What each rate covers
On the mainland the standard rate is 23%, the intermediate rate 13% and the reduced rate 6%. Madeira uses 22%, 12% and 4%. The Azores use 16%, 9% and 4%. Madeira’s reduced rate became 4% on 1 October 2024.
The rate follows where the supply takes place and which VAT Code list the item is on. Electricity, passenger transport, books and some basic food are generally reduced-rate. Some restaurant services are intermediate. Everything else is standard, unless it is exempt.
Example: a 100-euro mainland base at the standard rate is 23 euros of VAT and 123 euros to pay. In the Azores, the 4% reduced rate on a 100-euro base is 4 euros of tax.
Common questions
What is Portugal’s standard VAT rate?
It is 23% on the mainland, 22% in Madeira and 16% in the Azores.
When do the intermediate and reduced rates apply?
The reduced rate covers List I, including some basic food, books, medicines and hotel stays. The intermediate rate covers List II, including some restaurant services. The VAT Code decides the list, not a shortcut.
How do you remove VAT from a price?
Divide the tax-inclusive price by 1 plus the rate. One hundred euros plus 23% is 123 euros. 123 divided by 1.23 returns a 100-euro base and 23 euros of tax.
Sources
- Código do IVA, artigo 18.º.
- PwC Portugal VAT guide, 2026
- Decreto Legislativo Regional n.º 6/2024/M, taxa reduzida da Madeira.