The draft VAT Bill 2014 of Portugal contains a range of amendments to the Portuguese VAT rules.
According to the draft amendments, VAT on irrecoverable debts may only be refunded within two years from the beginning of the fiscal year after the bad debt has arisen. The supply of exempt financial services to businesses which are also VAT exempt still requires the issuance of a full VAT invoice and all exporters are entitled to the same VAT exemption as officially nominated national export organizations.
A provision allowing the supplier to apply VAT on otherwise exempt property transactions is to be introduced.
The current VAT rate of Portugal is 23% and Portugal makes extensive use of reduced VAT rates. The average EU VAT rate is over 21%. There are currently six VAT rates in Portugal whereas; the EU VAT Directive only permits two reduced rates in addition to the regular, standard VAT rate.
