Businesses in Portugal may encounter various challenges when it comes to VAT reporting. One of the primary issues is ensuring that VAT is correctly applied to all transactions, particularly when dealing with goods and services that are exempt or subject to reduced rates. Mistakes in VAT calculation can lead to discrepancies in VAT returns and potential fines from the tax authorities.

Another challenge is staying up-to-date with changes in VAT legislation. Tax rates, exemptions, and other regulations may change, and businesses must adapt their VAT reporting practices accordingly. Businesses should also be mindful of the specific VAT rules for cross-border transactions, such as imports and exports, as these may differ from domestic VAT obligations.

VAT reporting in Portugal