Your Company's Money Stuck at the Tax Authority - and How to Recover It
Portuguese companies have tens of thousands of euros immobilized at the Tax Authority. It's not an error. It's not fraud. It's VAT credit that was never claimed. If you're a CEO or CFO, keep reading.
Let me ask you a direct question: do you know if your company has accumulated VAT credit?
If the answer was "I need to check with my accountant" - that's exactly why we're here. Because that money is yours. It's available. And it could be in your company's account within weeks.
What is VAT credit - and why it happens in your company
VAT works as a simple circuit: the company charges it to customers, pays it to suppliers, and delivers the difference to the State. But when VAT paid exceeds VAT charged, the balance reverses - and it's the State that owes your company.
This happens more often than you think. Especially in three very common situations in Portuguese SMEs:
✅ You export or provide services outside Portugal - sales are VAT exempt, but domestic purchases are not. Credit accumulates automatically.
✅ You invested in equipment, construction, or technology - you paid VAT on acquisitions long before monetizing them through sales.
✅ You have strong seasonality - in low months, purchases continue but billing drops. Credit grows month by month.
The real impact on cash flow that most ignore
An unclaimed VAT credit doesn't disappear. It automatically carries forward to the next period. The problem is that money stays immobilized, earning nothing - while your company may simultaneously be paying interest on a bank loan to finance working capital.
It's a silent inefficiency. No alert appears. No notification is generated. It just sits there.
💡 Concrete example: A company with annual turnover of €500,000 and accumulated credit of 8% could have around €40,000 sitting at the Tax Authority. Your money, available, that could be working.
When you can request a refund
The law is clear - Article 22 of the VAT Code:
| Condition | Detail |
|---|---|
| Minimum value | Over €250 |
| Minimum time | Credit persistent for 12 consecutive months |
| Tax status | No discrepancies in declared values |
| Customer/supplier tax IDs | All valid and with active status |
⚠️ Warning: If the Tax Authority detects any discrepancy between reported and declared values, the request may be blocked or delayed. It's essential that accounting is organized before proceeding.
General regime vs. monthly regime - which is yours?
General regime: The refund is processed by the end of the 2nd month after submission. For most SMEs, this is the applicable regime.
Monthly refund regime: Processing in just 30 days. Available for companies where at least 75% of operations are exempt or with reverse charge - typically exporters and companies with large volumes of intra-community purchases.
💡 Grupo Your Tip: If the Tax Authority doesn't meet the legal deadlines, your company is entitled to compensatory interest on the overdue amount. Few business owners know this - and even fewer claim it.
How to request - no extra forms
The request doesn't have a separate form. It's made directly in the periodic VAT return, filling in the refund field with the amount to recover.
2026 submission deadlines:
⚠️ Important note: For requests over €30,000, the Tax Authority may require a bank guarantee before processing payment.
The decision that's up to you as CEO
Request the refund or carry the credit forward? It's not a technical decision - it's a management decision:
Carry the credit if:
Request the refund if:
What never makes sense - ever - is not making the decision due to ignorance.
What to do this week
✅ Ask your accountant for the VAT settlement history from the last 12 months
✅ Check if there's accumulated credit over €250
✅ Analyze the impact on cash flow and make an informed decision
✅ If credit exists - proceed with the request in the next periodic return
💬 At Grupo Your, analyzing your company's VAT situation is part of regular accounting support. If you want to know if you have credit to recover, talk to us today - no commitment.
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