Effective from the 1st of July 2016, the VAT rate on certain restaurant and cafe services in Portugal will return to the pre-crisis rate of 13% (down from its current rate of 23%) for the first time since 2012.
This is in line with the post-austerity policies of Antonio Costa’s government, and an election promise to boost recruitment in the sector.
In an effort to reduce the impact on state revenue (estimated at €175 million), the Government stopped short of applying the reduction to all restaurant products. This means that certain beverages are exempt from the reduction, including soft drinks, juices and alcoholic beverages, which remain at 23% VAT. We understand though that the Portuguese Government has pledged to apply the reduced rate to all products in 2017 however we expect to obtain further details on this later in the year.
Authored by: Evrard Donald Ewas Makon, Compliance Assistant, & Corie McCulloch, Compliance Assistant