Question 1

Do I need to register for VAT if I earn under EUR 15,000 in Portugal?

Accepted Answer

No. Under Article 53 of the CIVA (Portuguese VAT code), freelancers and sole traders whose annual domestic turnover stays below EUR 15,000 are exempt from VAT. You charge no VAT, use exemption code 122 on every invoice, and file no quarterly VAT declarations. The EUR 15,000 counts only Portuguese-source domestic invoices.

Question 2

What is the EUR 18,750 VAT ceiling in Portugal?

Accepted Answer

EUR 18,750 is the hard ceiling introduced by DL 35/2025 (effective 1 July 2025), set at 125% of the EUR 15,000 base threshold. If a single invoice pushes your cumulative turnover above EUR 18,750 during the calendar year, VAT registration is immediate: that invoice must already include VAT. There is no grace period above the ceiling.

Question 3

When does my VAT exemption end if I go over EUR 15,000?

Accepted Answer

If your turnover exceeds EUR 15,000 but stays below EUR 18,750 during the year, your Art. 53 exemption continues until 31 December. From 1 January of the following year you must register for VAT, and you have 15 business days after year-end to file a declaration of change with the Tax Authority (AT). You only register mid-year if you cross the EUR 18,750 ceiling.

Question 4

Do invoices to EU clients count toward the EUR 15,000 VAT threshold?

Accepted Answer

No. Only Portuguese-source domestic turnover counts toward the EUR 15,000 Art. 53 limit. Services to EU business clients (place of supply in the customer's country, Art. 6 CIVA) do not count toward the threshold, but they trigger a separate obligation (the Declaração Recapitulativa) from the first invoice. Foreign SaaS subscriptions you pay for (Stripe, AWS, and similar) also trigger reverse-charge VAT obligations from day one, regardless of your Art. 53 status.

Question 5

What happens if I accidentally cross EUR 18,750 while VAT-exempt?

Accepted Answer

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 (23% on mainland Portugal, 22% in Madeira, 16% in the Azores). You then register for VAT with the Tax Authority (AT) and start filing quarterly VAT declarations. Invoices issued before that one remain exempt. If you have already crossed the ceiling, register now and consider consulting a certified accountant.

Question 6

Is the VAT threshold reduced in my first year of activity?

Accepted Answer

No. The Art. 53 threshold is calendar-year based and there is no pro-rata reduction for new starters. A freelancer who opens their activity in November still has the full EUR 15,000 base threshold and EUR 18,750 ceiling for the remainder of that calendar year. This is different from the IRS simplified-regime first-year discount, which does apply a reduction.

How close are you to the VAT threshold?

The two thresholds

What counts toward the limit

Once you cross