IVA
VAT
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Imposto sobre o Valor Acrescentado, Portugal's value-added tax, charged on most goods and services. The standard rate on the mainland is 23%.
IVA (Imposto sobre o Valor Acrescentado) is the term you'll see on every invoice, tax form, and government portal in Portugal. It's the Portuguese name for VAT (value-added tax), and it works the same way: a consumption tax applied at each stage of the supply chain, ultimately paid by the end consumer.
The rates
Portugal has three IVA rate tiers, and they vary by region:
| Rate | Mainland | Azores | Madeira |
|---|---|---|---|
| Standard | 23% | 16% | 22% |
| Intermediate | 13% | 9% | 12% |
| Reduced | 6% | 4% | 5% |
Most freelance services fall under the 23% standard rate on the mainland. The intermediate and reduced rates apply to specific categories of goods and services listed in the CIVA (Código do IVA, Portugal's VAT code).
IVA on your invoices
As a solo entrepreneur on the simplified regime, you charge IVA on invoices to domestic clients and include it when issuing a Recibo Verde or a fatura. The IVA you collect isn't your income, you're holding it on behalf of the state and remitting it through your periodic IVA declaration.
When you don't charge IVA
There are three common scenarios where IVA doesn't appear on your invoice:
- Article 53 exemption: your annual revenue is below the threshold (around 15,000 EUR), so you're exempt from charging IVA entirely
- EU B2B services: the reverse charge applies, and your client self-assesses VAT in their country
- Non-EU services: the place-of-supply rules put the transaction outside Portuguese IVA scope
In each case, your invoice must state the legal basis for the exemption. Descodify adds the correct reference automatically based on your client's location and VAT status.
IVA declarations
You file IVA declarations through the Portal das Finanças, quarterly for most solo entrepreneurs, monthly if your revenue exceeds 650,000 EUR. The declaration reports how much IVA you collected and how much you paid on deductible business expenses. The difference is what you owe (or what the state owes you).
Not sure which rate applies to your invoice?
Use the VAT guide to find the right rate and exemption code for your specific situation. Input your client's location and VAT status and it walks through the decision.
Frequently asked questions
What is IVA in Portugal?
IVA stands for Imposto sobre o Valor Acrescentado, Portugal's version of VAT (value-added tax). It's a consumption tax added to most goods and services. As a solo entrepreneur, you charge IVA on your invoices and periodically remit it to the tax authority.
What are the IVA rates in Portugal?
Mainland Portugal has three rates: 23% standard (most services), 13% intermediate (e.g. some food and beverages), and 6% reduced (e.g. essential goods, some professional services). The Azores and Madeira have lower rates, for example, the standard rate in the Azores is 16% and in Madeira it's 22%.
What is the Article 53 IVA exemption?
Solo entrepreneurs earning below approximately 15,000 EUR per year can request an exemption under Article 53 of the CIVA. If you qualify, you don't charge IVA on your invoices at all, but you also can't deduct IVA on your expenses. Once your revenue crosses the threshold, you must start charging IVA.
How often do I report IVA?
Most solo entrepreneurs on the simplified regime report IVA quarterly, submitting a declaration by the 20th of the second month after each quarter ends. If your annual revenue exceeds 650,000 EUR, you must report monthly instead.
Do I charge IVA when invoicing clients in other EU countries?
For B2B services to VAT-registered businesses in other EU countries, no, the reverse charge mechanism applies. You issue the invoice without IVA, and the client self-assesses VAT in their own country. You can verify their VAT registration on VIES before invoicing.
Related terms
Value-Added Tax, a consumption tax on goods and services used across the EU. In Portugal it's called IVA and charged at 23% (standard rate) on the mainland.
Reverse ChargeAutoliquidação do IVAA VAT mechanism where the buyer, not the seller, accounts for VAT. Standard for cross-border B2B services within the EU.
Regime SimplificadoRegime Simplificado de Tributação · Simplified Tax RegimePortugal's simplified tax regime for solo entrepreneurs and small businesses, where taxable income is calculated using fixed coefficients applied to gross revenue.
Recibo VerdeGreen ReceiptA combined invoice-receipt (fatura-recibo) issued by solo entrepreneurs in Portugal through the Portal das Finanças when they receive payment for services.
FaturaInvoiceA formal invoice issued through certified software or the AT portal. For solo entrepreneurs on the simplified regime, income tax and Social Security remain cash-basis (tied to payment) regardless of when the invoice is issued.
ImobilizadoLong-term assets (fixed assets)Portuguese accounting term for long-term business assets, tangible items used in the business for more than one fiscal year, such as computers, equipment, vehicles, and furniture. Distinguished from inventory (held for resale) and consumables (used up within the year).