VAT Rates, Daily and Mileage Allowances and E-archiving in Portugal

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VAT rates in Portugal

Portugal imposes Value Added Tax (VAT) at different rates as follows for various goods and services.

1. Standard rate - 23% (16% in Azores and 22% in Madeira)

The standard VAT rate is applicable to all taxable goods and services in Portugal, except when a specific measure allows for a reduced rate.

2. Reduced rate - 13% (9% in Azores and 12% in Madeira)

Some foodstuffs; admission to certain cultural events; restaurant & cafe food; some agricultural supplies; wine; mineral water; diesel for agriculture; some goods and services for consumption on-board transportation

3. Reduced - 6% (4% in Azores and 5% in Madeira)

Some foodstuffs; water supplies; certain pharmaceutical products; medical equipment for disabled persons; children’s car seats; children’s diapers; domestic passenger transport; some books (including e-books); certain newspapers and periodicals; TV licence; social housing; renovation and repair of private dwellings; certain agricultural supplies; hotel accommodation; some social services; some medical and dental care; collection of domestic waste, minor repairs of bicycles; domestic care services; fruit juices; firewood; cut flowers and plants for decorative use and food production; construction work on new buildings; some legal services; some goods for consumption on-board transportation; treatment of waste water; some works of art, collectors items and antiques

4. Zero rate - 0%

Intra-community and international passenger transport

Source: Value Added Tax (VAT) in Portugal - gov.pt 

Daily allowances in Portugal

Employees of companies traveling for business may be entitled to per diem allowances, as outlined below:

Domestic Daily Allowance

The amount is intended to cover lunch, dinner and accommodation as follows:

• 25% is to cover each meal (lunch or dinner)

• 50% is to cover accommodation.

Additionally, the departure and return time should be taken into account; late departure and early arrival lead to reduced allowance amounts. The following calculation applies to determine the allowances due:

1. 
   

   Foreign daily allowance

   Function	Rate
   Directors/board members	€175,42/day
   Others	€156,36/day

    

   The full amount (option 100%) is intended to cover lunch, dinner and accommodation as follows:

   • 25% - each meal (lunch or dinner);

   • 30% - accommodation;

   • 20% - incidental expenses

   Hence, for trips abroad there is always a minimum of 20% of the fixed per diem limit that may be paid tax free, even if the expenses with hotel, lunch and dinner are paid against the presentation of receipts/bills.

   Additionally, the departure and return time should be taken into account; late departure ad early arrival lead to reduced allowance amounts. The following calculation applies to determine the allowances due:

   Time	Day of departure	Day of return	Days in between
   Up to 1PM	100%	20%	100%
   Between 1PM and 9PM	75%	45%	100%
   After 9PM	50%	70%	100%

    

   The maximum period allowed for the payment of such per diem allowances is 90 days.

   Sources: https://diariodarepublica.pt/dr/detalhe/portaria/1553-d-2008-24373

   https://diariodarepublica.pt/dr/detalhe/decreto-lei/1-2025-903770702

   Mileage allowances in Portugal
   

   The maximum amount that can be reimbursed depends on the type of vehicle. The employer can decide to pay a higher rate per kilometer. However, the part exceeding the defined rates will be considered part of the employee’s taxable income.
   

   Type of transport	Per kilometer allowance
   Car	€0,40
   Non-automotive motor vehicle	€0,14
   Public transport	€0,11
   Rental car (1 employee)	€0,34
   Rental car (2 employees)	€0,14 (each)
   Rental car (3 employees)	€0,11 (each)

    

   Source: DGCI Circular No. 19/93, of 8/20
   

   Electronic archiving and retention period in Portugal

   To safely digitize and then destroy originals in compliance, you’ll need to ensure:

   1. Quality of scan / image
      • The digitized copies must be perfect, legible, complete (no missing parts).
      • The imaging process must ensure that nothing is lost — resolution, colour, margins, etc.
   2. Controls on integrity / authenticity
      • The system used to archive needs to include safeguards against alteration, loss, corruption.
      • Metadata must track who did the scanning, when, and how. Possibly audit trails.
   3. Notification / identification of archive
      • You may need to notify the Portuguese Tax Authorities (Autoridade Tributária) of the facilities / location where the archive is kept.
      • The archival system must be located in Portuguese territory.
   4. Maintain the digital archive for required period
      • Keep electronic versions for 10 years.
   5. Destruction
      • Only after all above conditions are met, you are permitted to destroy the physical originals.
      • The destruction process should itself be documented.

   Upcoming changes:

   1. From 1 January 2026, there will be a requirement that PDF or XML invoices must use a qualified electronic signature (QES) to be legally recognized.
   2. Until the end of 2025, there is a postponement of that requirement: PDFs remain valid without QES.
      
      Source: Decree‑Law No. 28/2019