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Portugal – New rules for the application of the domestic reverse charge mechanism

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For many years, it has been understood and practised by all that the reverse charge mechanism provided for in Article 194 of Directive 2006/112/EC (transposed in Article 2 1° g of the Portuguese VAT Code) only applied in Portugal if the sell was not registered for VAT purposes in Portugal.

Conversely, it was common practice for businesses not established in Portugal but in possession of a VAT number in Portugal to charge Portuguese VAT.

However, the Portuguese tax administration has recently changed its interpretation and the reverse charge mechanism must now apply even when foreign sellers have a VAT number in Portugal.

For further information, please contact our experts.

Source : Portuguese portal of finances (in Portuguese)

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