The Portuguese Government has presented a proposal to extend VAT exemptions to small and medium-sized enterprises (SMEs) with organized accounting, which have so far been excluded from this regime.
This initiative aims to align Portugal with the new European Union directive that promotes fiscal simplification and harmonization across the European space, enhancing the competitiveness of SMEs.
Under the new proposal, all SMEs with annual revenues of up to 100,000 euros will be eligible for the exemption, including operations conducted in other EU Member States. Additionally, foreign companies meeting the revenue threshold may also benefit from this regime in Portugal.
The European directive also introduces changes to the taxation of digital services, with VAT to be charged in the country of consumption, fostering fairer competition in the digital market.
While the proposal leaves the VAT rates on essential goods in Portugal unchanged, its incorporation into national legislation represents a significant step forward for the internationalization of SMEs, simplifying tax burdens and reducing barriers to entering foreign markets.
Parliament will discuss the measure as part of the 2025 State Budget, with anticipated debates on potential extensions of exemptions and fiscal adjustments.
Tax Department
Sofia Quental | Inês Grácio | Catarina Amaral
