VAT in Portugal for Freelancers: Guide for Americans and Britons

VAT in Portugal is called IVA, and a freelancer or small business based in Portugal can invoice without it if turnover in Portugal did not exceed 15,000 euros in the previous calendar year. Above that you charge VAT at 6%, 13% or 23%, send a periodic return and pay the tax.

This guide sits next to our article on freelancing in Portugal and the independent worker regime, which covers opening activity and Social Security, and belongs to our guide on working in Portugal as an American or a Briton. It reads official pages and is not legal or tax advice. We read the pages listed at the end on 19 October 2026. The most recent change we found is Decreto-Lei 97/2026 of 20 May 2026, which the Portal das Finanças lists as the latest amendment to articles 2 and 27 of the VAT code. It does not touch the points below except one sentence we flag. The exemption rules we describe come from Decreto-Lei 35/2025 of 24 March 2025, and the return periods from Lei 12/2022, with the rules on the monthly option rewritten by Decreto-Lei 49/2025 of 27 March 2025, in force from 1 July 2025.

Who has to charge VAT in Portugal?

Article 2 of the VAT code makes liable to VAT natural or legal persons who, independently and habitually, carry out production, trade or services, including the free professions. Nothing in that wording depends on citizenship. A freelancer who opened activity with the tax authority is a taxable person, and the next question is whether the small-business exemption applies. Opening activity is explained in our freelancing article, and you need a Portuguese NIF first.

Can a small business or freelancer skip VAT?

Yes, under the special exemption of article 53. The article, as rewritten by Decreto-Lei 35/2025, says the exemption goes to taxable persons with a seat or home in Portugal who, not carrying out export operations or related activities, did not exceed 15,000 euros of annual turnover in Portugal in the previous calendar year. The Portal das Finanças FAQ repeats the two conditions and adds that you can use it whether or not you keep organized accounts.

Details from the pages:

• Start-up year: article 53 uses the turnover you estimate for the current calendar year, and the FAQ says that when the period is shorter than a year you do not annualize it. The circular letter 25062 of 26 March 2025 gives the example of someone starting in July who expects 10,000 euros: the figure on the start declaration is 10,000 euros, and the person is exempt that year.
• Not for everyone: the FAQ says the regime does not apply to an isolated act, and does not apply to a person with no seat or home in Portugal even if they have a permanent establishment or a VAT registration here.
• No deduction: article 53 says exempt persons are excluded from the right to deduct VAT under articles 19 and 20.
• Cross-border: the circular letter says exempt persons are not barred from cross-border operations, except exports or related activities, which exclude them.

What happens if you go over the limit?

Article 58 lists the triggers. You lose the exemption if turnover in Portugal in the previous year exceeded 15,000 euros, or if in the current year the limit is exceeded by more than 25%, or if the other conditions of article 53 stop being met.

On the last row the letter adds that you must adjust in the State’s favor the VAT you deducted before, as article 54 sets out. Check the details with the tax authority before you opt for the exemption.

What are the VAT rates?

Article 18 of the VAT code sets three rates: 6% for the goods and services on list I, 13% for list II, and 23% for everything else. The page says the legislative assemblies of the Azores and Madeira can set lower rates for operations in those regions. The pages we read do not say which rate fits which freelance activity, so check your own activity against the two lists.

How often do you file and pay?

Once you are in the normal regime, article 41 sets the return periods.

So the first quarter’s return is due on 20 May and the tax on 25 May. For June and for the second quarter the pages set a later date: return by 20 September and payment by 25 September. Returns go by electronic transmission.

Other points on the pages:

• Taxable persons below 650,000 euros can opt for monthly returns, in the start declaration or by a change declaration in January, and the option runs until you cancel it by another declaration in January.
• In the start year the turnover for the choice is your forecast for the current year.
• Article 29 says the duty to file the periodic return remains even when there were no taxable operations in the period. AT circular letter 25062 (point 28) says persons in the special exemption are released from the code’s other obligations, apart from articles 57, 58, 58-B and 58-C, and it names the recapitulative statement among those they are released from. It does not use the words “periodic return” in that point, so confirm with the tax authority how it applies to you.

How do invoices work?

Article 29 requires an invoice for every supply of goods or services, whether or not the client asks for one. Article 36 says it is issued by the 5th working day after the moment VAT is due, or on the date of payment for advance payments. An invoice must be dated, sequentially numbered and show names, addresses and tax numbers, the description of the services, the price before tax, the rate and the amount of VAT, and the reason VAT does not apply if that is the case.

For an exempt freelancer, circular letter 25062 says invoices must always carry the mention “IVA” followed by “Regime de Isenção”, and that an exempt person may issue a simplified invoice without regard to the usual limits.

The tax authority’s FAQ on the unique document code says invoices and other tax documents, however produced, must show the ATCUD, whatever the turnover or the tax regime. For documents issued in the Portal das Finanças the series is communicated automatically and the ATCUD is included. Using your own software means you communicate the series to the tax authority before using it.

What about clients in other countries?

Article 6 of the VAT code says services to a taxable person whose seat, establishment or home is in Portugal are taxable in Portugal wherever the provider is. Article 29 asks for a recapitulative statement for services to taxable persons in another EU member state that are not taxable in Portugal under that rule, unless you are in the article 53 exemption (circular letter 25062, point 28), and article 36 sets a later invoice date for them: the 15th of the month after VAT is due. Article 53 and the circular letter, for their part, make an exempt person’s exports a reason to leave the exemption.

For clients outside the EU, or for the exact treatment of a service to a foreign business, we found no clear statement on the pages we read. Do not guess; ask the tax authority or a certified accountant.

One more change touches VAT without reaching most freelancers. Article 2(1)(j), in the wording the page shows after Decreto-Lei 97/2026, makes the buyer liable for VAT on certain construction services, for buyers that have a seat, establishment or home in Portugal and either have a right to deduct or only carry out operations that give no right to deduct and buy construction or rehabilitation works under item 2.42 of list I; the page says it takes effect on 1 July 2026, or from 1 January 2026 if provider and buyer both opt for it.

What should a newcomer do first?

1. Get your NIF and your digital access to the Portal das Finanças; our guide to the Chave Móvel Digital covers the login.
2. Open activity and give an honest turnover estimate for the year. The estimate decides whether you start in the exemption.
3. Track turnover during the year against 15,000 and 18,750 euros.
4. If you set up a company rather than working as a sole trader, see how to set up a company in Portugal.

More guides in this series: Social Security contributions, a certified accountant and what the tax authority expects and corporate income tax (IRC) for a new company.

We read these official pages on 19 October 2026: the Portal das Finanças pages for articles 2, 6, 18, 27, 29, 36, 41, 53 and 58 of the VAT code, the Portal das Finanças FAQ on the article 53 regime, the FAQ on the unique document code (ATCUD), and the tax authority’s circular letter 25062 of 26 March 2025.