Portugal's VAT exemption: article 53.º explained, and what changed in 2025

A yes-or-no question that turns out to have two dates

Anyone invoicing as a freelancer in Portugal asks this every year around November: have I passed the VAT limit? It sounds like a yes-or-no question. It is not, because the regime has two limits rather than one, and each produces a different effect at a different moment.

The regime is called the special exemption regime and lives in article 53.º of the Portuguese VAT code¹. It is what lets a self-employed person issue receipts without VAT, and it is also why two professionals with similar invoicing can be in opposite positions.

On 24 March 2025 Decree-Law 35/2025 rewrote this part of the code to transpose the EU small-business scheme. It changed the conditions of access, changed how a new business counts its turnover, and changed even the heading of the article. A substantial part of what is still published, including on well-known sites, describes the previous regime.

The three conditions that remain

In its current wording, article 53.º(1) exempts taxable persons who meet three conditions at the same time¹:

1. they have their seat or domicile in Portugal;
2. they do not carry out export operations or related activities;
3. they did not reach, in the previous calendar year, an annual national turnover above €15,000.

Note what disappeared. The previous wording also required the taxable person not to have, or be required to have, organised accounting for income-tax purposes, not to carry out import operations, and not to trade in the goods or services listed in annex E of the code⁴. All three are gone.

The organised-accounting one is the condition that appears most often in circulation, and it is still repeated as though it were current law. It has not been since March 2025.

What counts towards the €15,000

Turnover is defined in article 52.º-A, added by the same instrument: the total annual value of goods supplied and services provided, net of VAT, carried out by a taxable person in national territory during a calendar year³.

There are two traps in this definition, both common:

• it counts what you invoiced, not what you were paid. An invoice issued in December and paid in March counts towards the year it was issued;
• it counts by calendar year, from 1 January to 31 December, not over the twelve months before today.

The threshold has been €15,000 since 2025. Before that, under the transitional schedule of Law 24-D/2022, it was €13,500 in 2023 and €14,500 in 2024⁴. And one drafting detail decides real cases: the law refers to turnover “above” €15,000, so invoicing exactly €15,000 still qualifies.

The two limits, and why the difference matters

This is the part that changes decisions, and where most people get it wrong at their own expense.

Losing the exemption is not one event but two. Article 58.º(2) separates them²:

From this follows the practical answer to the most frequently asked question of all. Passing €15,000 in September does not mean charging VAT in October. You keep the exemption until 31 December and lose it only on the following 1 January, under article 58.º(4)(a)². What costs you the exemption on the spot is paragraph (b), and that requires passing €18,750.

Here too the drafting is precise: the threshold must be exceeded by more than 25%, so reaching exactly €18,750 is not yet an immediate loss.

Anyone wanting to see both margins applied to their own figures can use the VAT exemption calculator, which returns how much more you can invoice before each of the limits.

Starting a business mid-year

For someone starting out there is no previous year, and article 53.º(5) settles the case in one sentence: the turnover to be taken into account is the one estimated by the taxable person for the current calendar year¹.

It is worth comparing with what the law used to say. Paragraph 3 of the previous wording required the forecast for the current year to be established after confirmation by the tax authority, and paragraph 4 added that, where the reference period was shorter than the calendar year, the turnover had to be converted into an equivalent annual figure⁴.

The practical difference is large. Someone opening an activity in October and expecting to invoice €5,000 by year end saw that figure converted into €20,000 a year and fell outside the exemption from the outset. Today they state €5,000, and the estimate is theirs, with no prior confirmation.

What you lose and what you gain by leaving

Being exempt has a trade-off that is rarely mentioned. Article 53.º(3) expressly excludes anyone benefiting from the exemption from the right of deduction in articles 19.º and 20.º¹. In other words: while exempt you do not charge VAT to clients, but neither do you recover the VAT you pay on business purchases, on the computer, the materials, the services you buy in.

Moving to the normal regime means charging tax on your invoices and filing periodic returns, but it also means being able to deduct the VAT you pay. For anyone with significant expenses, or with business clients who deduct the VAT charged to them, leaving the exemption is less costly than it first appears. For anyone selling to consumers with few expenses, it is a straight price increase or a margin cut.

What to do when the exemption ends

When the conditions cease to be met, article 58.º(5) requires the change declaration under article 32.º to be filed within 15 working days². The deadline runs from:

• the last day of the year in which turnover passed the threshold, in the ordinary case;
• the moment the threshold was exceeded by more than 25%, in the case of immediate loss;
• the moment any other condition of paragraph 1 ceased to be met.

There is one further situation that catches people unprepared. If the tax authority assesses taxable income by indirect methods based on turnover above the threshold, article 58.º(7) requires the taxable person to be notified to file the declaration within 15 working days, and tax becomes due from the month following the one in which that filing becomes mandatory².

Who is never exempt under this article

Article 53.º(6) excludes two cases from the regime, whatever the amount¹:

• anyone carrying out a single taxable operation under article 2.º(1)(a), the Portuguese ato isolado. VAT is always charged on a one-off transaction, however small the amount;
• intra-EU supplies of new means of transport.

And if you are established in another Member State

Article 53.º(2) is entirely new and is the European piece of the reform. It lets a taxable person seated in another Member State benefit from the exemption in Portugal, provided their annual turnover across the European Union does not exceed €100,000, that they have notified the State where they are established in advance, and that they have obtained an identification number with the ‘EX’ suffix there¹.

The procedure runs in the State of establishment rather than in Portugal, which is why the calculator explains it but does not compute it. It is worth noting that the exemption applies only from the date the taxable person is informed of that number, not from the date of the request.

In short

Article 53.º is short, and applying it comes down to three questions: how much you invoiced in the previous calendar year, how much you have invoiced in this one, and whether you export. The first two answers are measured against two different limits, €15,000 and €18,750, with consequences on different dates. And any guidance still telling you that you need to avoid organised accounting is describing a law that stopped being in force in March 2025.