(Spoiler: services supplied abroad don’t—goods shipped from Portugal now do)
With the new VAT rules that were introduced by the Portuguese Tax Authority in July 2025, we’ve been receiving a lot of questions. A recurring question is: Are sales outside of Portugal counted towards the new VAT Exemption limit?
Why this matters in 2025 – 26
From 1 July 2025 Portugal’s revamped VAT rules keep most micro-businesses VAT-free—but only if their Portuguese-located turnover stays at or below €15 000 during the calendar year.
Knowing which foreign sales inflate that turnover can decide whether you remain exempt or must register for VAT on 1 January 2026.
1. Services vs. goods—two totally different rules
| Type of sale | Where the transaction is “located” | Portuguese VAT to charge | Does it count toward the €15 000 limit? |
|---|---|---|---|
| B2B services to a client established outside Portugal (e.g. web design for a German GmbH) | Outside Portugal under the general place-of-supply rule (reverse charge, invoice code M40) | 0 % | No – ignored for the threshold |
| Digital or professional services consumed in Portugal (e.g. photography at a Lisbon wedding) | Portugal | Depends on whether you’re VAT-registered | Yes |
| Goods held in Portuguese stock and shipped abroad (exports or intra-EU supplies) | Portugal (article 14/15) even though rate is 0 % | 0 % (zero-rated export or intra-EU supply) | Yes – new in 2025 |
| Goods never entering Portugal (drop-shipping from a Spanish warehouse) | Outside Portugal | No PT VAT | No |
2. Real-world examples (using 2025 figures)
| 2025 revenue split | Do you breach €15 000? | Consequence |
|---|---|---|
| €12 000 Portuguese design work + €22 000 to UK clients (reverse charge) | No – only €12 000 counts | Stay exempt for 2025; review again in Jan 2026 |
| €10 000 Portuguese coaching + €9 000 Portuguese exempt health-care + €20 000 German clients | Yes – domestic turnover €19 000 (health-care now counts) | File alteration by mid-Jan 2026; VAT from 1 Jan 2026 |
| €14 500 exports of wine from Porto warehouse + €1 000 local tasting tours | Yes – exports are zero-rated but located in PT → total €15 500 | Same: register in Jan 2026 |
| €18 900 PT turnover reached on 3 October 2025 (local café) | Breach during the year | Charge VAT on the 3 Oct receipt; declare within 15 working days |
| €25 000 drop-shipped electronics from a Dutch warehouse; No PT clients | No – goods never located in Portugal | Remain exempt; keep M40-style documentation to prove location |
3. How to prove a sale is outside Portugal
- Services – collect the customer’s VAT or tax ID, contract, and evidence of business use (for B2B).
- Goods – keep transport documents showing the products left Portugal, or stock ledgers proving the goods were held abroad at the time of sale.
- Invoices – use two series: M40 for reverse-charge services / non-PT goods, M10 for exempt domestic sales.
Have you registered for VAT in Portugal? Know all about “When do I have to register for VAT in Portugal in 2025?”
4. Action checklist before year-end
- Watch exempt exports—their zero rate no longer protects your exemption status.
- Budget cash-flow: passing €18 750 mid-year means VAT due on that very invoice.
Based exclusively on the OCC “Guia Prático – Regime Especial de Isenção do IVA” (July 2025). Information is general; always seek professional advice for your specific facts.