Portuguese Tax Authority clarifies VAT place of supply rules applicable to colocation services

Our team prepared the document below, reflecting Binding Ruling no. 30559 issued by the Portuguese Tax Authority (AT), which provides essential clarifications on the VAT place-of-supply rules for data center operators, colocation providers, and business customers. 

The key factor determining the VAT treatment is whether space is allocated for the customer's exclusive use:

• Shared rooms/Racks: No exclusive space = Not property related. General B2B rule applies (taxed at customer’s location). 
• Dedicated cages/Private rooms: Exclusive space = Property-related. Portuguese VAT applies if the data center is in Portugal. 

Key takeaways:

• Security & Access: Access controls or security procedures do not alter the property-related classification. 
• Bundled Ssrvices: Power, cooling, cabling, and storage follow the core service's VAT treatment.  

Next steps: Operators should audit products and contracts; non-resident clients must evaluate total costs and refund processes. 

For detailed Information or assistance in reviewing your contracts and VAT setups, please reach out to MFA Legal & Tech Indirect Taxes team, Bárbara Miragaia and Rita Simão Luis.