Portugal to joins 19 other EU member states with VAT group simplification option January 2025
Portugal is to introduce the option for related taxpayers to join under a single VAT number for reporting and exempt intra-group invoicing – ‘VAT group’. The measure was proposed on 4 July 2024 to the Council of Ministers by Portugal’s Minister of the Economy as part of a wider package of reforms and tax breaks. The likely implementation date will be 1 January 2025.
The cash accounting simplification option threshold is being raised from €500,000 to €2 million.
This is based on Article 11 of the EU VAT Directive 2006/112/EC. This simplification and cashflow saving option is not widely allowed for in the EU and beyond.
The new rules will include the option for a single VAT return for related companies, a ‘VAT group, based on EU VAT Directive rules. Read more in our Portugal VAT guide.
Related VAT registered resident business are able to consolidate their reporting into a single return and share the same VAT number. This means intra-group transactions would be made without VAT. Intra-group VAT transactions would be zero-rated, thus avoiding cash flow requirements.
Likely Polish VAT Group features
The VAT Group will be similar to those in other EU countries:
- VAT groups will be a voluntary option between related businesses;
- businesses within the group will become jointly and severally liable to each others’ VAT; and
- intra-community transactions will be effectively zero-rated.
Related VAT registered resident business will be able to consolidate their reporting into a single return and share the same VAT number. This means intra-group transactions would be made without VAT. Intra-group VAT transactions would be zero-rated, thus avoiding cash flow requirements.
Requirements to join a VAT Group
To join, members of a VAT group must be financially and/or organisationally linked. Financial links include:
- holds directly more than 50% of the share capital in;
- holds more than 50% of the voting rights in; or
- holds more than a 50% participation in the profits of
Organisational links include:
- they either legally or actually, directly or indirectly, function under the joint management; or
- their activities are organized, wholly or partly, in agreement with one another.
EU VAT Group rules
Portugal has to introduced the scheme under the rules of the EU VAT Directive Article 11 of Directive 2006/112/EC. This stipulates that group members must be closely linked financially, economically and organisationally to be treated as one taxable person. Typically, this means at least 75% share control of companies within the group, shared management or shared business goals or activities. This can include a member of the group providing goods or services that are mostly / wholly consumed by other members of the group.
Portugal will be expecting one nominated member of the group to take on responsibility for the consolidated return.
VAT Calc’s VAT Filer can accurately populate any country VAT return, ESL, Intrastat of SAF-T with verified data from our VAT Calculator or VAT Auditor services
