Portugal: VAT exemption regime updated for small businesses
The Portuguese Official Gazette published Law No. 16/2025 on February 24, amending the VAT Act to partially implement EU Directives 2020/285 and 2022/542. The law introduces changes to the special VAT exemption regime for small businesses.
Key provisions of the law
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Eligibility restrictions:
- The VAT exemption applies only to taxable persons not engaged in export operations.
- Annual turnover must not exceed 15,000 euros (US$15,763).
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Cross-border VAT exemption:
- Small businesses residing in other EU countries can claim the exemption if their EU-wide annual turnover does not exceed 100,000 euros (US$105,084).
- Portuguese businesses may apply the exemption in other EU countries under specific conditions.
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Exclusions:
- Occasional transactions and the transfer of new means of transport are not eligible for the exemption.
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Additional measures:
- Establishes waiver, exemption, and cessation rules for businesses.
- Defines procedures for VAT deduction or refunds under the regime.
- Aligns the cash VAT and goods in circulation regimes with the exemption rules.
The law grants 180 days of authorization for the implementation of these measures.
Source: diariodarepublica.pt
