period in which the declaration is filed. [plmj.com], [vatcalc.com]
Minimum lock-in period: 3 years from the effective date. [pwc.pt], [cuatrecasas.com]
Voluntary cessation: After the 3-year period, the dominant entity may terminate the regime by filing a declaration of changes during January of any subsequent year, effective from 1 January of that year. [plmj.com]
Mandatory termination: The regime ends automatically if the core legal requirements (financial, economic, organisational links; Portuguese presence; deductibility) cease to be met. [vatcalc.com]

How the Regime Operates

Step	Responsibility	Deadline
Individual periodic VAT return	Each group member (including the dominant)	By the 10th of the 2nd month after the tax period
Group Declaration (consolidated return)	AT pre-fills; the dominant entity confirms	By the 20th of the 2nd month after the tax period
Payment of VAT due	Dominant entity	By the 25th of the 2nd month after the tax period

[vatcalc.com], [plmj.com]

The group return reflects the algebraic sum (debits minus credits) of all individual periodic returns. The dominant entity is responsible for paying the VAT, while all controlled entities are jointly and severally liable. [cuatrecasas.com], [globaltaxnews.ey.com]

Treatment of VAT Credits

Group credit balance: Can be carried forward to subsequent periods or be the subject of a refund request under the general terms of the Portuguese VAT Code (CIVA). [cuatrecasas.com]
Pre-entry credits: VAT credits held by an entity at the date of joining the group can only be offset against that same entity’s own VAT payable in the group period — they cannot reduce VAT due by other group members. [plmj.com], [vatcalc.com]
Unconfirmed group return: If the dominant entity fails to confirm the group return by the deadline and the result is a credit, the credit is automatically carried forward (no refund option). [vatcalc.com]

Exclusion and Partial Termination

An entity is automatically excluded from the VAT group if: [cuatrecasas.com], [plmj.com]

It has not carried out taxable transactions for more than one year.
It enters insolvency proceedings, a special revitalisation process, or an out-of-court corporate recovery procedure.
The legal eligibility requirements specific to that entity cease to be met.

Exclusion of a subsidiary does not terminate the entire group. However, exclusion of the dominant entity triggers termination of the whole VAT group. [plmj.com]

Key Benefits

✅ Cash flow optimisation: Automatic offset of credit and debit VAT balances across the group. [cuatrecasas.com]
✅ Reduced refund claims: Fewer refund requests and the associated delays/inspection triggers. [plmj.com]
✅ Administrative simplification: Centralised payment and consolidated group return. [cuatrecasas.com]
✅ Competitive alignment: Brings Portugal in line with the majority of EU Member States that already offer VAT grouping. [vatcalc.com]

Key Limitations

⚠️ Intra-group transactions remain subject to VAT: Unlike VAT grouping models in countries such as the Netherlands, Germany, or Ireland, the Portuguese regime does not neutralise transactions between group members. Supplies between entities in the same VAT group continue to be taxed. This significantly limits the benefits for groups with partial deduction rights and large intra-group flows. [plmj.com], [cuatrecasas.com]
⚠️ 3-year lock-in period: Once opted in, the group cannot be dissolved for at least three years. [pwc.pt]
⚠️ Pre-entry credit restrictions: Existing VAT credits cannot be pooled across the group. [vatcalc.com]

Practical Recommendations for Multinationals

Assess eligibility: Map your Portuguese entities against the three-link test (financial, economic, organisational).
Model the cash flow impact: Quantify the net benefit of balance consolidation versus the limitation on intra-group VAT.
Review partial deduction ratios: Entities with limited deduction rights may see reduced benefits.
Coordinate with IT/ERP teams: Monthly individual returns + group confirmation require process and system adjustments.
Consult with local advisors: Ensure compliance with the declaration requirements and timeline.

Sources & Links

Ofício-Circulado No. 25085/2025 — Portuguese Tax Authority Guidance on the VAT Group Regime (RGIVA)

Circular Letter No. 25085, issued by the Portuguese Tax and Customs Authority (Autoridade Tributária e Aduaneira, AT) on 7 November 2025, is a 14-page administrative instruction providing detailed clarifications on the operation of the VAT Group Regime (RGIVA) introduced by Law No. 62/2025 of 27 October 2025. [info.porta…cas.gov.pt], [taxathand.com]

The circular is available only in Portuguese on the Portal das Finanças. [taxathand.com]

Key Clarifications Provided by Circular 25085

Eligibility & Opt-In

The dominant entity may exercise the option to apply the RGIVA whenever a group of entities exists and all conditions are cumulatively met (financial ≥75% + >50% voting rights; economic link; organisational link). [paulomarqu…gs.sapo.pt]
The option covers all eligible entities that have their head office or permanent establishment in Portugal, are under the normal monthly VAT regime, and carry out (wholly or partly) transactions granting the right to deduct input VAT. [paulomarqu…gs.sapo.pt]
If an entity is not already on the monthly VAT regime, the AT will reclassify it automatically to monthly periodicity, effective from the tax period in which the RGIVA option is exercised. [paulomarqu…gs.sapo.pt]
The RGIVA election is autonomous from the IRC group regime (RETGS) — an entity may opt for one or both regimes. [paulomarqu…gs.sapo.pt]

Filing Obligations — Deadlines Clarified

Step	Who	Deadline	Note
Individual periodic VAT return	Each group member	By the 10th of the 2nd month following operations	⚠️ This is 10 days earlier than the standard deadline for non-group members
Group Declaration (pre-filled by AT)	Dominant entity confirms	By the 20th of the 2nd month	AT pre-fills based on individual returns
Payment of VAT due	Dominant entity	By the 25th of the 2nd month	Controlled entities are jointly and severally liable

[paulomarqu…gs.sapo.pt]

Failure to file or late filing of individual returns by any group member triggers penalties under the Regime Geral das Infrações Tributárias (RGIT). [paulomarqu…gs.sapo.pt]
If a group member fails to file, the AT performs an official assessment using available data, and the result is reflected in the group declaration. This does not release the dominant entity from the payment obligation. [paulomarqu…gs.sapo.pt]

Group Declaration — Confirmation & Default Rules

The group declaration is pre-filled by the AT based on the algebraic sum (credits + debits) of all individual periodic returns. [paulomarqu…gs.sapo.pt]
The dominant entity must validate and submit the group declaration by the 20th deadline. [paulomarqu…gs.sapo.pt]
If not confirmed by the deadline: the pre-filled declaration becomes final and definitive automatically. [paulomarqu…gs.sapo.pt], [taxathand.com]
If an unconfirmed return results in a credit: the credit is automatically carried forward to subsequent periods — no refund is possible. [taxathand.com], [paulomarqu…gs.sapo.pt]

Treatment of VAT Credits — Critical Clarifications

Group credit (confirmed return): May be carried forward OR may be the subject of a refund request, subject to Article 22(6) et seq. of the CIVA. In this case, the customer and supplier annexes of all group entities must be submitted. [taxathand.com], [paulomarqu…gs.sapo.pt]
Group credit (unconfirmed return): Becomes definitive carry-forward only — cannot be refunded. [taxathand.com]
Pre-entry credits: Credits accumulated by an entity before joining the group can only be offset against that entity’s own VAT payable — they cannot reduce the VAT due by other group members. [paulomarqu…gs.sapo.pt], [garrigues.com]
Credit upon termination/exclusion: A credit available under the RGIVA may only be used by the group or refunded at the request of the dominant entity, even in the event of the termination of the group or the exclusion of controlled entities that contributed to the group’s formation. [taxathand.com]

Practical Example (Example 4 from the Circular)

The circular includes worked examples. Example 4 illustrates the cash flow benefit: [paulomarqu…gs.sapo.pt]

Entity	Individual VAT Position (Nov 2026)
A, B, F	Total VAT payable: €26,000
C, D	Total VAT credit: €7,500
Without RGIVA	A, B, F pay €26,000; C, D carry forward €7,500
With RGIVA	Group pays only €18,500 (= €26,000 − €7,500)

➡️ Immediate cash flow saving: €7,500 — no need to wait for refund claims.

Cessation

The dominant entity may opt for cessation by filing a declaration of changes during January of a year after the 3-year minimum period has elapsed. [paulomarqu…gs.sapo.pt]
Cessation is possible regardless of how long individual entities have been in the group. [paulomarqu…gs.sapo.pt]

Why This Circular Matters

The Circular 25085 is the primary administrative guidance for the correct and uniform application of the RGIVA. It is particularly relevant because: [garrigues.com], [audico.pt]

⚠️ It shortens the individual return filing deadline to the 10th (vs. the standard deadline for non-group entities).
⚠️ It introduces strict consequences for non-confirmation of the group return (credit becomes non-refundable).
⚠️ It clarifies that all customer/supplier annexes must be submitted when requesting a group refund.
⚠️ It confirms the autonomy from the IRC group regime (RETGS) — companies can opt for one or both.
✅ It includes practical worked examples that illustrate the cash flow benefits of the regime.

Sources & Links