VAT cash accounting: pay the IVA only when you're paid

André, a freelance developer, invoices a big client €6,150 (€5,000 + €1,150 of IVA) - and the client pays at 90 days. The problem: the VAT return arrives before the money does. He has to hand the state the €1,150 of IVA he hasn’t yet received from the client - out of his own pocket.

There’s a regime built for exactly this squeeze: the VAT cash accounting regime (regime de IVA de caixa). In one sentence: you only hand the IVA to the state when the client pays you, not when you issue the invoice.

What it is (and the rule it flips)

Under the normal rule, IVA becomes due on the invoice date - whether or not you’ve been paid. Under the cash accounting regime (regime de contabilidade de caixa, Decreto-Lei n.º 71/2013), IVA is tied to the money coming in and going out:

• the IVA on your sales is only handed to the state when you receive from the client;
• in exchange, the IVA on your purchases can only be deducted when you pay the supplier.

It’s symmetric: you win on the sales side, and “pay” for it with a small delay on the deductions side.

Mind the scope: the regime was designed for operations between IVA taxable persons - clients that are businesses or professionals. It does not cover (these always follow the normal rule, paid or not): sales to final consumers (B2C), reverse-charge operations, intra-community operations, imports and exports, and operations between related parties (art. 1.º n.º 2 of the regime). If you invoice mostly private individuals or EU clients, the regime may not touch you the way you’d imagine.

Who can opt in

It’s not for everyone. To opt in you have to meet, all at once:

You join electronically on the Portal das Finanças, during the month of October, and it only takes effect from 1 January of the following year (art. 4.º of the regime) - you don’t join mid-year, and once in you stay at least 2 years. During that time, for the operations covered by the regime, your invoices use a special series and carry the note “IVA - regime de caixa”; and on each payment (full or partial) of those operations you issue a receipt (art. 6.º of DL 71/2013).

The side nobody reads: the 12-month rule

Here’s the trap. The regime protects you from fronting IVA on unpaid invoices - but not forever.

Warning: if the client simply never pays you, the IVA on that invoice becomes compulsorily due in the 12th month after the invoice date (art. 2.º n.º 3 of the regime). In other words: a year with no payment and you must hand the IVA to the state anyway, whether or not you’ve seen the money. The regime gives you cash-flow breathing room, not tax forgiveness.

And don’t forget the other side: since you only deduct the IVA on purchases when you pay the supplier, if you tend to buy on credit your deductions also get delayed - though, like on the sales side, after 12 months you can deduct the IVA even if you haven’t paid the supplier (art. 3.º n.º 2). For someone who buys little and gets paid late it’s worth it; for someone living off credit purchases the advantage shrinks.

The one who really gains is André, whose clients pay at 90 days: he only hands over the VAT once he’s been paid. Sofia, who gets paid almost entirely upfront, barely notices a difference - if you’re paid straight away, there’s no VAT to defer. And someone who buys a lot of equipment on credit should run the numbers first: the delay on deductions can eat the advantage.

✅ In summary

1. The VAT cash accounting regime (DL 71/2013) lets you hand over the IVA on sales only when the client pays - and, in exchange, you only deduct the IVA on purchases when you pay the supplier. Cash-flow relief for anyone who gets paid late.

2. It’s not for everyone, nor for everything: turnover up to €2,000,000, registered for IVA for ≥ 12 months, outside art. 53.º/art. 9.º; you opt in in October, effective 1 January after (and you stay at least 2 years). It mainly covers B2B operations (with taxable persons) - B2C, reverse-charge, intra-community operations and those involving related parties are out. And mind the 12-month rule: an unpaid invoice ends up paying IVA anyway.

3. With FIZ each invoice is tied to its payment, so your VAT return reflects what actually came in - and you pick the right rate on each invoice. See the plans.