The most well-known expense tax is VAT (Value Added Tax). This tax is typically borne by individual consumers in their consumption or by businesses and entrepreneurs who, while having exempted activities, incur it as an expense in their operations.

In mainland Portugal, VAT is applied at different rates: 0%, 6%, 13%, and 23%.

VAT is a complex tax with numerous rules and exceptions depending on the type of goods and services being provided, as well as a set of rules related to the location of service provision. This complexity can make it challenging for businesses and entrepreneurs to interpret.

Companies and entrepreneurs are usually required to calculate and report their VAT on a monthly basis if their Turnover exceeds 650,000 Euros, or on a quarterly basis for other cases. Failure to submit a periodic VAT declaration or not paying VAT is subject to a penalty that can have a significant financial impact on the offender.

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