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Over €15,000: 5 rules to start charging VAT without surprises
Step Inside Accounting · Practical guide
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1. Know when you start charging: straight away or on 1 January
Only what you invoice, without VAT, in transactions located in Portugal counts towards the limit: services to clients resident or based here and services considered to be provided here, such as real estate commissions on Portuguese properties. What happens next depends on how far over you went:
- between €15,000 and €18,750 in the year – you remain exempt until 31 December and start charging VAT on 1 January of the following year;
- above €18,750 – you start charging VAT immediately, from the invoice that takes you over that amount.
The invoices you issued before, without VAT, stay as they are: there is no backdated VAT to pay on them. What you cannot do is keep invoicing without VAT after the moment of the change – that VAT would come out of your own pocket.
2. File the change-of-activity return on time
The change is reported to the Tax Authority with a change-of-activity return (declaração de alterações), on the Portal das Finanças, where you state that you are moving to the normal VAT regime. The deadline is 15 working days:
- if you went over €18,750, counted from the day you went over it;
- if you stayed between €15,000 and €18,750, counted from the end of the year – for anyone who goes over €15,000 in 2026, the deadline ends on 22 January 2027.
Filing late means a fine and does not postpone the obligation: VAT is due from the moment of the change, whether or not you have filed the return.
3. Use the right rate and agree the price with your clients
| Rate | Mainland | Madeira | Azores |
|---|---|---|---|
| Standard | 23% | 22% | 16% |
| Intermediate | 13% | 12% | 9% |
| Reduced | 6% | 4% | 4% |
Most services provided by self-employed people pay the standard rate; the intermediate and reduced rates only apply to goods and services expressly listed in the law. Do not choose a lower rate without checking that your service is on those lists. If your activity is in Madeira or the Azores, the regional rates generally apply.
Talk to your clients before the first invoice with VAT. For companies that deduct VAT, the cost does not change: they pay the VAT and recover it. For private individuals and entities that do not deduct VAT (such as clinics, schools or insurers), the service becomes 23% more expensive. If you keep the price “VAT included”, you receive less: out of €1,000, only €813.01 is yours. Review your contracts: if they say VAT is added to the price at the legal rate, VAT is added on top; if they say nothing, agree it in writing.
4. Deduct the VAT on your business expenses
From the change onwards, the VAT you pay on business expenses can be deducted from the VAT you charge. In the VAT return, you pay the difference:
- VAT charged to clients,
- minus the deductible VAT on professional expenses (equipment, software, coworking, accounting, training),
- equals the VAT to pay (or a credit in your favour, if the result is negative).
To deduct it, the invoice must have your NIF, be for a business expense and be linked to your activity in e-fatura – see what to check before the end of the year. Not all VAT is deductible: passenger cars, meals, accommodation and entertainment expenses have their own rules or are excluded. If you bought equipment while you were exempt, there may be a way to recover part of that VAT – talk to us.
5. File the quarterly return and pay on time
Under the normal regime, you are generally on the quarterly regime. You file the periodic VAT return by the 20th of the second month after the end of each quarter and pay by the 25th:
| Quarter | File the return by | Pay by |
|---|---|---|
| January to March | 20 May | 25 May |
| April to June | 20 August | 25 August |
| July to September | 20 November | 25 November |
| October to December | 20 February | 25 February |
The return must be filed even in quarters with no invoicing. And the VAT you receive is not yours: keep it in a separate account from the day it comes in, so you do not have to take it out of your own income when the deadline arrives.
Example
Marta is a consultant, works in mainland Portugal and only has private clients in Portugal (so, no withholding). By 8 September 2026 she has already invoiced €17,500, without VAT. On 9 September she issues a €2,000 invoice: her total for the year goes up to €19,500, above €18,750, so this invoice already carries VAT:
- service value: €2,000
- VAT (23%): €460
- invoice total, paid by the client: €2,460
Marta has until 30 September 2026 to file the change-of-activity return. On 15 September she buys a monitor for work for €492 (€400 + €92 VAT).
But not all the money she receives is hers. Of the €2,460 received, €460 is VAT. As she paid €92 of VAT on the monitor, she pays €368 to the State (€460 − €92) in the return for the 3rd quarter: she files by 20 November and pays by 25 November.
- She keeps €2,000 for the service, before IRS.
- The monitor costs her €400, not €492, because she recovers the €92 of VAT.
- The previous invoices, totalling €17,500, remain without VAT.
If Marta had stayed at €18,000 until the end of the year, she would remain exempt until 31 December, file the change-of-activity return by 22 January 2027 and charge VAT from 1 January 2027.
Team tip
Add up every month what you have invoiced to clients in Portugal. When you pass €12,000, talk to us: there is time to warn your clients, review contracts and prepare your first VAT return, instead of discovering the change on an invoice that should already have had VAT.
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This article is for information only and does not replace professional advice. Figures and rules are those in force at the date of publication and may change.
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