Starting in 2025, new VAT rules will come into effect, promising to significantly transform how businesses and consumers deal with this tax in Portugal and the rest of the European Union. These changes are part of an effort by the European Commission to modernize the VAT system, making it simpler, fairer, and more resistant to fraud.
In this article, we explain what will change, who will be affected, and how different economic agents can prepare.
1. Real-Time Invoicing
One of the major new features is the introduction of the real-time electronic invoicing system. The idea is that all issued invoices will be automatically communicated to the Tax Authority in near real-time. This will allow for more effective control over operations and reduce the chances of tax evasion.
For Portuguese companies, this system will require adaptations to their invoicing software and greater attention to complying with tax obligations.
2. VAT in E-commerce
Another important change concerns VAT on cross-border online sales. The One-Stop Shop (OSS) scheme will be expanded, allowing companies selling to multiple EU countries to declare and pay VAT through a single portal. This will simplify bureaucracy, especially for small and medium-sized businesses operating in e-commerce.
3. Harmonized Rates
The European Commission also wants greater harmonization of VAT rates, although Member States will retain some freedom to apply reduced rates. Portugal is expected to take advantage of this flexibility to adjust some rates, particularly in sectors such as food, culture, or energy, aiming to benefit consumers and promote strategic sectors.
4. Fight Against Fraud
The new rules bring more effective digital tools to combat VAT fraud. Among these, the strengthening of information exchange between European tax administrations and automated data analysis to detect irregularities stand out.
Conclusion
The changes to the VAT regime for 2025 are ambitious and aim to create a more modern and functional system for all of Europe. Portuguese companies should start preparing now by updating their systems and monitoring national regulations that will adapt these community guidelines.
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This article was prepared based on information available to date and is intended for informational purposes.
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