Technical article
Madeira and the Azores: A Lower VAT on the Same Country
They wonder what the same spending costs in tax on the mainland, in Madeira and in the Azores.
Picture a couple named Anne and Paul. They spend about EUR 2,000 a month on things taxed at the standard rate, before tax. They wonder what the same spending costs in tax on the mainland, in Madeira and in the Azores.
The three rates
Portugal's tax authority publishes a table of VAT (value added tax) rates for 2026. The rates are below.
| Rate | Mainland | Azores | Madeira |
|---|---|---|---|
| Reduced | 6% | 4% | 4% |
| Intermediate | 13% | 9% | 12% |
| Standard | 23% | 16% | 22% |
The same table for 2025 shows the same figures.
What the numbers mean
On goods or services priced at EUR 100 before tax, the standard rate adds EUR 23 on the mainland, EUR 16 in the Azores and EUR 22 in Madeira (my arithmetic).
For Anne and Paul's EUR 2,000 in standard-rate spending (my arithmetic):
- Mainland: EUR 460 in tax.
- Azores: EUR 320 in tax, which is EUR 140 less.
- Madeira: EUR 440 in tax, which is EUR 20 less.
Their real gap would be smaller, since some of what they buy sits on the reduced or intermediate lists. Which goods sit on which list is not among the sources.
Why the islands differ
The national VAT code sets 6%, 13% and 23%. Its Article 18 lets the regional parliaments of the Azores and Madeira set lower rates for supplies made in the regions. The tax authority says the Azores rates are "reduzidas em 30%" from the national ones, with rounding. Those rates have applied since 1 July 2021. In Madeira, the intermediate (12%) and standard (22%) rates have applied since 1 April 2012. Madeira's reduced rate fell from 5% to 4% on 1 October 2024.
A simple way to read it
The mainland standard rate is 23%. The Azores standard rate of 16% is 7 points lower, and Madeira's 22% is 1 point lower (my arithmetic). At the reduced rate, both island regions charge 4% against 6% on the mainland. At the intermediate rate, the Azores charge 9% and Madeira 12%, against 13% on the mainland. So the Azores are lower at every rate, while Madeira is lower at every rate by a smaller step. Tax is one part of monthly spending. Rent, food, flights and care are others, and they have their own official figures.
What is left open
- Which goods and services fall on each list.
- How the regional rates treat property purchases, imports or tourist refunds.
- Whether the rates will change in 2027.
You could…
List your last three months of spending and mark what carries VAT. Ask an accountant in Portugal which rate applies to each item.
Would a few points of sales tax change your choice, or is it small next to everything else?
Figures are estimates for planning, based on public data. Date read: 10 October 2026.
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