Invoicing clients outside of Portugal is increasingly common, especially for digital services and consultancy. However, VAT (Value Added Tax) rules change depending on the client and the country. Applying the wrong rule can lead to problems with the Tax Authority.
Clients in the European Union
When invoicing a company in another European Union country with a valid VAT (IVA - Imposto sobre o Valor Acrescentado) number, the reverse charge mechanism generally applies: you do not charge Portuguese VAT, and the client settles the VAT in their own country. For this to apply, both parties must be registered in VIES.
VIES Registration
VIES (VAT Information Exchange System) is the system that validates intra-community VAT (IVA) numbers. Before invoicing a European client without VAT, confirm that their number is valid in VIES and ensure that you are also registered for intra-community operations.
The Recapitulative Statement
Intra-community transactions must be reported in a recapitulative statement, in addition to being included in the periodic VAT (IVA) return. Failure to report this will incur penalties.
Clients Outside the European Union
When invoicing clients in third countries (countries outside the European Union), the rules depend on the type of service or good. Many services provided to clients outside the European Union are not subject to VAT (IVA) in Portugal, but it is necessary to confirm on a case-by-case basis and document the operation.
Sales to Final Consumers
Sales to final consumers in other countries, especially in e-commerce, follow their own rules, with specific regimes for the VAT (IVA) of the destination country. These rules require attention from those who sell online.
Document to Support
Keep the VIES validation, contracts, and proof of operations. In case of an inspection, it is the documentation that supports the VAT (IVA) treatment applied.
At Grupo Your, we help your company invoice foreign clients correctly and comply with reporting obligations. Talk to us before issuing your next international invoice.
