You've incorporated in Portugal and opened a bank account. Now you want to invoice a customer in Germany, sell software to a consumer in France, and ship goods to Spain. Each of those is a different VAT question — and getting them wrong is the most common early compliance mistake we see.
VAT (IVA in Portuguese) is the tax founders most often assume they understand and most often misapply once they cross a border. The rules are logical, but they hinge on three things people rarely check up front: who your customer is (business or consumer), where they are, and what you're selling (goods, services, or digital). Get those three right and the rest follows.
A Portuguese company registers for VAT with the tax authority as part of setting up. But being VAT-registered domestically is not the same as being visible for intra-EU trade. To sell cross-border B2B properly you need to be listed in VIES — the EU's VAT Information Exchange System, the shared database that lets businesses verify each other's VAT numbers across member states.
This trips people up regularly: the company has a Portuguese VAT number, issues a zero-rated invoice to a German client, and later discovers it wasn't registered for intra-EU operations. The fix is administrative, but the correction can be uncomfortable. Sort VIES at setup, not at the first invoice.
When you sell services or goods to a VAT-registered business in another member state, you generally do not charge Portuguese VAT. Instead the customer accounts for VAT in their own country under the reverse charge mechanism. Practically, this means:
If the customer's VAT number doesn't validate, they are — for your purposes — not a business. Charge VAT accordingly rather than hoping.
Consumers are different. For cross-border sales of goods and digital services to private individuals in other member states, the general position is that you charge the VAT rate of the customer's country once you pass a modest EU-wide threshold for cross-border B2C sales. Below that threshold, you can continue applying your domestic rate.
Registering for VAT in every country you sell to would be absurd, which is why the One Stop Shop (OSS) exists. You register for OSS once, in Portugal, then file a single periodic return declaring your cross-border B2C sales by country, and the Portuguese authority distributes the tax onward. It is genuinely one of the EU's better pieces of administrative design — and it only helps if you register for it before you need it.
A detail that surprises new entrants: Portugal does not have a single VAT rate. The mainland, Madeira and the Azores each set their own, with the Azores lowest and the mainland highest. Which applies depends on where the supply takes place, not simply where your company is registered. For a services business selling internationally this is often marginal; for a consumer business operating in the islands it is material. We cover the regional picture in Madeira & Azores for Business.
VAT across the EU is not difficult, but it is unforgiving of assumptions. Decide, for each revenue stream, who the customer is and where they sit — then apply the rule that follows. Set up VIES and, if you sell to consumers, OSS early, and build the invoicing wording into your templates from day one rather than retrofitting it after the first audit question. We handle registration, filings and the recurring reporting as part of Corporate & Tax Support.
Tell us what you sell and to whom. We'll set up VAT, VIES and OSS correctly and run the recurring filings so cross-border invoicing is a non-event.