VAT for Portuguese freelancers - find your rate and exemption code

How this works

• We walk you through the decision tree that determines your VAT treatment - the same logic the Portuguese Tax Authority (AT) expects you to follow.
• The result includes the VAT rate and the motivo de isenção (exemption reason code) you need when the rate is 0%.
• This covers the most common scenarios for trabalhadores independentes (solo entrepreneurs) on the simplified regime or VAT-exempt under Art. 53.
• Edge cases (property services, events, digital products to EU consumers) are flagged - but for complex situations, always check with your accountant.
• When issuing invoices to VAT-registered EU customers, verify their VAT number first with the NIF checker before applying the reverse charge exemption.

Common VAT exemption codes (códigos de isenção IVA)

Code 122 - Art. 53 small business exemption (isenção)

For businesses (sole traders and companies) with annual turnover not above €15,000 who are VAT-exempt. You don't charge VAT on any invoice. If your turnover stays between €15,000 and €18,750 during the year, the exemption continues until 1 January of the following year. But if you cross €18,750 on a single invoice, VAT registration is immediate - that invoice must already include VAT (DL 35/2025, effective July 2025).

Code 090 - Art. 6 specific place-of-supply rules

For services that the specific rules in Art. 6 CIVA, from n.º 7 onward, place outside Portugal. The usual case for a freelancer is a service on the closed Art. 6 n.º 11 list (consulting, engineering, legal and accounting work, advertising, data processing, among others) sold to a private client outside the EU. It is not the code for a business client abroad, which takes code 115, and a service to a private client in the EU is normally taxed in Portugal.

Code 115 - Reverse charge for B2B services to foreign businesses (autoliquidação)

Used for most services sold to a business established outside Portugal, in another EU country or outside the EU. Services tied to property or events follow their own rules. You charge 0% VAT and the invoice carries the mention "IVA - autoliquidação"; the customer accounts for any VAT in their own country. For an EU client, include their VIES-validated VAT number on the invoice. This is the most common code for freelancers with foreign business clients. Before issuing the invoice, verify the customer's VAT number.

Code 063 - Art. 14 CIVA export exemption

For goods physically exported outside the EU. Requires customs export documentation (DAU or DAE export declaration) as proof. Code 063 does not cover an ordinary freelance service (Art. 14 exempts only specific services, such as transport linked to an export): a service to a business outside the EU takes code 115, and a listed service to a private client outside the EU takes code 090.

Code 065 - Art. 9 CIVA exempt activities

Applies to specific activities that are permanently exempt from VAT regardless of turnover: medical and healthcare services, education and training, insurance, and certain financial services. If your core activity is listed in Art. 9 CIVA, you use this code even if your turnover is above €15,000.

The €15,000 exemption - and the €18,750 ceiling

Under Art. 53 CIVA, businesses (sole traders and companies) with annual turnover not above €15,000 are exempt from VAT - no VAT charged, no VAT returns filed. This is the default for most people starting out on recibos verdes.

DL 35/2025 (effective 1 July 2025) added a tolerance band. If your turnover goes above €15,000 but stays under €18,750 during the year, the exemption continues until 1 January of the following year - you then have 15 business days after year-end to file a declaration of change with AT.

If you cross €18,750 on a single invoice, there is no grace period. That invoice must already include VAT. VAT registration is immediate. The invoices before it remain exempt.

Use the decision tree above to find which code to use once you're VAT-registered. To see how close you are to the threshold and when you'll cross it at your current pace, use the VAT threshold tracker.