Portugal opens its VAT small-business exemption to EU-established businesses under the EU SME scheme

What changed in detail

Decreto-Lei n.º 35/2025, de 24 de março, published in Diário da República n.º 58/2025, partially transposes Directive (EU) 2020/285, the EU’s special scheme for small enterprises. It rewrites Article 53 of the Código do IVA and adds new articles on the cross-border scheme.

• Domestic exemption (Article 53(1)). A taxable person with its seat or domicile in Portugal, not engaged in exports or related activities, is exempt if its turnover in Portugal in the previous calendar year did not exceed EUR 15,000.
• Businesses from other Member States (Article 53(2)). The same exemption applies to a business established in another Member State if its annual turnover in the EU does not exceed EUR 100,000, it has notified its Member State of establishment in advance, and it holds an individual identification number with the suffix “EX”.
• Portuguese businesses abroad (new Article 58-A). A business established in Portugal can use other Member States’ exemptions after prior notification to the Portuguese tax authority.

The decree-law has no article on entry into force. Under the general rule on entry into force, it applies from the fifth day after publication, 29 March 2025.

Under the transitional rules in Article 10, businesses established in other States that were in the old exemption lose it from 1 July 2025. Portuguese businesses that want to opt into the exemption file their declaration in June 2025, with effect from 1 July 2025.

What it means

The regime is in force as of November 2026, and Article 53 of the consolidated VAT Code still carries this wording.

The point most often misread is who the EUR 15,000 threshold protects. It covers only businesses established in Portugal. A business from another EU country can use the Portuguese exemption only through its own tax authority, under the EUR 100,000 EU-wide cap and with an EX number. A business established outside the EU has no small-business exemption in Portugal at all.

The EUR 15,000 figure did not first appear in this decree: the transitional rules already treat it as the threshold applying from January 2025. What the decree added was the cross-border scheme around it.