Portugal: Tax Authority Clarifies VAT Filing Simplification Measures

INLIS Consulting
1 day ago
3 min read

On May 19, 2025, Portugal’s Tax and Customs Authority (AT) issued Circular No. 25069, offering vital clarification on VAT return simplification measures outlined in Decree-Law No. 49/2025, which will come into effect on July 1, 2025.

This blog post summarizes the new VAT obligations and changes, including the highlights of Decree-Law No. 49/2025 in English for non-Portuguese speakers.

Key VAT Clarifications from Circular No. 25069

The circular provides important updates on how VAT filing obligations are changing, especially concerning filing frequency and turnover thresholds:

1. More Flexibility in Filing Frequency

Businesses that previously opted into the monthly VAT return regime are no longer bound by the three-year minimum requirement. They may switch regimes based on eligibility without being locked in long term.

2. No Automatic Changes by the Tax Authority

The Tax Authority will not unilaterally change a taxpayer’s VAT filing frequency. Any change must come from the taxpayer unless specific legal exceptions apply.

3. Turnover Threshold Rule

Taxpayers with actual turnover of €650,000 or more in 2025 must remain on monthly VAT filing for the entirety of 2026. Switching to quarterly filing is not permitted for this group.

4. Declaration of Change Required

If a quarterly filer exceeds the €650,000 turnover in 2025, they must submit a declaration of change in January 2026, transitioning to monthly filing effective from January 1, 2026.

What is Decree-Law No. 49/2025?

(Published March 27, 2025)

The decree is part of the Portuguese government's Agenda for Fiscal Simplification, approved by the Council of Ministers on January 16, 2025. It introduces over 20 legislative measures to simplify compliance and reduce administrative burdens for individuals and businesses.

Key Measures Introduced

Elimination of Redundant Declarations: Annexes Q and O of the Simplified Business Information (IES) are removed.
Automatic VAT Filing: For taxpayers with no taxable operations, periodic VAT returns will now be automatically filed.
Simplified Export Certificates: For goods under €1,000, simplified certification replaces traditional export declarations, facilitating VAT exemption.
Micro Payments Exemption: Withholding at source is no longer required for payments under €25.
Harmonized Deadlines: IRS declarations and certificates of no debt to tax or social security authorities will now follow unified deadlines.
Digitalization of Records: VAT registries for non-accounted businesses are now fully digitized.
Voluntary Audit Meetings: Mandatory regularization meetings in tax inspections are now optional.

Legal Reforms Covered in the Decree

The decree modifies several key pieces of legislation, including:

Personal and Corporate Income Tax Codes (IRS & IRC)
VAT Code
Stamp Duty Code
Real Estate Tax Codes (IMI & IMT)
Tax Benefits Statute
General Tax Law
Tax Procedure and Process Code
E-invoicing regulations
Simplified Business Information (IES) rules

Impact for Businesses and Freelancers

The simplified filing framework is designed to:

Lower compliance costs
Increase transparency
Promote competitiveness
Make VAT reporting more flexible and less time-consuming

If your annual turnover is approaching or exceeding the €650,000 threshold, it’s crucial to plan ahead and be ready for monthly filings in 2026.

Need Help Understanding the New Rules?

INLIS Consulting is here to help. Whether you're a freelancer, entrepreneur, or business owner, our team can guide you through these changes, help adjust your filing regime, and ensure full compliance with Portuguese VAT laws.

WhatsApp: +351 968 464 942

Stay informed. Stay compliant. Let INLIS handle the complexity for you.