Portugal VAT Return Simplification: New Tax Authority Guidance & Key Updates for 2025

In addition to implementing amendments regarding the place of supply rules for VAT purposes concerning services providing virtual access to cultural and other events, the Portuguese Tax and Customs Authority (Tax Authority) released several VAT decrees and guidelines throughout March, April, and May.

Besides providing clarification, the released decrees and guidelines introduce some new rules coming into effect on July 1, 2025.

Key Amendments and Guidelines

Circular No. 25069, outlining the VAT return simplification measures set out in Decree-Law No. 49/2025, is one of the most notable guidelines published by the Tax Authority. It eliminates the rule that required taxable persons who opted for monthly VAT returns to stay in that regime for at least three years, offering more flexibility in filing frequency. Additionally, it restricts the unilateral change of taxable persons' filing frequency by the Tax Authority, and sets a turnover threshold of EUR 650,000 for taxable persons for 2025, requiring monthly filing in 2026.

While Decree No. 35/2025 introduces the EU’s new VAT Rules for small businesses, known as the EU SME Scheme, into national legislation, the Circular No. 25065 clarifies how those rules apply. The Circular underlines that the regime applies to Portuguese businesses operating in other EU countries, and to certain foreign companies operating in Portugal.

Additional legal documents published by the Tax Authority include Ordinance No. 191/2025/1, which introduces a new cover sheet for the annual VAT return, eliminating two Annexes in the process. The new sheet format for VAT return has been used since April 17, when the Ordinance came into effect.

Conclusion

Since the Portuguese Tax Authority released several decrees and clarifications affecting both domestic and foreign taxable persons, all taxable persons operating in Portugal should review the regulations and guidelines to determine to what extent they apply to them.

While some of the rules, such as those related to VAT return format, have already taken effect, others will come into effect on July 1, providing taxable persons with sufficient time to familiarize themselves with the new rules.

Source: Deloitte, PwC, VATabout