According to the European Commission's 2026 Annual Tax Report, VAT generated 18.1 percent of Portugal's total tax receipts, matching the proportion recorded across the EU on average.

Across the bloc, VAT accounted for 7.1 percent of gross domestic product in 2024, making it the fourth-highest share since records began in 1995.

Public revenue

Hungary tops the list with a 27 percent rate, followed by Finland on 25.5 percent, while Denmark, Croatia and Sweden each levy VAT at 25 percent.

Portugal shares its 23 percent rate with Ireland, Poland and Slovakia.

The European Commission noted that VAT remains one of the principal sources of public revenue despite a slight decline in its overall contribution.

In 2024, VAT represented 18.1 percent of total tax revenue across the European Union, marginally lower than the 18.3 percent recorded the previous year.

Financing

Brussels said VAT receipts, like corporate tax revenues, reached a peak in 2022 as inflation pushed up prices and, consequently, tax income.

The revenue levels have since eased only modestly, supported by the gradual withdrawal of temporary VAT reductions introduced by several governments during the cost-of-living crisis to ease pressure on households.

While VAT income has remained resilient, the report highlights a longer-term decline in the overall importance of consumption taxes.

The consumption taxes accounted for 26.8 percent of total EU tax revenue in 2024, compared with 28.3 percent a decade earlier.

This downward trend was recorded across almost every Member State, with Hungary, Greece and France the only exceptions.

The European Commission's findings underline the continuing importance of VAT in financing public services, even as the overall share of consumption-based taxation gradually declines across the European Union.