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Google, Meta and software: 5 rules on VAT for purchases from abroad
Step Inside Accounting · Practical guide
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1. Why the invoice has no VAT
For services between businesses, VAT is due in the buyer’s country. When your company buys a service from a foreign supplier with no establishment in Portugal, the service is treated as supplied in Portugal and the supplier does not charge VAT.
That is why invoices from Google Ireland, Meta or a US software company arrive without VAT and with a note such as “reverse charge”. This applies to online advertising, software, website hosting, work platforms and consulting services.
2. Your company declares the VAT
Your company calculates Portuguese VAT (IVA) on the invoice amount (23% on the mainland for most of these services) and declares it in the periodic VAT return for the period of the purchase.
For this, the supplier has to know it is selling to a business: add the company’s VAT number (PT followed by the NIF) to your account with the supplier. Without it, the supplier may charge its own country’s VAT, which your company cannot deduct in Portugal.
3. In most cases the effect is zero, but it must be declared
If the company has activity subject to VAT, in the same return it charges the VAT and deducts the same amount. The tax to pay stays the same, but the transaction has to appear in the return.
Forgetting the reverse charge leads to a fine, even when no tax is missing. The Tax Authority receives information from other EU countries about services sold to Portuguese businesses and cross-checks it with the returns.
Example
In the quarter, the company spent €1,000 on Google Ads. In the VAT return, it charges €230 and deducts €230: it pays €0 extra, but the transaction is declared.
4. When the effect is not zero
Some companies cannot deduct VAT: those with exempt activities, such as certified training, healthcare or renting property, and those in the small business VAT exemption scheme.
In these cases, the company still has to self-assess the VAT, but pays it without being able to deduct it. The €1,000 of Google Ads cost, in practice, €1,230. A company in the exemption scheme has to file a VAT return in the months in which it makes these purchases.
5. Outside the EU it works the same way
The same rules apply to suppliers in the US, the UK or any other country outside the EU: software, artificial intelligence tools, design platforms or image banks.
Some of these suppliers charge Portuguese VAT by default, because they treat the customer as a private individual. If that happens, add the company’s VAT number to the account and ask for future invoices to be issued without VAT.
Team tip
These invoices do not appear in e-Fatura, because foreign suppliers do not report them to the Tax Authority. Download them every month from your online accounts (Google, Meta, software) and send them to your accountant with the rest of your invoices.
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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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