Flash News NA 2025/07/01
When the €15,000 Threshold is Exceeded under the Special VAT Exemption Scheme. Procedures and Transitional Regime in 2025 in Portugal
With the entry into force of the new Special VAT Exemption Scheme (REI), amended by Decree-Law no. 35/2025, taxpayers under this regime must closely monitor their turnover. If they exceed €15,000 in the previous calendar year, they will be mandatorily subject to the normal VAT regime from 1 January of the following year..
Who is no longer VAT exempt?
The new scheme applies to:
• Taxable persons who exceeded €15,000 in turnover in the previous year will be subject to VAT from 1 January 2026.
• Taxable persons who exceed the turnover threshold by 25%, i.e. €18,750, during the first half of 2025 will automatically be subject to VAT from 1 July 2025. The invoice that exceeds the €18,750 threshold must already include VAT.
Who is exempt and what counts towards the €15,000?
Taxpayers with a head office or domicile in Portuguese territory who did not exceed an annual turnover of €15,000 in the previous calendar year are considered exempt.
Exemption also applies to taxpayers based in other Member States, provided they meet the following additional conditions:
a) The taxable person’s annual turnover in the EU does not exceed €100,000;
b) The taxpayer has previously notified the Member State where established of their intention to benefit from the exemption in Portuguese territory.
The new Article 53 of the VAT Code (CIVA) establishes that the relevant turnover for the REI corresponds only to operations located in national territory.
Not considered:
• Transactions located outside Portugal (according to Art. 6 of the VAT Code);
• Exports and intra-community supplies;
• Ancillary financial and insurance operations;
• Transfers of capital goods;
• Isolated acts.
Mixed taxable persons should only consider the operations of activities that give the right to deduction.
2. What happens if you exceed €15,000?
If you exceed 25% of the €15,000 limit within the semester, you will become subject to VAT in 2025. The normal VAT regime will apply from the 1st day of the month following the excess.
You must notify the Tax Authority:
• By submitting a declaration of changes via the Finance web page.
• Within 15 days after exceeding the threshold.
You must issue invoices with VAT:
• From the cessation date, invoices must include VAT at the applicable rate (standard, reduced, or intermediate).
You must submit VAT returns:
• You are required to submit VAT returns (monthly or quarterly, depending on turnover);
• Payment of the assessed tax also becomes mandatory.
3. Start of activity declaration: new rule
With the changes effective from July 2025, the estimated turnover for activity commencement is no longer annualised. Thus:
• The forecast of invoicing until the end of the year is considered in full, without proportional adjustment.
• If this estimate is below €15,000, the taxpayer may fall under the REI.
• If it is higher, the taxpayer is excluded from the start.
Conclusion
The reform of Article 53 of the VAT Code in 2025 requires taxpayers to more closely monitor their turnover, under penalty of losing tax benefits. The transitional 25% measure in 2025 allows some flexibility, but it is temporary. NOMINAUREA is available to provide full technical, accounting, and tax support during this transition and adaptation to the new framework.
