How vat / sales tax works in Portugal
Portuguese VAT (IVA) defaults to 23% on the mainland for most goods and services, with traders charging, deducting, and remitting through periodic returns filed on Portal das Financas.
A 13% intermediate rate covers restaurants, hotels, passenger transport, and culture, while 6% applies to bread, milk, fruit, vegetables, books, medicines, and passenger transport, with lower regional rates in Madeira and the Azores.
Invoicing must run through certified software with ATCUD and QR codes, invoice data flows monthly through SAF-T PT, and small traders can use the Article 53 exemption while turnover stays low.
Tax rates at a glance
- Standard VAT mainland
- 23%
- Intermediate VAT
- 13%
- Reduced VAT
- 6%
- Madeira standard
- 22%
- Azores standard
- 16%
- Small-trader exemption
- Article 53
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersFreelancersExpatsFoundersHospitality operators
Watch out for
- Mixed restaurant bills split rates: meals at 13% but alcoholic drinks, sodas, and bottled extras at 23%, so single-price menus need apportionment or the top rate wins.
- Electricity straddles bands with reduced treatment only for low contracted power and capped consumption, which complicates landlord and short-let billing.
- The restaurant 13% rate faces recurring political debate about returning to 23%, so hospitality investors should stress-test margins against a hike.
- Non-certified invoicing software produces legally invalid invoices in Portugal, making ATCUD-compliant tooling a day-one requirement rather than an upgrade.
Frequently asked questions
What is the VAT rate in Portugal?
Mainland Portugal applies 23% standard VAT, 13% intermediate, and 6% reduced in 2026. Madeira and the Azores set lower regional rates, such as 22% and 16% standard respectively.
What VAT applies to restaurants in Portugal?
Restaurant food and non-alcoholic drinks are generally 13%. Alcoholic beverages, sodas, and sparkling extras stay at 23%, so mixed bills must separate the bases.
Do small Portuguese businesses charge VAT?
Not always. The Article 53 exemption shelters low-turnover traders from charging VAT, but exempt traders cannot deduct input VAT, which penalises input-heavy startups.