How to create a product with the right VAT and type

What is it for?

Each line of an invoice starts from a product: something you sell or a service you provide. The product brings the description, the price and the VAT rate to the line, and tells the SAF-T what type of product it is.

A well-created product saves you choosing the VAT by hand on every invoice and avoids errors in the month's SAF-T file.

When to use it?

• Before invoicing a product or service for the first time.
• When you start selling something with a VAT rate different from the ones you already use.

Where to find it?

Billing › Customers and items › Products › New

Before you start

• Your profile is Billing or Accountant.
• You know the VAT rate of what you are going to sell. If in doubt (reduced rate, intermediate rate, exemption), confirm it first with the certified accountant.

How to use it

1. Open Billing › Customers and items › Products and click New.
2. Type the product name as you want it to appear on the invoice, for example Kit de canetas.
3. On the General Information tab, in Product Type, choose Goods for a product or Service for a service.
4. In Sales Price, type the price without VAT, for example 10.00.
5. In Taxes on sales, check the rate. It comes as 23%; next to it, the screen shows the price including VAT, for example “(= €12.30 Incl. Taxes)”. For another rate, see “Choose another VAT rate” below.
6. Further down, in Reference, type the product's internal code, if you use codes, for example KIT-CAN. The reference appears in square brackets before the name on invoices.
7. In SAF-T product type, choose Product for a product or Service for a service. If you leave it empty, the SAF-T uses Product for Goods and Service for Service. The other three options are never inferred and are chosen by hand: Other (e.g. freight charged, advances received, asset disposal), Excise duty (e.g. IABA, ISP, IT) and Tax, fee or parafiscal charge. On a Combo product, always choose the type.
8. Save (the cloud icon, next to the name).

Example. The product [KIT-CAN] Kit de canetas, at €10.00 with 23% VAT, on an invoice for 10 units gives €100.00 + €23.00 VAT = €123.00.

Choose another VAT rate

When you click the Taxes on sales box, a list opens that starts with the mainland VAT rates: 23%, 13%, 6%, then 0% (with reason M07), 0% EU S, 0% EX S, 22% MA and 12% MA, and Search more... at the end.

1. Remove the default rate with the × next to 23%.
2. Type the rate in the box, for example 13, and click 13% in the list. The box changes to 13% and the price including VAT updates, for example “(= €11.30 Incl. Taxes)”.

Rates that are not at the top (for example the Azores ones, 16% AZ, 9% AZ, 4% AZ) appear when you type part of the name, or under Search more.... If you type, for example, Ret, the list shows the withholding taxes (Retenção IRS 23% — trabalho independente (art. 151.º), Retenção IRS 16,5% — propriedade intelectual e industrial and others). The Retenção IRS… and Retenção IRC… taxes are not VAT rates: do not choose them as the product's VAT.

These are the sales taxes you can choose. The exemption reason comes with the tax: you do not choose it on the product.

Tax (name on screen)	What for	Exemption reason it carries
23%, 13%, 6%	mainland standard, intermediate and reduced rates	—
22% MA, 12% MA, 5% MA, 4% MA	Madeira	—
16% AZ, 9% AZ, 4% AZ	Azores	—
0%	exemption	M07 — Isento artigo 9.º do CIVA (exempt under VAT Code art. 9)
0% EU / 0% EU S	goods / services for a customer in another EU country with the tax number validated in VIES (see How to create a customer with the right tax details)	M16 — Isento artigo 14.º do RITI / M40 — IVA - autoliquidação (reverse charge)
0% EX / 0% EX S	goods / services for a customer outside the EU	M05 — Isento artigo 14.º do CIVA / M40 — IVA - autoliquidação (reverse charge)
0% NS, 0% NS MA, 0% NS AC	operation not subject to VAT	M99 — Não sujeito ou não tributado (not subject or not taxed)
0% AUT … (scrap, construction, GHG emissions, cork, electricity)	reverse charge in specific sectors	M30 to M35 — IVA - autoliquidação (reverse charge)

Users with the Certified Accountant / Fiscal Manager profile can see the reasons in Accounting › Configure › Taxes, on the Portugal tab of each tax (Exemption reason). The Accountant profile does not have the Taxes menu. On an ordinary product, use 23%, 13% or 6%; the 0% rates apply on their own through the customer's form (see How to create a customer with the right tax details) or are decided with the certified accountant. Pending validation by a certified accountant: which rate to use for each type of good or service and when to use each exemption.

Expected result

• The product appears in the Products list.
• On a new invoice, when you choose the product, the line comes with the product's description, price and VAT rate: How to issue a certified invoice.

Important notes

• SAF-T product type is empty on a new product. Empty, it does not block the SAF-T of a Goods or Service product: the October billing SAF-T, generated in the demo with an invoice for the product Serviço de montagem (type Service, with no SAF-T type), reported no error on that product.
• The fields Margin scheme, Liquid fuel (reseller scheme), Energy supply (OSS) and VAT special case are for special VAT schemes. On an ordinary product, leave them empty.
• Counts for the distance-sales limit comes set to Goods count, services do not. It says which sales count towards the €10,000 limit for distance sales to consumers in other European Union countries. The other options are Telecommunications, broadcasting or electronic service and Does not count, which the field help recommends for new means of transport and for goods sold with assembly or installation. On an ordinary product, leave the default. Pending validation by a certified accountant: which sales count towards the distance-sales threshold (RITI (VAT regime for intra-Community transactions), art. 11).
• Purchase Taxes, next to Cost, comes set to 23%. It is the VAT used by default on supplier invoices for this product (the field help says “Default taxes used when buying the product”). On a product you only sell, leave the default. For purchases, see How to record a supplier invoice.
• Changing a product's price or VAT does not change invoices already issued; only new ones.

Common problems

The invoice line comes with the wrong VAT rate

• Cause: the product has another rate in Taxes on sales, or the customer's form (country, tax number and, for a customer in another EU country, the VIES validation) applies a fiscal position that changes it, for example 0% EU or 0% EX.
• What to do:
  • Customer in another EU country whose tax number is not yet Valid in VIES: the 23% rate is correct. Do not change it on the line to 0% EU or 0% EU S. For the exemption, validate the tax number on the customer's form: what each VIES state does to the VAT, and what to do with a draft already made, is in How to create a customer with the right tax details.
  • In other cases: on a draft invoice, correct the rate on the line. For future invoices, correct the product (step 5). If the invoice has already been confirmed, it can no longer be changed: it is corrected with a credit note (How to issue a credit note).