VAT refund in Portugal: A complete guide to tax-free shopping in Portugal for tourists

In contrast to the rainy UK, much of Portugal enjoys exceptional weather with sunny and warm days. Shopping in Portugal is quite an unique experience in itself. Often considered as one of the most budget friendly in Western Europe, the country has a perfect balance of big and fancy shopping malls, cheap outlets, or even flea markets and local boutiques. However, you might soon have to pay a lot of extra money for VAT; most of the time it can be up to 23%!

But it is good to know that the VAT refund system in Portugal allows non-EU residents, including the British, to claim back the tax paid on goods purchased during their stay! This comprehensive guide will navigate you through the process to get the most out of your VAT refund in Portugal. Whether you are planning to shop for souvenirs or indulge in some designer fashion, read on to learn how to claim your VAT refund in Portugal.

How much is VAT in Portugal?

In Portugal, VAT is known as Imposto sobre o valor acrescentado (IVA) in the local language. There are three different tiers of VAT: standard, intermediate, and reduced rates. The standard tax rate in Portugal is 23%, and this is applied to the majority of goods and services that you purchase. The two other VAT rates are applied to a long list of products and services that are mentioned in the Value Added Tax Code. It's important to note that the different regions in Portugal have varying rates for each tier.

You can take a quick look of the three different tiers in the table below:¹

Tier	Rate	Applicable goods
Standard rate	23% in mainland Portugal, 16% in the Autonomous Region of the Azores and 22% in the Autonomous Region of Madeira.	The majority of goods and services.
Intermediate rate	13% in mainland Portugal, 9% in the Autonomous Region of the Azores and 12% in the Autonomous Region of Madeira	Some food and caffeine products and wines, musical instruments, and other goods and services in List II of the Value Added Tax Code.
Reduced rate	6% in mainland Portugal, 4% in the Autonomous Region of the Azores and 5% in the Autonomous Region of Madeira	Some basic food products, certain types of books and magazines, certain hygiene products, and other goods and services in List I of the Value Added Tax Code.

How much VAT is refunded in Portugal?

Generally, the refund amount would be calculated based on the applicable VAT tier. However, administration fees might accompany the VAT refund process because you might need to work with a tax refund intermediary. Therefore, there is a high chance that you will not get a full VAT refund on your purchases. For example, even if you mostly see the standard VAT rate of 23%, the actual reimbursed VAT amount you receive may differ depending on the VAT tier and the characteristics of the products.

Who is eligible for tax free shopping in Portugal?

You are qualified for a VAT refund in Portugal if you meet these requirements:²

• You can provide proof of identity showing that your residence or usual place of residence is outside the EU. This means if you are from the UK, you are also qualified.
• Your purchase must cost more than 50 EUR, including VAT. A “purchase” is defined as an item or a set of items bought on the same day from the same store.
• You will take the products with you in your personal luggage within three months after the end of the month in which you made the purchase.

Please note that there are some additional restrictions that you must consider while travelling in Portugal. As you are only qualified for a VAT tax refund if you can take the products with you in your personal luggage, you will not be eligible for any refund for the items that you have already consumed in the country, such as the expenses incurred on hotels and meals.

How do you get a VAT refund in Portugal?

Getting a VAT refund in Portugal is rather straightforward. However, it is recommended you start thinking about getting a VAT refund right away when you just arrive in Portugal. Right at the store where you are shopping, you have already needed to do the very first step of getting your tax refund!

To get a VAT refund in Portugal, you can follow these steps:

Receive proof of the transaction

When you are at a shopping centre, go up to the sales assistant to request a document with a registration code and proof of the transaction (such as receipts and invoices). The retailer might ask you to present your passport or other officially recognized identity document. So remember to bring a personal identity document with you when you go shopping.

In some cases if you receive a guarantee for the products, the seller also defines the form of its reimbursement. Sellers may deduct administrative costs from guaranteed product reimbursements.

Go to an electronic e-Tax Free Portugal kiosk

You should come to the airport early, so you don’t have to rush through the process. When you are at the check-in desk, tell the person on duty that you have some items ready for VAT tax refund. After that, go to the customs area and head to the electronic e-Tax Free Portugal terminal kiosk. By this time, you should have with you:

• your passport or other officially recognized identity document;
• proof of the transaction with the registration code you obtain at the shopping centre;
• the boarding pass;
• the goods and the invoices.

After finishing filling your information at the kiosks, you will receive either one of these two results:

Code green: Your certification is successfully confirmed.
Code red: You have to go to the Customs table for further assistance. The Customs will issue the certification depending on your eligibility.

Obtain a VAT refund

Now it’s time to get your rewarding VAT refund back! You can locate the refund operators in the airport; they will help you with receiving your refund. If you are flying from Lisbon Airport, you will see these VAT refund operators across the restricted area of departures in Terminal 1 and Terminal 2.³

There are two general ways you can receive the refunded VAT: at the counter or submission boxes. At the counter, you will be refunded immediately through cash, credit card or international checks after the operator validates your form. If you decide to leave your form in the submission box, the payment will be processed later.

This short article explained the steps to getting your VAT refund upon exiting Portugal. The process is simple: from what to ask at the shopping sites to obtaining your refund.

There is one additional note to take to save you even more money!

Tourists can receive a VAT refund with the card, but you might incur extra costs! If the denominated currency of the card (e.g., GBP) is different from the local currency (e.g., EUR), it may be converted automatically. If you are looking for a way to avoid extra costs on currency conversion, consider receiving your refund with a Wise debit card, which allows you to hold 40+ currencies, including EUR.

It's crucial to note that tax regulations and procedures can change. To ensure you have the most accurate and up-to-date guidance, always verify the information with official sources. This will help you feel secure in your VAT refund process.

Get your card now

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Sources used for this article:

1. ePortugal.gov.pt: Value Added Tax (VAT) in Portugal
2. Portal das Finanças: How to obtain the VAT exemption on my purchases in Portgual
3. Lisbon Airport: VAT refund

Sources last checked on 13-Apr-2024.