E-Commerce & B2C Services in Portugal
On 1 July 2021, the EU implemented its e-Commerce VAT Package. The package supersedes existing distance selling regulations and expands the Mini One Stop Shop (MOSS). This is a significant change to the VAT rules that apply to business-to-consumer (B2C) supplies of goods and services, both as EU imports and intra-EU trade.
The new significantly reduced pan-EU VAT threshold of EUR 10.000 (EUR 0 for businesses established outside the EU) applies to the majority of businesses, requiring them to account for VAT on a broader range of supplies.
Since July 1, 2021, all business-to-consumer (B2C) sales of goods to EU consumers are taxed in the destination member state due to this package. Additionally, VAT reporting is done through “One Stop Shop” (OSS) systems, enabling vendors to declare and pay VAT through a single member state’s tax portal. An Import OSS (IOSS) system allows suppliers and electronic interfaces that sell imported goods into the EU to collect, declare, and pay VAT on their behalf to tax authorities, rather than the buyer paying VAT when the goods clear customs.
OSS, however, is an optional procedure. Thus, VAT can be settled on intra-Community distance sales of goods and all types of cross-border B2C services with the Member State of consumption as the place of supply (up to now, this was possible solely for electronically supplied services and similar of the kind).
The scheme’s main advantages are:
- The possibility of electronic VAT registration in a single Member State (thereby avoiding the requirement to register for VAT in each Member State where goods or services are sold).
- A single return submitted electronically to the Member State of identification (yet at VAT rates applicable in the consumer’s country).
- Cooperation with the tax authorities of the Member State of identification (establishment), even in the case of cross-border sales.
Selling in Portugal?
Services in Portugal
The general rule on the place of the supply of services, is established in Article 6 of the Portuguese VAT Code. This is in regard to suppliers established in Portugal and customers not being taxable persons. (B2C supplies)
B2B – The place of supply for B2B services is Portugal if the services are provided within Portugal.
Of course the general rules are modified in case special conditions are in place. In this case, independently of the place where the service provider and the acquirer are established, and independently of the recipient being a taxable person, certain supplies have Portugal as their place of supply, if Portugal is the place of consumption.
As an example, in Portugal the following supplies can generally be considered taxable:
- Food and Beverage services.
- Telecommunications and electronically supplied services which will be analysed in our next paragraph.
- Intermediary services which take place in Portugal.
- Services which offer access to cultural, sporting, scientific and artistic events.
- Services regarding immovable property in Portugal.
- Passenger transportation & short term hiring of means of transport in Portugal
Global VAT regulation has undergone significant changes due to the rapid growth of digital services.
Intangible products and services, also known as e-services or digital goods, are intangible products or services sold over the Internet. Any product stored, delivered, and used in an electronic format falls under the definition of a digital product under EU law. Goods or services that are delivered to customers via email, download from the Internet, or logging into a website, including but not limited to, the following:
- E-books, images, movies, and videos, whether purchased directly from Shopify or through a third-party service such as Netflix. These products are classified as «Audio, visual, or audio-visual products» in tax parlance.
- Music that can be downloaded or streamed, whether purchased as an MP3 or via a service like SoundCloud or Spotify. Normally, these items also fall under the audio category.
- Software and as-a-Service products delivered via the cloud, including Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS) (IaaS)
- Websites, web hosting services, and ISP’s
- Advertisements on the internet and affiliate marketing
In the case of digital services, telecommunications services, or broadcasting services supplied in a business-to-business context, the place of supply is the recipient’s location. Unless the supplier and customer are established in Portugal, no Polish VAT should be charged.
Last Updated: 17/01/2022
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
