VAT (IVA) regimes — 23 / 13 / 6% mainland, reduced rates Azores and Madeira

IVA (Imposto sobre o Valor Acrescentado) is Portuguese VAT, governed by the Código do IVA (CIVA). Its distinctive feature: three separate rate sets by territory — the mainland (23 / 13 / 6%) and the two autonomous regions, the Azores and Madeira, which have their own reduced rates. For e-invoicing, each line must carry the right rate and the right "tax space".

History — from CIVA 1984 to the autonomous regions

The Código do IVA was established by Decreto-Lei n.º 394-B/84, ahead of Portugal's entry into the EEC (1986) and alignment with the 6th VAT directive. From the outset, the autonomous regions of the Azores and Madeira — outermost regions recognised by the Constitution — have reduced rates relative to the mainland.

The mainland standard rate was raised to 23% in 2011 under the troika memorandum. CIVA Lists I (reduced 6%) and II (intermediate 13%), which define which goods and services qualify for reduced rates, are adjusted by successive budget laws. In 2023, a temporary zero-VAT measure on a basket of essential foods addressed inflation; it has since been lifted.

1984       | The Código do IVA (CIVA), Decreto-Lei n.º 394-B/84, introduces
           | Portuguese VAT ahead of Portugal's entry into the EEC (1986).
           |
1986       | EEC accession: alignment with the 6th VAT directive. The
           | autonomous regions of the Azores and Madeira receive
           | constitutionally recognised reduced rates.
           |
2011       | Crisis / troika memorandum: mainland standard rate raised to 23%.
           |
2016-2020  | Adjustments to CIVA List I (reduced 6%) and List II
           | (intermediate 13%) under successive budget laws.
           |
2023       | Temporary "zero VAT" measure on a basket of essential food
           | products (inflation response), since lifted.
           |
2024-2026  | Stable rates: mainland 23/13/6%, Azores 16/9/4%,
           | Madeira 22/12/5%. Reverse charge for certain operations
           | (construction, waste, intra-EU).

Governance — CIVA and the periodic return

VAT is administered by the Autoridade Tributária e Aduaneira (AT). Taxable persons file a Declaração Periódica do IVA (periodic return) — monthly for high turnover, quarterly otherwise — through the Portal das Finanças. Since the generalisation of SAF-T / e-fatura, the AT pre-fills part of this return from communicated invoices.

The CIVA lists (List I, List II) are annexed to the code and are authoritative for classifying a product into the correct rate. Exemptions fall mainly under Article 9 of CIVA (health, education, etc.) and intra-community operations / exports.

Rates, SAF-T codes and tax spaces

In SAF-T and the QR code, each tax amount is qualified by a TaxCode (NOR / INT / RED / ISE), a rate, and a tax space (PT mainland, PT-AC Azores, PT-MA Madeira). It is this combination — not the rate alone — that determines the correct treatment.

--- VAT rates and SAF-T codes (mainland) ---
TaxCode  Label             Rate     CIVA list
NOR      Standard          23.00%   (general regime)
INT      Intermediate      13.00%   List II
RED      Reduced            6.00%   List I
ISE      Isento (exempt)    0.00%   Art. 9 CIVA / exports

--- Tax spaces (QR code field I1) ---
I1:PT*    -> Mainland Portugal
I1:PT-AC* -> Azores   (16 / 9 / 4%)
I1:PT-MA* -> Madeira  (22 / 12 / 5%)

--- Example line with reverse charge (autoliquidação) ---
<Tax>
  <TaxType>IVA</TaxType>
  <TaxCountryRegion>PT</TaxCountryRegion>
  <TaxCode>ISE</TaxCode>
  <TaxPercentage>0.00</TaxPercentage>
</Tax>
<TaxExemptionReason>IVA - autoliquidação</TaxExemptionReason>
<TaxExemptionCode>M40</TaxExemptionCode>

Mainland vs Azores vs Madeira

Adoption — per-rate breakdown

• Mandatory breakdown: on every invoice and in the QR code, VAT bases and amounts are broken down per rate (fields I, J, K by tax space). The AT cross-checks automatically.
• Pre-filled return: thanks to the monthly SAF-T, the Declaração Periódica do IVA is partly pre-filled — discrepancies are flagged to the taxable person.
• Reverse charge: some operations (construction subcontracting, waste, intra-EU purchases) shift VAT to the recipient (autoliquidação, SAF-T code M40 and similar).
• Autonomous regions: businesses operating in the Azores or Madeira configure their certified software with the regional rate sets.

Common pitfalls

• Applying 23% everywhere. The Azores and Madeira have their own rates. Invoicing a regional operation at the mainland rate is a VAT error.
• Forgetting the tax space in the QR. The I1 field (PT / PT-AC / PT-MA) must match the territory of taxation, not the head office.
• Wrong exemption code. A reverse-charge or exempt operation must carry a precise TaxExemptionCode / TaxExemptionReason (e.g. M40). Omitting it invalidates the invoice.
• Confusing List I and List II. 6% (List I) ≠ 13% (List II). Classifying a product in the wrong list skews the rate and the return.
• Ignoring temporary measures. Exceptional rates (e.g. zero VAT 2023) have precise start and end dates; applying them out of period is an error.

Cross-links

• Portugal hub — full view
• SAF-T (PT) — tax codes
• ATCUD + QR code — tax spaces
• e-fatura — pre-filled return
• NIF — tax identifier
• AT — Código do IVA (CIVA)
• Diário da República — DL 394-B/84 and budget laws