Invoicing and Tax regulation in Portugal

Portugal initiated the modernization of its transaction processes in 2019 by implementing mandatory B2G e-invoicing for large companies, extending it to all companies in 2021. Since 2020, the use of certified invoicing software has been obligatory for companies with an annual turnover of €50,000 or more. While B2C and B2B e-invoicing remain optional, many companies have chosen to transition earlier, recognizing significant savings in money, time, and reduction in manual errors, especially in tax reporting. Given the standard VAT rate of 23% and a corporate tax rate of 21% in Portugal, minimizing errors is crucial to avoid increased liabilities and penalties.

 

To ensure you're meeting the requirements while optimizing your financial strategy, explore our comprehensive guide on (e-)invoicing, tax regulations, and digital reporting in Portugal.

 

Invoicing Regulations in Portugal

Invoicing regulations in Portugal are also under the purview of the Tax and Customs Authority (AT). This authority oversees the invoicing requirements whenever goods or services are sold, including transactions with other businesses or consumers. For VAT-registered businesses, invoices must be issued to the customer by the 15th of the month following the provision of goods or services, or sooner upon customer request. Moreover, VAT-registered businesses are obliged to issue a VAT invoice for all taxable sales.

At a minimum, the invoice needs to include:

Date of Issue;

Unique and Sequential Invoice Number;

QR code;

Supplier Information: Name, address, and Tax Identification Number (NIF);

Customer Information: Name, address, and NIF number, if applicable;

Description of Goods or Services;

Quantities and Unit Prices: excluding tax;

Additional Information: discounts, reason for any exemption or non-application of VAT.

Total Amount and VAT Details: Total amount payable, excluding and including VAT, the total amount of VAT charged, a breakdown of the VAT amount for each item where applicable;

 

B2B Invoice Specifications

For B2B transactions, you have to include detailed information on the invoice that enables both parties to accurately ascertain the VAT due.

 

B2C Invoice Specifications

For most B2C transactions you can issue simplified invoices, which require less information compared to full invoices.

 

Simplified Invoice

Simplified e-invoices are allowed for transactions where the total invoice amount does not exceed €1000 for B2C and €100 for B2B, provided the customer does not request a full invoice.

A simplified invoice has to include:

Date of issue;

Unique invoice number;

Supplier Information: Name, address and NIF number;

Description of goods or services;

Total amount payable, including VAT;

VAT amount payable.

 

Certified Invoicing Software

Any business with a turnover that exceeds €50,000 in the previous year, and is either VAT-registered or provides billing services to other entities, must use certified invoicing software. This software supports electronic data interchange, facilitating standardized communication of business documents, including invoices, in a digital format.

Software providers are required to undergo a rigorous testing process conducted by the Portuguese Tax Authority to ensure compliance and reliability. Once the software passes this evaluation, it is assigned a certification number. It is essential for the invoicing software to be regularly updated to remain in compliance with changes in tax legislation and reporting requirements.

 

Invoice Archiving

You have to archive invoices for a period of 10 years. This period starts from the end of the year in which the invoice was issued.

 

 

E-invoicing Regulations

Electronic invoicing, or e-invoicing, is the digital exchange of invoice information between a supplier and a buyer. In 2019, Portugal implemented mandatory B2G e-invoicing. While B2C, B2B e-invoicing remain optional, numerous companies have proactively embraced e-invoicing. The benefits of e-invoicing include improved efficiency, faster payments, and compliance with tax authority regulations, making it superior to traditional paper invoicing.

Portugal e-invoicing regulations align with Directive 2014/55/EU, which mandates public entities to be equipped to receive and process e-invoices that adhere to the European standard EN-16931. Furthermore, Portugal participates in the PEPPOL network, enhancing standardized cross-border e-invoicing within the EU. To support these requirements, Portuguese government utilizes eSPap (Entidade de Serviços Partilhados da Administração Pública), a centralized platform designed for the receipt and processing of e-invoices in dealings with public sector entities.

Starting in January 2025, there will also be a requirement for Qualified Electronic Signatures on PDF invoices. This mandate underscores the importance of verifying the authenticity of the document to ensure its integrity and security.

 

E-invoicing Process in Portugal

Taxpayers in Portugal are required to register on the Portal das Finanças. This platform facilitates the management of tax-related activities, including the submission of electronic documents. The process follows:

Completing a transaction: You must submit transaction details electronically immediately after completion.

Upon submission: The Portuguese Tax Authority reviews the electronic document, which includes validating the transaction details and assigning a unique identification code known as the ATCUD (Código Único de Documento).

After validation: The taxpayer issues a receipt that includes the ATCUD and, where applicable, other security features like a QR code. This receipt serves as proof of the submitted and validated transaction.

The customer receives this receipt, which confirms the transaction.

Customers or other interested parties can verify the transaction: through a web application provided by the Portuguese Tax Authority, ensuring transparency and accountability.

 

Portuguese Tax Authorities Responsible for E-invoicing

Responsibility for e-invoicing regulations in Portugal lies with the Agência para a Modernização Administrativa (AMA).

Furthermore, the Autoridade Tributária e Aduaneira (Portuguese Tax Authority) plays a critical role in ensuring that businesses comply with VAT regulations and submit electronic invoices correctly as part of their fiscal obligations.

 

E-invoicing Formats

Portugal's e-invoicing formats align with the European standard EN 16931. The system for e-invoicing is managed through eSPap (Entidade de Serviços Partilhados da Administração Pública).

E-invoicing formats commonly used in Portugal:

UBL (Universal Business Language)	Internationally recognized standard that includes a suite of XML-based business documents specifications.
PEPPOL BIS Billing 3.0a	Internationally recognized standard, providing a unified XML-based specification for electronic billing.
CIUS-PT	Country-specific adaptation of the European standard, which includes additional requirements for e-invoicing in Portugal.

 

E-invoice Validating

Ensure that your e-invoices adhere to the European standard EN 16931 as well as specific Portuguese requirements. Further validation of e-invoices is mandatory in Portugal, which includes the use of digital certificates.

It is mandatory to include a QR code on all e-invoices issued within Portugal. This QR code facilitates immediate access to invoice details for both tax authorities and taxpayers, enhancing transparency and ease of verification.

Alongside the QR code, the ATCUD (Código Único de Documento), or unique document code, is another essential element of the e-invoice. The ATCUD, which is provided by the Portuguese Tax Authority (Autoridade Tributária e Aduaneira), serves as a critical identifier for the invoice.

 

Certified Invoicing Software

Any business in Portugal with a turnover that exceeds €50,000 in the previous year, is VAT-registered, or provides billing services to other entities, is required to use certified invoicing software.

Software providers are obligated to submit their invoicing software for a comprehensive testing process conducted by the Portuguese Tax Authority. Upon passing this evaluation, the software is assigned a certification number. It is essential that this e-invoicing software is kept up-to-date with any changes in tax legislation and reporting requirements. Additionally, the software must maintain a detailed and secure log of all invoicing actions to ensure compliance and security.

 

E-invoice Archiving

You are required to archive e-invoices for a minimum of 10 years, beginning from the end of the year in which the invoice was issued. Archiving abroad is permissible under specific conditions, provided that the storage facility is located within the European Union or in a country that offers an adequate level of data protection, consistent with EU standards.

 

 

Tax Regulations

The standard VAT rate in Portugal, known as Imposto Sobre o Valor Agregado (IVA), is 23% and is applicable to most goods and services. A reduced VAT rate of 13% is applicable to certain foodstuffs, some passenger transport services, and some wines. Furthermore, specific foodstuffs, pharmaceutical products, books, newspapers, and certain types of accommodation benefit from an even lower VAT rate of 6%.

Regional variations in VAT rates exist in Portugal’s autonomous regions: In Madeira, the rates are 22%, 12%, and 5% VAT, while in the Azores, the rates are 16%, 9%, and 4% VAT. Understanding and adhering to VAT compliance is crucial for businesses to access the best content on electronic invoicing and to navigate the VAT regulations and requirements in Portugal effectively.

 

Corporate Tax

The standard corporate tax rate in Portugal is 21%. Small and medium-sized enterprises (SMEs) benefit from a reduced corporate tax rate of 17% on the first €25,000 of taxable profit.

Additionally, regional variations in corporate tax rates apply in Portugal's autonomous regions: In Madeira, the corporate tax rate is 20%, and in the Azores, it is 16.8%.

 

VAT on Digital Products

In Portugal, digital products including software, digital media, e-books, and online services are subject to the standard VAT rate. This rate is 23% on the mainland, 22% in Madeira, and 16% in the Azores.

 

 

VAT Payments and Returns

In Portugal, businesses are required to file a VAT Return with Portuguese Tax Authority to declare the VAT they have collected and the VAT they have credited for business purchases. The VAT Return should detail:

VAT collected on sales,

VAT credits for VAT paid on business purchases.

The net VAT amount, which is the difference between the VAT collected on sales and the VAT credits on purchases, is indicated on the VAT Return and must be paid to the Portuguese Tax Authority (Autoridade Tributária e Aduaneira). If the VAT credits exceed the VAT collected, the business can claim a refund.

The reporting frequencies are:

Monthly: Required for businesses with a turnover exceeding €650,000 in the previous year. VAT returns must be submitted by the 10th of the second month following the reporting period.

Quarterly: Required for businesses with a turnover of less than €650,000. These reports must be submitted by the 15th of the second month following the end of the quarter.

The Portuguese Tax Authority encourages the electronic filing of VAT Returns and Payments through its online portal (Portal das Finanças).

 

VAT Registration Thresholds

VAT registration threshold for domestically established businesses is €13,500 if the business commenced its activities in 2022. This threshold is set to increase to €14,500 in 2024 and will rise again to €15,000 in 2025.

For EU-based businesses engaged in distance selling of goods or services to the Portuguese consumers, the threshold is €10,000.

Non-EU businesses selling into Portugal have no VAT registration threshold; they are required to register for VAT immediately upon beginning sales of goods or services to Portuguese consumers.

 

 

E-invoice Requirements

In Portugal, e-invoice requirements adhere to EU standards and demand components such as:

Unique and Sequential Invoice Number;

Date of issuance;

Identification of the Seller and the Buyer: full name, address and Tax Identification Number (NIF), suppliers NIF only if the customer is also a taxable entity and the transaction is subject to VAT;

Information about Goods or Services Provided: description, quantity, unit price, excluding VAT;

VAT Information: applicable VAT, total VAT amount, total invoice amount including VAT;

Total amount excluding VAT;

Currency;

Payment terms: including payment due date and any discount;

Reference to the legal requirement for the invoice: if applicable, include references to contract agreements, purchase orders, or any other legal obligation necessitating the invoice.

QR Code and ATCUD.

For businesses with repeating customers, setting up recurring invoices can streamline the billing process by automating regular, automatic payments.

 

Utilizing invoicing software can significantly benefit businesses in creating, sending, and managing e-invoices in compliance with Portuguese regulations. These tools not only help in generating professional invoices but also in streamlining the invoicing process, improving cash flow, and ensuring that payments are received on time.

See how Space Invoices can help.

 

B2G E-invoice Specifications

In Portugal, B2G e-invoicing is the only type that is mandatory. This sector adheres strictly to EU Directive 2014/55/EU, requiring that invoices be submitted through the eSPap platform, Portugal's public administration shared services entity.

 

B2C E-invoice Specifications

For most B2C transactions you can issue simplified invoices, which require less information compared to full invoices.

 

Simplified E-invoice Requirements

You can issue simplified e-invoices for transactions where the total invoice amount, including VAT, does not exceed €1000 for B2C and €100 for B2B, provided the customer does not request a full invoice.

Simplified e-invoices include:

Date of Issue;

Unique Invoice and Sequence Number;

Supplier’s Identification: Name and Tax Identification Number (NIF);

Description of Goods or Services;

Total Amount Payable, including VAT;

VAT Rate Applied;

QR Code.

 

 

Digital Reporting R

Businesses registered for VAT in Portugal are required to submit a VAT Return electronically. This can be done through the Portuguese Tax Authority's online platform, Portal das Finanças, via business software that integrates this feature, or through a tax agent. The report should include detailed information on the VAT collected and the VAT paid.

Additionally, businesses with a turnover exceeding €750,000 must submit the SAF-T (PT) file monthly. For smaller businesses, SAF-T reporting is typically annual and coincides with the submission of their tax return.

 

SAF-T

SAF-T is mandatory in Portugal.

 

Real-Time Reporting

Real-time reporting in Portugal is facilitated through the e-invoicing system. As of January 2021, all invoices issued in Portugal are required to include a QR code and a unique document code (ATCUD). These features enable the real-time tracking of transactions and allow the tax authority to perform compliance checks more efficiently.

 

Data Breaches

If a data breach occurs, you must notify the Portuguese Data Protection Authority (Comissão Nacional de Proteção de Dados, CNPD) within 72 hours of becoming aware of the incident. If the breach poses a significant risk to individuals' rights and freedoms, affected individuals must also be notified without undue delay. This protocol ensures timely actions to mitigate any potential damage and uphold data protection standards.

 

 

Penalties

Penalties for failing to issue invoices on time range from €150 to €3,750.

Penalties for inaccuracies in statements or tax-relevant documents range from €750 to €22,500.

Failing to prepare accounts in accordance with Portuguese accounting standards can result in fines ranging from €1,000 to €10,000.

If you fail to include mandatory elements such as the QR code and ATCUD on invoices, penalties can range from €200 to €1,000 per invoice.

 

Tax Penalties

Penalties for late tax payment due to negligence can range from 15% to 50% of the unpaid tax for natural persons (with a maximum penalty of €22,500), and from 30% to 100% for legal persons (with a maximum penalty of €45,000).

For culpable delays up to 90 days, fines can increase to 200% of the outstanding tax for natural persons (up to a maximum of €82,000), and to 400% for legal entities (up to a maximum of €165,000).

Fines for non-delivery of VAT are based on the amount owed, but have a minimum value of €25.

 

Certified Invoicing Software

Businesses that fail to use the required certified invoicing software in Portugal face fines ranging from €1,000 to €18,750.

 

 

Streamline Global Invoicing and Digital Reporting with Space Invoices

One way to comply with (e-)invoicing, tax and reporting requirements in Portugal is to use a credited provider like Space Invoices.

You will be able to:

Utilize a single API for current and future worldwide compliance, including in Portugal

Support and upsell your clients globally, including in Portugal

Become the one-stop shop for current and future clients

Streamline processes to save time and reduce costs, while also eliminating manual errors

Rest assured all documents are properly archived and reported to the relevant authorities

Achieve rapid integration, typically completed in less than a week.

 

Having questions about how to achieve compliance in Portugal?

We are here to assist.

 

 

This guide is provided by Space Invoices and does not constitute professional tax advice or opinions tailored to the specifics of any particular business or situation. Space Invoices does not accept responsibility for the accuracy or applicability of the content within this guide. Tax regulations, e-invoicing requirements, and digital reporting standards are subject to frequent changes and complex interpretations that require validation by qualified tax professionals. It is the user's responsibility to evaluate the relevance and accuracy of the information provided and to consult appropriate professionals. Space Invoices does not offer professional tax opinions or advice through this publication.

Looking to automate real-time reporting and tax compliance for Portugal? Let's talk