Tax Alert - VAT Group Regime

The Law No. 62/2025, of 27 October, introduces the new VAT group regime, allowing for the consolidation of VAT balances payable or recoverable by members of groups of entities connected through financial, economic, and organizational links.

The regime may be applied by entities who meet the requirements set out in Article 2 of the VAT Code, form a “group of entities,” and exercise the option for its application through the parent (dominant) entity.

A “group of entities” is deemed to exist when one entity, referred to as the parent entity, and its dependent entities, referred to as subsidiaries, are closely linked to each other in financial, economic, and organizational terms.

The aforementioned “financial link” is established when the “parent company” directly or indirectly holds at least 75% of the capital and more than 50% of the voting rights of the “subsidiary entities.”

As for the “economic and organizational” links, the law states that “the entities forming part of the VAT group must pursue similar, complementary, or interdependent economic objectives and have a common management structure or one subordinated to the same business strategy.”

The option binds the group for a minimum period of three years, and the parent entity is responsible for submitting the group VAT return, which consolidates the individual returns of all group members. The format of this return will be defined by ministerial order.

The law enters into force on 28 October 2025 and will apply to tax periods beginning on or after 1 July 2026.

Practical implications:

• Enables the offsetting of VAT balances between group entities;
• Requires a prior assessment of the corporate structure and internal links;
• Demands preparation of compliance and reporting processes aligned with the new consolidated approach.

For any additional clarification or to assess the applicability of this regime, our team remains at your disposal.