Companies that supply school meals in Portugal are required to invoice VAT at the rate of 13% to municipalities, in accordance with current tax rules. This situation occurs even when the dishes served to students in school canteens are tax-exempt.
The discrepancy between the VAT rate charged to municipalities and the tax exemption applicable to student meals creates a tax complexity for sector operators. Municipalities, as purchasing entities of school food services, receive invoices with VAT included, but cannot deduct this tax in its entirety, given the exempt nature of the meals served to students.
