VAT and EU Supply Chains with a Portuguese Tax Representative

Cross-border trade in the European Union offers huge business opportunities, but it also comes with complex VAT challenges. For companies shipping goods across EU borders, failing to manage VAT properly can lead to lost deductions, double taxation, and compliance risks.

This is especially true when goods move between multiple countries before reaching their final destination. Fortunately, appointing a Portuguese tax representative can simplify the process, reduce VAT costs, and ensure full compliance.

The Cross-Border VAT Challenge

Imagine a company that:

• Is based in France and sells specialized products.

• Holds stock in Italy with a third-party logistics operator.

• Receives orders from subsidiaries in the USA and UK, which sometimes need goods shipped directly to manufacturers in Portugal.

• Relies on Portuguese manufacturers to produce finished products and ship them to non-EU countries.

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At first glance, this seems simple—but VAT obligations across multiple EU countries can quickly become a problem:

• Shipping from Italy to Portugal may trigger Italian VAT, which might not be recoverable.

• Incorrect VAT handling could result in double taxation or lost tax deductions.

• Cross-border invoicing must comply with EU VAT rules, even when final customers are outside the EU.

The Solution: Appoint a Portuguese Tax Representative

A Portuguese tax representative allows businesses to:

• Register for VAT in Portugal without establishing a full Portuguese entity.

• Treat shipments from other EU countries as intra-Community acquisitions, avoiding unnecessary VAT charges in the country of origin.

• Maintain compliance for exports from Portugal to non-EU countries, such as the USA or UK.

This approach is a VAT-saving strategy and a legal requirement for some companies shipping goods into Portugal.

How It Works: A Step-by-Step Example

1. Goods Transfer: Products move from Italy to a Portuguese manufacturer.

2. Invoicing: The parent company invoices its subsidiaries without Italian VAT.

3. VAT Reporting: The Portuguese tax representative handles VAT registration, intra-Community acquisition reporting, and ensures compliance.

4. Final Delivery: The Portuguese manufacturer ships the finished goods to the final destination, invoicing only for manufacturing or production services.

By following this structure, companies can save VAT, avoid compliance risks, and streamline cross-border operations.

Benefits of a Portuguese Tax Representative

• Cost savings: Avoid losing VAT in the country of origin.

• Compliance: Stay fully aligned with EU VAT rules.

• Operational efficiency: Simplify invoicing and reporting for international shipments.

• Flexibility: Ship products to Portugal for production without opening a local company.

Who Needs a Portuguese Tax Representative?

Companies that:

• Ship goods into Portugal from other EU countries.

• Export finished products from Portugal to non-EU markets.

• Want to optimize VAT and reduce tax costs.

• Need a reliable solution for cross-border VAT compliance.

Final Thoughts

Managing cross-border EU VAT doesn’t have to be complicated. By appointing a Portuguese tax representative, businesses can protect their margins, stay fully compliant, and focus on expanding in international markets.

If your business ships goods into Portugal or across the EU, a Portuguese tax representative could save you thousands in VAT while ensuring smooth cross-border operations.