Flash News NA 2025/04/03
Portugal - The New Rules on the Localization of Service Provision and Their Impact on VAT
Decree-Law No. 33/2025 introduced significant changes to the localization of service provision for VAT purposes, affecting both in-person and virtual services in sectors such as culture, art, sports, education, and entertainment.
These changes aim to ensure fairer taxation aligned with the increasing digitalization of services.
1. Context and Purpose of the Changes: Decree-Law No. 33/2025 was introduced to clarify and adapt the rules on the localization of service provision to the new economic and technological landscape. With the rise of service provision through digital platforms, it has become essential to establish a clearer tax framework to prevent fiscal ambiguities.
2. In-Person Services: The changes apply to cultural, artistic, sports, educational, and recreational services that require the physical presence of the recipient, including fairs and exhibitions:
• In-person services provided within Portugal will continue to be taxed in Portugal.
• Services performed outside the country remain non-taxable in Portugal.
3. Virtual Services and Streaming: The main change concerns the taxation of digital services, including streaming transmissions:
• Services provided to final consumers outside Portugal will now be taxed in the recipient's country of residence.
• New specific rules have been introduced for online services provided by companies established in Portugal.
4. Impact on Businesses and Professionals: Businesses and professionals operating in these sectors must review their tax policies and adjust their reporting obligations. In particular, those working with digital platforms should consider the impacts of international taxation.
Conclusion: The implementation of these new localization rules for VAT purposes requires specialized monitoring to ensure tax compliance and optimization. NOMINAUREA can assist businesses and professionals in interpreting these changes and adapting to the new legal framework, ensuring efficient tax management aligned with the latest market requirements.
