Portugal has finally caught up with the rest of the EU on one long-standing tax gap: for the first time, corporate groups operating multiple Portuguese entities can consolidate their VAT position into a single filing. The regime — known officially as RGIVA (Regime de Grupos de IVA) — took effect for tax periods starting on or after 1 July 2026, and it matters directly to any multinational employer, investor or holding structure running more than one Portuguese subsidiary.
What changed, and why now
Until this month, each Portuguese company had to register and file VAT entirely on its own, even if it sat inside a global group with dozens of related entities. Historically, Portugal did not allow VAT grouping, with each company having to register and file VAT separately, but a VAT group regime was introduced with effect from 1 July 2026. The legal basis is Law 62/2025, published on 27 October 2025, which introduces Portugal’s Group VAT regime (RGIVA), effective from 1 July 2026 when elected.
The move brings Portugal into line with peers that have long offered VAT grouping. Portugal is one of the last of the EU states to launch a group VAT regime, following jurisdictions such as Germany, the Netherlands and Spain, which have run comparable systems for years.
How the consolidated filing actually works
The mechanics are more nuanced than a simple merger of tax numbers. Each member of the VAT group continues to calculate its VAT position individually and submit its own periodic VAT return by the 10th day of the second month following the reporting period, and the Portuguese Tax and Customs Authority then automatically generates a pre-filled VAT Group declaration using the information submitted by all members. Any VAT due must be paid by the 25th day of the second month. Crucially, responsibility sits with the parent: if the dominant entity fails to confirm the declaration by the deadline, the pre-filled return is automatically submitted by the tax authority, and any credit position that hasn’t been confirmed on time simply rolls forward rather than being refunded.
Eligibility is tightly defined. The financial link requires the dominant entity to directly or indirectly hold at least 75% of the share capital of its dependants, provided that this holding gives it more than 50% of the voting rights. That shareholding generally needs to have been in place for over a year before joining, though this minimum holding period does not apply to entities incorporated by the dominant entity or a dependant entity in the last year, provided the required shareholding has been held since incorporation — useful for groups actively setting up new Portuguese subsidiaries. Enrolment itself happens through a formal declaration to the tax authority, and once in, the group must remain in the regime for at least three years.
Not full neutrality — a key catch for shared-services groups
Foreign finance teams used to grouping regimes elsewhere should note one important limitation: Portugal has not gone as far as some neighbours. Unlike the practice in some other EU Member States, intra-group transactions remain subject to VAT, meaning the absence of intra-group neutralisation may reduce the attractiveness of the regime, especially for entities with partial input VAT restriction and significant internal flows. Multinationals running centralised shared-services billing across Portuguese entities — a common structure for tech and services groups — will still need to invoice VAT internally, even after joining the group.
Where the regime clearly pays off is cash management. VAT balances can be offset across group members, avoiding situations where one company is due a refund while another has VAT to pay, and supplies between group members are disregarded for VAT purposes in some respects, reducing invoicing complexity.
A bumpy first week
The launch was not entirely smooth. Days before go-live, the Portal das Finanças wasn’t ready to process enrolment requests online, forcing companies to submit their applications through the e-balcão helpdesk channel instead. According to Portuguese financial outlet ECO, the tax authority confirmed an exceptional procedure applying to all enrolment requests submitted from 1 July 2026, remaining in force until the online option is finally made available on the Portal das Finanças. It’s a reminder that even well-legislated reforms in Portugal often outrun the administrative systems meant to support them — worth flagging to anyone assuming the online process would work smoothly from day one.
What foreign-owned groups should do next
If you run a Portuguese holding structure or multiple subsidiaries here — a common setup for foreign investors using a Portuguese Lda as an EU base — this is worth reviewing with your accountant now rather than at year-end. Model the cash-flow benefit against the three-year lock-in, check whether your shareholding structure meets the 75%/50% test, and confirm whether intra-group flows are heavy enough that the lack of full VAT neutrality changes the calculation. Groups actively incorporating new Portuguese subsidiaries should also weigh joining early, since new entities can enter without waiting out the usual one-year ownership period.
For background on setting up and running a Portuguese company as a foreign investor, see our company setup guide, and for broader tax residency and NIF questions relevant to founders and directors, our tax & NIF hub. As with any structural tax decision, get advice from a Portuguese-qualified accountant before electing into RGIVA — the three-year commitment makes it a decision worth getting right the first time.
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This article was produced with AI assistance and editorial oversight in line with our editorial policy. It is general information, not legal or tax advice.