Reverse Charge
Autoliquidação do IVA
Last updated:
A VAT mechanism where the buyer, not the seller, accounts for VAT. Standard for B2B services supplied to businesses in other countries, inside the EU and beyond.
The reverse charge is a VAT mechanism that shifts the responsibility for reporting VAT from the seller to the buyer. Instead of the seller collecting VAT and paying it to their tax authority, the buyer accounts for the VAT in their own country.
For Portuguese solo entrepreneurs (trabalhadores independentes), this comes up for most services you provide to a business outside Portugal, in another EU country or beyond. You issue the fatura without VAT, and your client handles any VAT on their end. Some services follow their own rules instead: work tied to property, admission to events and short-term vehicle hire, for example.
How it works in practice
Say you're a Portuguese freelance developer billing a German company. Billing a company in Lisbon, you'd charge 23% Portuguese VAT (on the mainland, unless you're exempt under Art. 53). Under the reverse charge:
- You verify the client's VAT number on VIES, and it's valid
- You issue an invoice without VAT, carrying the mention
IVA - autoliquidação - The German company reports the VAT in Germany at the German rate (19%)
- You report the invoice as income in Portugal, with zero VAT. If you're on the normal VAT regime, it also goes on your periodic VAT return and your Recapitulative Statement
The client accounts for the VAT with its own tax authority instead of paying it to you. A fully taxable business usually deducts the same amount in the same return.
The mention on the invoice
Portuguese law requires the invoice to carry the exact expression IVA - autoliquidação whenever the buyer is the one who owes the VAT (Art. 36.º n.º 13 CIVA). This isn't an exemption: the service simply isn't taxable in Portugal. The legal basis is:
- Article 6.º n.º 6 a) of the CIVA, read a contrário: a service to a business established in Portugal is taxed here, so a service to a business established elsewhere is not
- Article 196 of the VAT Directive: for an EU client, the EU-wide rule making the buyer liable for the VAT in their own country
For a foreign client, it helps to print the English words "Reverse charge" alongside the Portuguese mention.
Descodify adds the Portuguese mention automatically when you invoice a foreign business for services.
Inside and outside the EU
The invoice is the same for a business client outside the EU. Norway, Iceland and Liechtenstein (in the EEA but not the EU), Switzerland, the UK and the US all get 0%, code 115 and IVA - autoliquidação, on the same legal basis. The tax authority confirms this in its binding ruling ficha doutrinária n.º 13460.
What differs is the reporting:
- EU business clients → check the VAT number on VIES; on the normal VAT regime, list the sale in the Recapitulative Statement
- Business clients outside the EU → no VIES and no Recapitulative Statement; on the normal VAT regime, the sale goes in a different field of the periodic VAT return from intra-EU sales
Perguntas frequentes
When does reverse charge apply to Portuguese freelancers?
For most services you provide to a business established outside Portugal, in another EU country or outside the EU. Instead of charging Portuguese VAT, you issue the invoice without VAT and the client accounts for any VAT in their own country. The rule is Article 6.º n.º 6 a) of the CIVA, read a contrário. Services tied to property, events or short-term vehicle hire follow their own rules.
Do I still need to report reverse charge invoices to the tax authority?
Yes. The invoice is issued and reported normally, and it still counts as income for IRS purposes. The only difference is that no VAT is charged. The invoice must carry the mention `IVA - autoliquidação`. It isn't a VAT exemption: the service is simply not taxable in Portugal.
How do I verify my client qualifies for reverse charge?
For an EU client, check their VAT number on VIES (the EU's VAT Information Exchange System). A valid number is the evidence that lets you treat the client as a business. If the number doesn't check out, or the client is a consumer, the answer changes: on the normal VAT regime you generally charge Portuguese VAT, and under the Art. 53 exemption you charge none (code 122). Digital services sold to EU consumers have a rule of their own.
Does reverse charge apply to clients in Norway, Switzerland, or the UK?
Yes, for business clients. The invoice is the same as for an EU business: 0% VAT, code 115 and the mention `IVA - autoliquidação`, on the same legal basis (Art. 6.º n.º 6 a) CIVA, a contrário), as the tax authority confirms in ficha doutrinária n.º 13460. What differs is the reporting: there's no VIES check and no Recapitulative Statement entry, and on the normal VAT regime the sale goes in a different field of the periodic VAT return from intra-EU sales.
What happens if I accidentally charge VAT on a reverse charge invoice?
Correct it with a credit note (nota de crédito) that reverses the VAT, because the tax on the invoice changes. A cancellation is for formal errors that don't touch the VAT, or for an operation that never took place. To recover the VAT in your favour, you need proof that your client knew about the correction or was reimbursed the VAT (Art. 78.º n.º 5 CIVA), and the correction must be made within two years (Art. 78.º n.º 3 CIVA).
Termos relacionados
A formal invoice issued through certified software or the AT portal.
VIESVAT Information Exchange SystemThe EU's free online tool for verifying VAT numbers. Confirms whether a business is VAT-registered and, in Portugal's case, reveals the name and address behind the number.
Proforma InvoiceFatura ProformaA commercial document that looks like an invoice but has no fiscal or legal meaning, essentially a detailed quote that doesn't create any tax obligation.