General Framework for International Invoicing in Portugal

Globalisation and the increase in remote work have led a growing number of companies and independent professionals in Portugal to provide services or sell goods to clients located in other countries. This scenario, while promising for economic growth, introduces significant complexities at the tax and accounting level, particularly regarding Value Added Tax (VAT). Understanding the applicable rules is crucial to avoid tax contingencies and ensure legal compliance.

Portuguese legislation, in line with European Union directives, establishes clear rules for the place of supply of operations and the application of VAT. The distinction between business clients (B2B - Business-to-Business) and final consumers (B2C - Business-to-Consumer), as well as geographical location (within or outside the European Union), are the pillars for determining the correct tax treatment. Non-compliance with these rules can result in fines and compensatory interest, in addition to damaging the company's reputation.

Invoicing in Portugal is governed by Decree-Law no. 28/2019, of 15 February, which establishes the mandatory use of invoicing software certified by the AT and the inclusion of specific elements in invoices, such as the QR code and the ATCUD. These requirements also apply to invoices issued to foreign clients, ensuring the traceability and transparency of operations.

The 4 VAT Scenarios — Quick and Detailed Reference

Determining the applicable VAT regime is the first and most important step in invoicing foreign clients. The complexity lies in the variety of situations that can arise, depending on the nature of the client, the type of service/good, and the location.

Details on VAT Scenarios

• EU B2B (with valid VAT ID): When the client is a company established in the European Union and has a valid VAT identification number (VAT ID) in the VIES system, the operation is considered an intra-community supply of services or goods. In these cases, the reverse-charge rule applies, meaning the Portuguese service provider does not charge VAT on the invoice, and the acquirer in the other Member State is responsible for self-assessing VAT in their country. The invoice must state "VAT – Reverse-charge – Article 196 of Directive 2006/112/EC", in accordance with Article 6, no. 6, point a) of the CIVA.
• EU B2C Digital: For digital services provided to final consumers (B2C) in the EU, the general rule is that VAT is due in the consumer's country of residence. However, there is a threshold of EUR 10,000 for annual cross-border sales. If sales to other EU Member States are below this value, the Portuguese provider can apply Portuguese VAT (23% in Mainland). If they exceed the threshold, the provider must register for the One Stop Shop (OSS) scheme and apply the VAT rate of the client's country. Article 13-A of the RITI regulates this matter.
• Non-EU B2B and B2C Services: Services provided to clients outside the European Union, whether they are businesses or final consumers, are generally considered "exports of services" and are outside the scope of Portuguese VAT, in accordance with Article 6, no. 6, point b) of the CIVA. This means no VAT is charged on the invoice and the rate is 0%. The invoice must contain the mention "Outside scope – Export of services outside the EU".
• Goods Exported outside the EU: The sale of goods that are dispatched or transported outside the European Union is exempt from VAT, under Article 14 of the CIVA.
• Goods Sold to EU B2B (intra-community supply): The sale of goods to a company in another EU Member State, which is transported to that Member State, is exempt from VAT in Portugal, provided the acquirer has a valid VAT ID. This exemption is provided for in Article 14 of the RITI.

Step-by-Step Guide: Issuing an Invoice to a Foreign Client

Step 1 — Identify Client Type and Country

The first and most fundamental step is the correct identification of your client. This analysis will determine the applicable VAT regime and the data to be collected:

• Is the client a business (B2B) or an individual (B2C)? This distinction is crucial for the place of supply rules. For B2B clients, the general rule is that the place of supply of services is where the recipient is established (Article 6, no. 6, point a) of the CIVA). For B2C clients, the general rule is the place where the supplier is established (Article 6, no. 1 of the CIVA), with exceptions for digital services.
• Is the client in the European Union or outside the European Union? The EU border is a watershed for VAT rules.
• For EU B2B: does the client have a valid VAT ID? The validity of the VAT identification number in VIES is an indispensable requirement for the application of reverse-charge.
• For B2C digital services: what is the client's permanent address? For these services, VAT is due in the consumer's country, especially if the EUR 10,000 threshold is exceeded.

Step 2 — Validate the EU VAT ID (for EU B2B)

For EU business clients, validating the VAT ID in the VIES (VAT Information Exchange System) at vies.europa.eu is a mandatory and critical procedure. This step is vital for the correct application of the reverse-charge scheme:

• If the VAT ID is valid: Apply reverse-charge (0% Portuguese VAT), mentioning Article 196 of Directive 2006/112/EC.
• If the VAT ID is invalid: You must charge Portuguese VAT at the standard rate of 23% (in Mainland), as the operation is considered as supplied in Portugal to a taxable person without a valid VAT ID or to an individual.
• Validation must be carried out at the time of invoice issuance and the proof saved. Most certified software automatically stores VIES validation records.

Consequence of error: Incorrect application of reverse-charge without a valid VAT ID can lead the Tax and Customs Authority (AT) to demand payment of the uncharged Portuguese VAT, plus compensatory interest and fines that can amount to 100% of the missing tax. The legal basis for the VAT demand is found in Article 28 of the General Regime of Tax Infractions (RGIT).

Step 3 — Determine VAT Treatment

Based on client identification and VAT ID validation (if applicable), use the VAT scenarios table to determine the correct tax treatment. Here are some practical examples:

• Software developer in Lisbon invoicing a tech company in the USA: Non-EU B2B services → 0% VAT, outside the scope. Invoice in USD or EUR.
• Designer in Porto invoicing a German agency: EU B2B (with valid German VAT ID) → 0% VAT, with reverse-charge note.
• SaaS company in Lisbon invoicing French consumers (B2C): EU B2C digital — OSS scheme at the French rate of 20% if cross-border sales exceed EUR 10,000. Otherwise, Portuguese VAT of 23% applies.
• Consultant in Lisbon invoicing a UK company: The UK, post-Brexit, is considered non-EU → 0% Portuguese VAT, outside the scope.

Step 4 — Issue the Invoice via Certified Software

Invoice issuance in Portugal is strictly regulated. Decree-Law no. 28/2019, of 15 February, mandates the use of invoicing software certified by the AT. The invoice must obligatorily contain the following elements, under penalty of invalidity of the document:

• Issuer's Details: Full name or company name, tax identification number (NIF/VAT ID), registered office or tax domicile address, and the indication of the legal form (e.g., "Sociedade por Quotas", "Empresário em Nome Individual").
• Client's Details: Full name or company name, address, country, and VAT ID (if applicable and validated).
• Invoice Identification: Sequential invoice number, document type (e.g., "FT – Fatura"), document series, and the Unique Document Code (ATCUD), as per Ordinance no. 195/2020, of 13 August.
• Dates: Invoice issue date and date of provision of services or supply of goods (supply date).
• Description of Goods or Services: Clear and detailed description of the goods supplied or services rendered.
• Values: Quantity, unit price, and total value per item line.
• VAT: Applicable VAT rate per line, total VAT amount.
• Invoice Total: Total invoice value in the original currency and the equivalent in EUR (if the original currency is not EUR), using the exchange rate published by the AT for the invoice date.
• Legal Mentions: Legal references to VAT exemption or reverse-charge, when applicable. For example, "VAT Exempt under Article 14 of the CIVA" or "VAT – Reverse-charge – Article 196 of Directive 2006/112/EC".
• Payment Terms: Payment deadline and method.
• QR Code: Two-dimensional barcode (QR code), mandatory since 2022, which contains relevant invoice data to facilitate communication to the AT and validation by consumers.
• Software Certification Number: The certification number of the invoicing program by the Tax Authority.

Step 5 — Send Invoice and Set Up Payment

After issuance, the invoice must be sent to the client. The choice of payment platform is crucial to optimise costs and expedite receipts. It is essential that the platforms used are suitable for commercial transactions. Article 123 of the Corporate Income Tax Code (CIRC) and Article 17 of the Personal Income Tax Code (CIRS) require that income be properly accounted for.

SEPA (for EU clients)

• Provide the IBAN of your Portuguese business bank account (Millennium BCP, ActivoBank, Santander, etc.).
• Free or very low cost for EU clients paying in EUR.
• Settlement usually within 1 business day.

Wise (multi-currency, popular with US/UK/Brazil clients)

• Allows obtaining local account numbers in USD (US ACH), GBP (UK Faster Payments), EUR, CAD, etc.
• The client pays domestically in their currency with zero or reduced costs.
• You can convert to EUR when needed at the mid-market exchange rate + small commission.
• Account-level integration with Portuguese accounting via CSV import.

Stripe (for card payments and recurring invoices)

• Ideal for B2C SaaS, marketplaces, e-commerce.
• Card processing fee ~1.4% + EUR 0.25 per transaction (EU cards).
• Settles to your Portuguese bank account or Wise account.
• Stripe Tax can automatically manage the OSS scheme for B2C digital services.

Revolut Business

• Multi-currency features similar to Wise.
• Useful if you also use Revolut for personal purposes, although it is crucial to keep personal and business accounts separate.
• Offers card issuance and exchange functionalities.

Step 6 — Record the Invoice for VAT and Accounting

Certified invoicing software plays a fundamental role in tax compliance, automating various tasks:

• VAT Ledger Registration: Automatically records the invoice in your VAT ledger, essential for the Periodic VAT Return.
• Monthly SAF-T Generation: Generates the monthly SAF-T (Standard Audit File for Tax purposes) file, which must be communicated to the AT by the 5th of the month following the invoice issuance, as per Ordinance no. 321-A/2007, of 26 March.
• Recapitulative Statement: Calculates and assists in submitting the Recapitulative Statement for intra-community B2B operations (monthly), which lists intra-community sales and acquisitions of goods and services.
• Periodic VAT Return: Feeds data for your periodic VAT return (monthly or quarterly).
• OSS Scheme: For companies registered under the One Stop Shop (OSS) scheme, the software assists in generating the quarterly OSS return.

Currency Management — Practical Guidance and Numerical Examples

Invoicing in foreign currency is permitted in Portugal but requires attention to specific details for tax and accounting compliance. Article 18 of the CIVA establishes that the taxable amount must be expressed in euros, even if the operation is carried out in another currency.

• Invoices can be issued in any currency, but the VAT line (where applicable) and the total value must show the EUR equivalent.
• The exchange rate published by the Tax and Customs Authority (AT) for the invoice issue date must be used. Most certified software integrates this functionality automatically.
• For accounting purposes, the EUR value on the invoice date is what matters for revenue recognition. Any exchange gains or losses resulting from the difference between the invoice rate and the receipt rate must be accounted for separately as financial gains or losses, in accordance with the SNC (Accounting Standardisation System).

Practical Example: USD Invoice from Lisbon to New York

Consider the case of a Portuguese freelancer providing consulting services to a company in New York, USA.

• Invoice issued on 15 April 2026: USD 5,000.00 for services rendered.
• AT exchange rate on that date: 1 EUR = 1.08 USD (Daily exchange rate published by the European Central Bank, adopted by the AT).
• EUR equivalent on the invoice: USD 5,000.00 / 1.08 = EUR 4,629.63.
• VAT: 0% (non-EU B2B services, outside the scope of Portuguese VAT, as per Art. 6, no. 6, point b) of the CIVA).
• Invoice total: USD 5,000.00 (equivalent to EUR 4,629.63).
• Client pays via Wise on 28 April 2026: The freelancer receives EUR 4,650.00 (due to exchange rate fluctuation).
• Accounting:
  • Revenue recognised on invoice date: EUR 4,629.63.
  • Exchange gain on payment date: EUR 4,650.00 (received) - EUR 4,629.63 (invoice value) = EUR 20.37. This exchange gain is recorded as financial income.

Practical Example 2: Consulting Invoice for EU B2B Client

A marketing consultant in Portugal invoices services to a company in Spain with a valid VAT ID.

• Invoice issued on 10 May 2026: EUR 2,500.00 for consulting services.
• VAT: 0% (reverse-charge, Art. 6, no. 6, point a) of the CIVA).
• Note on invoice: "VAT – Reverse-charge – Article 196 of Directive 2006/112/EC".
• Invoice total: EUR 2,500.00.
• Client pays via SEPA on 15 May 2026: The consultant receives EUR 2,500.00.
• Accounting:
  • Revenue recognised on invoice date: EUR 2,500.00.
  • No VAT to be charged in Portugal. The Spanish client will self-assess VAT in Spain.
  • This operation will be reported in the monthly Recapitulative Statement.

Practical Example 3: B2C SaaS Invoice for EU Client (OSS Scheme)

A Portuguese SaaS company sells software subscriptions to final consumers in France, and its annual sales for EU B2C digital have already exceeded EUR 10,000.

• Invoice issued on 20 June 2026: EUR 50.00 for a monthly subscription.
• Client: Final consumer in France.
• VAT: French VAT rate for B2C digital services, which is 20%.
• VAT Calculation: EUR 50.00 * 20% = EUR 10.00.
• Invoice total: EUR 60.00.
• Note on invoice: "Subject to OSS scheme – VAT charged at client's country rate (France 20%)".
• Accounting and Reporting:
  • Gross revenue: EUR 50.00.
  • VAT payable via OSS: EUR 10.00.
  • This VAT will be declared and paid quarterly through the AT's OSS portal.

Common Errors to Avoid in International Invoicing

The complexity of VAT rules and the diversity of scenarios often lead to errors that can have financial and legal consequences. Prevention is the best strategy.

• ❌ Charging Portuguese VAT to an EU B2B client with a valid VAT ID: This is a common error that violates the reverse-charge rule. The client will not be able to deduct the unduly charged VAT, and the Portuguese company will have to rectify the invoice and the VAT return.
• ❌ Applying reverse-charge without validating the VAT ID in VIES: The absence of proof of validation at the time of the operation can lead the AT to consider that the reverse-charge was undue, demanding Portuguese VAT, interest, and fines. Article 28 of the RGIT penalises infractions related to VAT declaration and payment.
• ❌ Forgetting to submit the monthly Recapitulative Statement: This statement is mandatory for all intra-community supplies of goods and services (B2B). Its omission or error is subject to a fine.
• ❌ Using invoicing software not certified by the AT: Since 2020, it is mandatory to use certified software. Invoices issued by uncertified software are considered invalid and can result in significant fines, as per Decree-Law no. 28/2019.
• ❌ Issuing in foreign currency without the EUR equivalent: All invoices in foreign currency must indicate the EUR equivalent, at the AT exchange rate on the invoice date. Failure to include this information makes the invoice non-compliant with Article 18 of the CIVA.
• ❌ Treating UK clients as EU B2B post-Brexit: After Brexit, the UK is a third country (non-EU). The applicable rules are those for "non-EU B2B" or "non-EU B2C", with 0% Portuguese VAT and outside the scope. Confusing this regime can lead to VAT errors.
• ❌ Mixing personal and business payment platforms: Using personal accounts (e.g., personal Wise, personal Revolut) to receive business payments is incorrect practice. It can lead to traceability problems, complicate accounting, and raise questions with the AT about the origin of funds. It is crucial to maintain a clear separation between personal and business finances.
• ❌ Not registering for the OSS scheme when the EUR 10,000 threshold for B2C digital is exceeded: Failure to adhere to the OSS and apply the correct VAT of the client's country, after exceeding the threshold, will result in non-compliance with tax obligations in the clients' Member States, leading to potential double taxation or VAT demands by foreign tax authorities.

Recommended Toolkit for Freelancers/Ltd Companies in Portugal Invoicing Abroad

Using the right tools can significantly simplify international invoicing management and ensure compliance.

• AT Certified Invoicing Software:
  • Moloni: Very popular among freelancers and small businesses due to its intuitive interface and cost-effectiveness.
  • InvoiceXpress: Another robust and widely used option, with good functionalities for client and document management.
  • FacturaPlus: Suitable for medium-sized companies.
  • PHC: A more complete and scalable solution, ideal for larger Ltd companies with integrated management needs.
• VIES Validation:
  • vies.europa.eu: Bookmark this page. It is the official source for validating EU VAT IDs. Most certified invoicing software already integrates this functionality.
• Multi-currency Payment Reception:
  • Wise Business (formerly TransferWise): Essential for receiving payments from clients outside the SEPA area, offering local accounts in USD, GBP, EUR, etc. Allows converting currencies at competitive exchange rates.
  • Revolut Business: Good alternative or complement to Wise, with similar functionalities and business debit cards.
• Card Processing and Online Payments:
  • Stripe: Indispensable for B2C business models, e-commerce, and SaaS, allowing card payments. The Stripe Tax functionality can assist with OSS scheme compliance.
• Main Bank for EUR Settlement:
  • Millennium BCP or ActivoBank: Traditional banks with a strong presence in Portugal, ideal for settling funds in EUR and managing SEPA operations.

Frequently Asked Questions (FAQ)

Should I charge VAT to a UK client while in Portugal?

After Brexit, the United Kingdom is considered a third country (non-EU). For B2B services, Portuguese VAT is not charged; the operation is outside the scope, and the UK client will self-assess VAT internally (if applicable). For B2C services, Portuguese VAT is also not charged, being considered an export of services to a third country (0% VAT). The invoice should state "Outside scope – Export of services outside the EU".

How should I manage currency on invoices?

It is permitted to issue invoices in any currency. However, it is mandatory that the EUR equivalent is indicated on the invoice, both for the total value and for the VAT line (if applicable). The exchange rate published by the AT for the invoice issue date must be used. For receipt, you can use platforms like Wise or Revolut to receive in the original currency and then convert to EUR.

Can I use Stripe / Wise / Revolut?

Yes, these platforms are widely used and recommended for international transactions. It is important to note that Stripe, Wise, and Revolut are payment platforms, not certified invoicing tools. The Portuguese invoice must always be issued from AT-certified software.

What information do I need to obtain from a foreign client?

• EU Company: Full legal name, full address, and VAT ID (validated in VIES).
• Non-EU Company: Full legal name, full address.
• Individual (final consumer): Full name and full address.

Are electronic signatures required on invoices?

Manual signatures are not required. The certified invoicing software automatically generates a digital signature that is embedded in the invoice's QR code. This is a legal requirement and ensures the authenticity and integrity of the document.

What is the Recapitulative Statement?

The Recapitulative Statement is a mandatory monthly document that lists all intra-community supplies of goods and services (B2B) where the reverse-charge scheme was applied. It is automatically generated by the certified software and must be submitted to the AT. It serves for the AT to cross-reference information with the tax authorities of other EU Member States through the VIES system.

Conclusion and Final Recommendations

Invoicing foreign clients from Portugal, although challenging due to the complexity of tax rules, is an essential component for the growth of many companies and independent professionals. The key to success lies in a deep understanding of VAT scenarios, the use of certified tools, and maintaining rigorous organisation.

It is fundamental that Portuguese taxpayers invest time in validating the VAT IDs of their European clients, in the correct application of the place of supply rules, and in currency management. The automation provided by certified invoicing software is an indispensable ally, but it does not replace the need for solid knowledge of tax obligations.

We strongly recommend that, in case of doubt or for operations of greater volume and complexity, you seek the support of a certified accountant specialised in international taxation. Professional guidance can prevent costly errors, optimise the tax burden, and ensure compliance with all applicable laws and regulations. Proactivity in tax management is an investment in the health and sustainability of your business.

Don't let the complexity of international invoicing hinder your business. Schedule a consultation with HVR Business Consulting to ensure compliance and optimise your processes.

Sources and Legal References

• Value Added Tax Code (CIVA): Approved by Decree-Law no. 394-B/84, of 26 December, and its amendments.
  • Article 6: Rules for the place of supply of operations.
  • Article 14: Exemptions for exports.
  • Article 18: Taxable amount and currency rules.
• Intra-Community Transactions VAT Regime (RITI): Approved by Decree-Law no. 290/92, of 28 December, and its amendments.
  • Article 13-A: Rules for B2C digital services (EUR 10,000 threshold and OSS scheme).
  • Article 14: Exemptions for intra-community supplies of goods.
• Decree-Law no. 28/2019, of 15 February: Regulates the mandatory use of certified invoicing software and other invoicing requirements.
• Ordinance no. 195/2020, of 13 August: Regulates the requirements for creating the Unique Document Code (ATCUD) and the two-dimensional barcode (QR code).
• Ordinance no. 321-A/2007, of 26 March: Approves the data structure to be used for exporting invoicing and accounting data (SAF-T PT).
• General Regime of Tax Infractions (RGIT): Approved by Law no. 15/2001, of 5 June, and its amendments.
  • Article 28: Infractions related to VAT declaration and payment.
• Council Directive 2006/112/EC of 28 November 2006: On the common system of value added tax (VAT Directive).
  • Article 196: Reverse-charge by taxable persons established in another Member State.
• Accounting Standardisation System (SNC): Approved by Decree-Law no. 158/2009, of 13 July, and its amendments, which establishes the rules for accounting recognition of operations, including exchange gains and losses.
• VIES (VAT Information Exchange System): European system for validating VAT IDs of intra-community operators. Available at vies.europa.eu.

Related Resources from HVR Business Consulting

• VAT for Foreign Companies in Portugal — Complete Guide
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