Law No. 62/2025: New VAT Group regime - What changes for businesses?

SÉRVULO PUBLICATIONS 27 Oct 2025

Law No. 62/2025 was published today, introducing the VAT Group regime and aligning Portugal with best European practices.

This regime offers corporate groups the potential to optimise their tax management, enhance competitiveness, and improve overall liquidity.

Under this framework, companies belonging to the same economic group will be able to consolidate VAT balances, meaning they can offset VAT credits and debits among themselves. As a result, within the same group, there will no longer be companies with VAT credit while others owe VAT, allowing these balances to be settled more quickly.

Groups may join this regime provided, among other conditions, that a parent entity holds at least 75% of the share capital of the controlled entities, as long as such participation grants it more than 50% of voting rights.

Furthermore, entities must be closely linked financially, economically, and organizationally.

Once the criteria are met, the parent entity may opt to apply this regime, which will take effect from the tax period corresponding to its submission.

Key aspects of the regime include allowing the deduction of VAT credits generated before an entity joined the group, although subject to limits based on the VAT payable by that entity.

Moreover, the regime will last indefinitely, except if the group expressly opts to terminate it (after a minimum application period of three years) or if any legal grounds for termination occur.

This new regime will come into force the day after publication but will apply to tax periods starting from July 1, 2026.

Teresa Pala Schwalbach | tps@servulo.com

 

 

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