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Portugal ends VAT exemption for non-EU online purchases

Buying goods such as books, music and other items is about to get more expensive for British, US and other non-EU citizens living and working in Portugal.

New rules governing online commerce and distance purchases will scrap VAT exemption for goods purchased from non-EU countries that cost less than €22.
The need for VAT to meet the new reality that has resulted from an explosion in online shopping, particularly from overseas suppliers on sites like Amazon and eBay is behind this change as Portugal struggles to net enough tax revenues as overall government receipts have plummeted because of the pandemic.

The measure also aims to minimise possible fraud and tax evasion situations as well as limiting competition problems. It means that any goods or remittances from outside the EU will now face taxes of 23% from 1 July.

In other words, from this date, any imports of any goods will be liable to VAT regardless of their value.

On the question of competition, this change will eliminate those cases in which the consumer thinks they are buying a product online within the EU (whereby the price paid already includes all tax obligations) and then ends up having to pay tax because the goods in question had been sent from a country outside the EU.

The new rules will simplify administrative and bureaucratic procedures that companies currently face whenever they want to sell products to more than one country outside of the European Union, with the current regime still in place that requires them to register in the various destination markets and liquidate their respective VAT there when a specific volume of sales is exceeded in each market.

Therefore, from 1 July onwards, these tax costs per unit number of goods sold will be reduced and standardised across the EU for companies that must now liquidate VAT for the country in which the client is based (€10,000 per Member-State), so the company now had to be registered for VAT purposes in just one country, filling out just one tax declaration and making one single VAT payment by using the One Stop Shop – OSS in their country.

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