Portuguese VAT Exemption Codes M01–M99: Which One Each Sale Needs

Whenever a line on an invoice comes out at 0%, Portuguese law requires the document to say why. That "why" is not free text: it is an exemption reason code, from M01 to M99, which travels on the document, into the SAF-T file, and from there into what the tax authority understands about your business.

Picking the wrong code fails nothing at the time. It fails months later, when somebody cross-checks your sales against the code you declared and the two stop telling the same story.

This article explains what each code means, which ones actually show up in e-commerce, and how to choose from the buyer rather than from habit.

First: the code only exists when the rate is zero

Simple rule, often forgotten: the exemption code only applies to lines at 0%. A sale at 23%, 13% or 6% carries no code at all, because the rate already says everything.

If you see an exemption code on a line with VAT charged, something is crossed in the configuration.

The full table

This is the table in force since July 2022, with the wording that goes on the document and, under each one, a concrete case, because the legal wording alone rarely lets anyone recognise their own sale. Codes M03 and M08 were withdrawn: M08 was split into M30–M34 and M40–M43, the reverse-charge codes.

There are many. In practice a Portuguese online shop uses five or six, and most of this table exists for specific sectors: construction, scrap, cork, art, travel, gold.

The ones that actually show up in e-commerce

M05, exempt under article 14 of the CIVA (export)

Goods that left the European Union. You sold to Brazil, to the United Kingdom, to the United States, and the goods actually left. It is a claim about where the goods went, which is why it has to be backed by proof of export.

M16, exempt under article 14 of the RITI (intra-EU reverse charge)

A business registered in another EU country, with a VAT number confirmed in VIES. The VAT becomes the buyer's obligation. Without VIES confirmation this code is not used. See Intra-EU reverse charge.

M40, reverse charge: services to a taxable person abroad

Services supplied to a business in another country, under article 6(6)(a) read the other way round. It is M16's counterpart for people selling services rather than goods. Confusing the two is the most common error of all: M16 is the RITI, for goods; M40 is the CIVA, for services.

M10, special exemption scheme, article 53

The seller is the one exempt, by being covered by article 53. It does not depend on the buyer or the country: while you are in that scheme, all your invoicing comes out this way.

M07, exempt under article 9

Activities exempt by their nature: health, education, training, certain cultural activities. Again a property of the seller and the service, not of the buyer.

M99, not subject, not taxed

The bag everything falls into when nobody decided anything. Sometimes it is legitimate, since some operations genuinely are outside the scope. Often it is just the symptom of a configuration nobody ever reviewed.

How to choose: start from the buyer, not from habit

This is the right order to think in. Who the buyer is determines the regime; the regime determines the rate; the rate, if it is zero, determines the code.

Who the buyer is decides the regime; the regime decides the rate and the code. In that order, never the reverse.

Notice the code is never the first step. When somebody asks "which code do I put?", the question underneath is always "which regime is this sale?".

The M01 case, which is everywhere

M01 is article 16(6) of the CIVA: amounts excluded from the taxable base. Things like financial discounts and sums paid in the name and on behalf of the customer.

In other words, it is not a generic exemption code. But it is the default in half the software and integrations on the market, which is why you find M01 on documents where it makes no sense at all: exports, sales to foreign businesses, article 53 exemptions.

If you opened your account and never chose a code, you are probably issuing with M01. It is worth a look. Not because the tax authority will knock tomorrow, but because correcting ten documents is trivial and correcting two thousand is not.

Common mistakes

• A zero-rated code with no regime behind it. A 0% document with M16 and no buyer VAT number on it cannot be defended: the code asserts the buyer is a business registered in another member state, and the document does not show which.
• M16 on services, M40 on goods. The two are swapped in many configurations. If you sell physical goods to EU businesses, it is M16.
• M05 on sales inside the EU. Article 14 of the CIVA is export. A sale to Spain is not an export, however far away Spain feels.
• Changing the code mid-year without recording why. It is legitimate, since a product's classification can genuinely change, but whoever audits the older documents will see two codes for identical sales and will ask. Leave a note.
• Issuing at 0% "to keep things simple". It simplifies nothing: it moves the problem to the periodic return.

How Rioko helps

Rioko does not ask you to pick a code sale by sale. It asks you to declare your registrations: whether you are registered for OSS, whether you supply services under reverse charge, whether you are under article 53. From there it decides each sale's regime from facts about the buyer: the country, whether they are a business, and what VIES answered.

The code follows from that regime. The same decision serves InvoiceXpress, Moloni and Vendus, because it is taken before any of them sees the sale, rather than inside each integration with slightly different rules.

And there is one thing Rioko does not do: invent a code. If a sale is at 0% and nothing in your registrations justifies a concrete reason, issuing stops and says so, instead of stamping M01 and moving on.

See how to configure VAT on your connection →