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Portugal

1 October 2020

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Portugal Provides Reduced Intermediate VAT Rate for Electricity Supplies

Portugal has published Decree-Law No. 74/2020 in the Official Gazette, which amends the scope of the reduced intermediate rate of VAT to include certain supplies of electricity up to a certain consumption amount. This includes that the intermediate rate applies to supplies of electricity for consumption up to 6.90 kVA, on the part that does not exceed:

  • 100 kWh for a period of 30 days; and
  • 150 kWh for a period of 30 days, when purchased for consumption by large households made up of five or more people.

The VAT is levied progressively, such that the intermediate rate applies up to the above amounts, and the standard rate applies on excess amounts. The application of the intermediate rate excludes fixed components of electricity supplies, the costs of which do not vary with the amount of kWh consumed.

The application of the intermediate rate applies from 1 December 2020 in general, while its application for large households applies from 1 March 2021.

Note, the current intermediate rate in Portugal is 13% (12% in Madeira and 9% in the Azores), and the standard VAT rate is 23% (22% in Madeira and 18% in the Azores).

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