Do I need to charge VAT if I earn under EUR 15,000 per year?

No. If your annual turnover stays below EUR 15,000, you are exempt from VAT under Article 53 of the CIVA (Portuguese VAT code). You do not charge VAT on any invoice. You use exemption code 122 on every invoice and do not file quarterly VAT declarations. However, if your turnover crosses EUR 18,750 in a given year (the hard ceiling under DL 35/2025, effective July 2025), VAT registration is immediate - the invoice that crosses that threshold must already include VAT. Between EUR 15,000 and EUR 18,750, exemption continues until 1 January of the following year.

What exemption code do I use for services to EU business customers?

For services to VAT-registered EU businesses (B2B), use code 115 (reverse charge, Art. 6 n.6a CIVA). The customer self-accounts for VAT in their own country. You issue the invoice at 0% and note the customer's VIES-validated VAT number on the invoice. For services to EU private individuals (B2C), the situation is more complex - Portuguese VAT applies unless the EUR 10,000 distance-selling threshold has been crossed.

What happens if I accidentally exceed EUR 18,750 while on the Art. 53 exemption?

From the moment you issue the invoice that crosses EUR 18,750 in the calendar year, your Art. 53 exemption ends immediately. That invoice must include VAT at the applicable rate. You must then register for VAT with the Portuguese Tax Authority (AT) and start filing quarterly VAT declarations (declaracao periodica de IVA). Invoices issued before that invoice remain exempt. The tolerance band between EUR 15,000 and EUR 18,750 (introduced by DL 35/2025) gives you a buffer if you go slightly over the base threshold, but the hard ceiling triggers immediate registration.

Do the VAT rules differ for Madeira and the Azores?

Yes. The standard VAT rate in mainland Portugal is 23%. In Madeira it is 22%, and in the Azores 16%. Intermediate and reduced rates also differ by region. The exemption rules (Art. 53, Art. 6 place of supply, reverse charge) apply the same way across all three territories - only the rate changes when VAT does apply. Your VAT regime and exemption codes are determined by where your business is registered, not where your customer is.

What is the exemption code for exporting goods outside the EU?

For goods physically exported outside the EU, use code 063 (Art. 14 CIVA, export exemption). This requires customs export documentation (the DAU or DAE export declaration) as proof. For services to customers outside the EU, the more common code is 090 (Art. 6 place-of-supply rules) - the service is taxed where the customer is established, which is outside Portugal.

What is isenção IVA and which code do I use?

Isencao IVA means VAT exemption. There are several types. The most common for Portuguese freelancers: code 122 (Art. 53 small business exemption, for turnover below EUR 15,000); code 090 (Art. 6, place of supply for services to foreign customers); code 115 (reverse charge for services to EU businesses); code 065 (Art. 9 exemptions for medical, education, and other listed activities). The right code depends on why VAT is zero - they are not interchangeable.

Do I need to validate my customer's VAT number before using reverse charge?

Yes. To apply reverse charge (code 115) for EU B2B services, you need a valid EU VAT number for your customer. Best practice is to verify it via the EU VIES database before issuing the invoice. An invalid or expired VAT number means you may be liable for the VAT yourself.

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VAT for Portuguese freelancers - find your rate and exemption code

Not sure what VAT to charge or which exemption code (motivo de isenção IVA) to put on the invoice? Answer a few questions and we'll tell you - based on your VAT regime, what you're selling, and who you're selling to.

Step 1 of 2

Where is your business registered?

The VAT rate depends on whether your business is on the mainland, Madeira, or the Azores. Check your registration on the Portal das Finanças if you're not sure.

Mainland Portugal

Madeira

Azores

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 freelancers with annual turnover below €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 place of supply rules: The most common code for services to foreign customers. It means the place of supply is outside Portugal, so Portuguese VAT doesn't apply. Used for services to non-EU customers and to EU private individuals below the €10,000 distance selling threshold.
Code 115 - Reverse charge for intra-EU B2B services (autoliquidação): Used when selling services to a VAT-registered business in another EU country. You charge 0% VAT; the customer self-accounts for VAT in their own country. You must include their VIES-validated VAT number on the invoice. This is the most common code for freelancers with EU 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. For services to non-EU customers, code 090 (place of supply) is the appropriate code - not 063, which is specific to goods.
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, freelancers with annual turnover below €15,000 are exempt from VAT - no VAT charged, no quarterly VAT declarations 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.

Código de isenção IVA para freelancers em Portugal: Esta ferramenta guia-o pelo processo de decisão do IVA para trabalhadores independentes - regime de isenção Art. 53, códigos de autoliquidação para clientes da UE, e regras de localização para serviços ao estrangeiro.

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