Portugal

Corporate - Significant developments

Last reviewed - 13 January 2020

May 2020

COVID-19 - Reduced VAT rate for disinfectant gel

Order no. 5335-A/2020 published in the Official Gazette, establishes the application of a reduced VAT rate to imports, transfers and intra-Community acquisition of masks for respiratory protection and skin disinfectant gel. This measure is effective from 8 May 2020 to 31 December 2020.

COVID-19 - Exemption and reduced VAT rate applicable to certain goods

Law no. 13/2020, of 7 May, published in the Official Gazette, establishes the following temporary measures:

  • Exemption from VAT on intraCommunity supply and acquisitions of goods (listed in the annex to the referred Law) necessary to tackle the effects of the COVID-19 outbreak; it applies to acquisitions made by the State and other public bodies or non-profit organizations; this measure applies from the 30th January to the 31st July 2020;
  • Application of the reduced VAT rate to imports, as well as intraCommunity supplies and acquisitions of masks for respiratory protection and skin disinfectant gel; the reduced rate applies from the 8th May to the 31st December 2020.

COVID-19 – Donations to public entities: extension of tax benefits

Order 157/2020/XXII, of 4 May 2020, of the State Secretary of Tax Affairs (“Secretário de Estado dos Assuntos Fiscais” or “SEAF”) establishes the extension, until 31 July 2020, of the CIT additional deduction (in 40%) relevant to costs incurred with donations granted to the entity SPMS - Serviços Partilhados do Ministério da Saúde, EPE (public enterprise or "Empresa Pública Empresarial"), and to medical institutions integrated in the regional health public services, all having the status of EPE.

The Stamp Tax exemption applicable to such donations is also extended to the 31st July 2020.

April 2020

COVID-19 - Additional deduction of donations granted to public enterprises

Order 137/2020-XII, of 3 April 2020, of the State Secretary of Tax Affairs, establishes that, while the state of emergency is in force, donations granted by resident entities to the entity SPMS (Serviços Partilhados do Ministério da Saúde), EPE (public enterprise or 'Empresa Pública Empresarial'), and to hospital institutions integrated in the regional health public services, all having the status of EPE:

  • are allowed as a tax deductible cost for corporate income tax (CIT) purposes for 140% of the respective amount, and
  • are exempt from stamp tax.

COVID-19 - Extension of deadlines to file tax statements and pay taxes

Order 153/2020-XXII, of 24 April 2020, of the State Secretary of Tax Affairs, extends the deadlines to comply with several tax obligations, as well as the deadlines for the payment of taxes.

Company’s Simplified Information (IES) / Annual Statement

The deadline to file the IES was extended to 7 August 2020.

Tax file ('dossier fiscal')

The deadline to prepare, or to file (when applicable), the tax file was extended to 31 August 2020.

Transfer pricing documentation 

The deadline to prepare, or to file (when applicable), the transfer pricing documentation was extended to 31 August 2020.

Value-added tax (VAT)

Monthly regime
  • March 2020 periodic VAT return:
    • Can be filed until 18 May 2020.
    • The payment of the VAT assessed can be made until 25 May 2020 (eligible taxpayers can opt to pay the tax in instalments).
    • VAT payers with a turnover up to 10 million euros (EUR) (with reference to 2019), or that have started their activity on or after 1 January 2020, or that have restarted their activity on or after 1 January 2020 and had no turnover in 2019, may complete the VAT return based on the data of the web-based invoice record ('e-Fatura') without the need for other supporting documentation, and, if necessary, regularised by filing a replacement VAT return until 31 August 2020 (any VAT due should be paid at the same moment).
  • April 2020 periodic VAT return:
    • Can be filed until 18 June 2020.
    • The payment of the VAT assessed can be made until 25 June 2020 (eligible taxpayers can opt to pay the tax in instalments).
Quarterly regime: January 2020 to March 2020 periodic VAT return
  • Can be filed until 22 May 2020.
  • The payment of the VAT assessed can be made until 25 May 2020 (eligible taxpayers can opt to pay the tax in instalments).

VAT payers with a turnover up to EUR 10 million (with reference to 2019), or that have started their activity on or after 1 January 2020, or that have restarted their activity on or after 1 January 2020 and had no turnover in 2019, may complete the VAT return based on the data of the web-based invoice record ('e-Fatura') without the need for other supporting documentation, and, if necessary, regularised by filing a replacement VAT return until 31 August 2020 (any VAT due should be paid on the same moment).

CIT and PIT withholding taxes (WHTs)

  • Assessed in April 2020: Can be paid until 25 May 2020.
  • Assessed in May 2020: Can be paid until 25 June 2020.

Stamp tax

  • Assessed in April 2020: Can be paid until 25 May 2020.
  • Assessed in May 2020: Can be paid until 25 June 2020.

March 2020

2020 State Budget published

Law no. 2/2020, of 31 March 2020, published in the Official Gazette, approved the State Budget for 2020, having entered into force on 1 April 2020. 

We highlight the following measures:

CIT

  • Patent box regime: The existing 50% relief from taxation now applies to income from computer program copyrights.
  • Deduction for reinvestment of retained earnings: The existing tax credit is allowed throughout a four-year period (previously, three years), increasing the eligible amount to EUR 12 million (previously, EUR 10 million), and covering the acquisition of intangibles. A legislative authorisation was granted to the government to increase the type of beneficiary and eligible investments under this scheme.
  • Research and development (R&D) tax incentive scheme (SIFIDE II): The existing regime was extended until 2025 (previously, 2020) and now foresees stricter rules for contributions to investment funds that finance R&D companies (a five-year mandatory holding period by the unit holder and the need to provide thorough detail of the investment fund portfolio).

VAT and other indirect taxes

  • Electrical and plug-in vehicles: The deduction of VAT included in expenses incurred with electrical and plug-in hybrid vehicles is allowed.
  • Excise duties: Increase of 0.3% on excise duties in general (tax on alcohol and alcoholic products, tax on oil and energy products, tax on tobacco products, vehicle tax, and vehicle circulation tax).

Stamp tax

An exemption from stamp tax applies on cash-pooling contracts when established between companies in a domain or group relationship created, being applicable to loans not exceeding a one-year period. A relationship of domain or group exists when a so-called ‘dominant company’ holds, for more than one year, directly or indirectly, at least 75% of the capital of another so-called ‘dominated company(s)’, provided that such participation grants more than 50% of the voting rights.

A stamp tax exemption now applies on the transfer of an ongoing concern (commercial, industrial, or agricultural establishments) within the context of a business restructuring.

In 2020, the 50% increase of the stamp tax rate on consumer credit is maintained and, in addition, the tax rates of consumer credit have also increased.

Property taxes

The exemption from property transfer tax applicable on the acquisition of real estate by credit institutions (including their subsidiaries), in case those assets are sold to related parties, has ceased to apply.

A new 7.5% rate applies on the acquisition of residential properties whose taxable basis exceeds EUR 1 million (currently the highest rate for residential properties is 6%).

COVID-19: Tax and other measures enacted (amended)

Simplification measures for completion of VAT returns and issuance of PDF invoices

Order no. 129/2020-XXII, of 27 March 2020, issued by the Secretary of State for Tax Affairs, establishes simplification procedures to adapt compliance reporting obligations to the current circumstances caused by the COVID-19 pandemic.

In case of taxable persons that meet certain requirements, the VAT returns for February 2020 can be calculated based on the data in the 'e-invoice' platform, not requiring supporting documentation. In turn, for the regularisation of the situation without any costs/penalties, the VAT returns should be replaced based on all the support documentation, provided that this replacement and respective payment/adjustment occurs during the month of July 2020.

In addition, the issuance of PDF invoices must be accepted during the months of April, May, and June 2020, and will be considered electronic invoices for all purposes provided for in the tax law.

Finally, the above-mentioned Order extends the regime of fair impediment to the fulfilment of the fiscal obligations, considering, for its application, the situations of infection or prophylactic isolation determined by a health authority, as well as the situations of fixing a health fence that interrupts the movement of taxpayers or certified accountants, provided that they have their professional or tax domicile in the aforementioned areas.

Deferral of payment of CIT and PIT WHTs and VAT

Following the publication of Decree-Law 10-F/2020, of 26 March 2020, and effective as from 12 March 2020, the payment of CIT and PIT WHTs, as well as VAT (monthly and quarterly regimes) due in April, May, and June 2020 can be deferred, as follows:

  • Payment in three or six monthly instalments, upon electronic request, with no interest due or need to present a guarantee.
  • The first instalment should be paid within the legal deadline foreseen; subsequent instalments should be paid in the next months, within the legal deadline foreseen.
  • This measure applies to:
    • Self-employed workers.
    • Taxpayers:
      • With a turnover up to EUR 10 million euros (EUR) in 2018.
      • That have started their activity from 1 January 2019 onward.
      • That have reinitiated their activity from 1 January 2019 onward, not having registered any turnover in 2018.
      • Which activity is included in a sector that was closed following the declaration of a state of emergency, as foreseen in Article 7 and Annex I of Decree-Law 2-A/2020, of 20 March 2020.
      • Which invoicing in 2020 (as communicated through the e-invoice system or with reference to the turnover) decreases by at least 20% in the average three months prior to the month in which the taxes should paid (with reference to the same period in 2019); certification by statutory auditor or certified accountant is required.

Deferral of payment of social security contributions

Decree-Law 10-F/2020, of 26 March 2020, also establishes that the payment of Social Security contributions can be deferred, as follows:

  • Social contributions due in March 2020 with reference to February 2020: Entities that did not pay the social contributions due on 20 March 2020 with reference to February 2020 can make the respective payment until 31 March 2020.
  • Social contributions due in April, May, and June 2020: Deferral of payment allowed as follows:
    • Payment of 1/3 of the amount of the social contributions due by the employer, to be made in the month in which they are due.
    • The remaining 2/3 of the social contributions can be made in three or six monthly equal instalments, starting in July 2020, interest-free.
    • It is not necessary to file a request to have access to this measure; however, in July 2020, the employer should inform the Social Security authorities which instalment period (three or six months) will be implemented.
    • Entities that paid the total amount of the social contributions due in March 2020 and related with February 2020 can initiate the deferred payment in April 2020 ending in June 2020.
    • This measure applies to:
      • Self-employed workers.
      • Private and social employers:
        • With less than 50 employees.
        • With 50 and up to 249 employees, that:
          • Face a decrease of at least 20% of invoicing (as communicated through the e-invoice system or with reference to the turnover) in March, April, and May 2020, with reference to the same period in 2019.
          • Having started their activity in less than 12 months, face a decrease of at least 20% of invoicing (as communicated through the e-invoice system or with reference to the turnover), with reference to the average of the period of activity.
        • With 250 or more employees:
          • That face a decrease, duly certified by joint statement of the entity and the respective certified accountant, of at least 20% of the invoicing (as communicated through the e-invoice system or with reference to the turnover) in the months of March, April, and May 2020, with reference to the same period in 2019 (average of the period of activity in case of entities that have started their activity in less than 12 months).
          • Being:
            • A social solidarity private institution or equivalent.
            • An entity which activity is included in a sector that was closed following the declaration of a state of emergency.
            • An entity which activity was suspended, following legislation enacted or administrative decision.
    • The number of employees considers the statement of remunerations of February 2020.
    • Lack of payment of the first instalment of 1/3 implies the cease of the benefits; all instalments shall become due immediately, and interest will be charged.

Suspension of tax and social security procedures

As per Law 1-A/2020, of 19 March 2020, effective as of 13 March 2020, and Decree-Law 10-F/2020, of 26 March 2020, effective as of 12 March 2020, the following measures have been enacted:

  • Suspension of ongoing compulsory tax and social security collection procedures, of ongoing tax and social security debt instalment plans, and of deadlines of tax procedures.
  • Suspension of deadlines for filing tax administrative and judicial claims, and hierarchical appeals, unless these procedures are allowed by other means (conference call or videoconference).

Exemption from VAT on donations

Order no. 122/2020-XXII, of 24 March 2020, issued by the State Secretary for Tax Affairs, establishes that, during the national emergency situation related with the COVID-19 pandemic, the exemption foreseen in Article 15, no. 10 (a) of the VAT Code, is also applicable to the supplies of goods free of charge made to the state, to private social security institutions, and to non-governmental non-profit organisations, for later distribution to people in need, even if those goods remain in the ownership of those entities. The right to deduct the tax incurred applies as provided for in Article 20, paragraph 1, point (b) (IV) of the referred Code. For this purpose, people in need are also considered those who are receiving health care in the current pandemic context, who are considered victims of catastrophe.

Deferral of CIT payments and of the deadline for filing the 2019 CIT return

Following the publication of Order 104/2020-XXII, of the State Secretary of Tax Affairs, of 9 March 2020, the following measures have been introduced:

  • The first special payment on account was extended from 31 March 2020 to 30 June 2020.
  • The filing of the 2019 CIT return and payment of CIT, Municipal Surtax and State Surtax, if due (usually, 31 May, in case of taxpayers with a tax year corresponding to calendar year), was extended to 31 July 2020.
  • The first CIT prepayment, and the first State Surtax additional prepayment, have been extended from 31 July 2020 to 31 August 2020.

Multilateral Convention: Portugal deposits instrument of ratification

Following the deposit of the instrument of ratification on 28 February 2020, the Multilateral Convention to implement tax treaty related measures to prevent base erosion and profit shifting (Multilateral Convention) shall enter into force on 1 June 2020 in respect of Portugal. 

The production of effects of the provisions of the Multilateral Convention should be assessed on a case-by-case basis in respect of each convention for the elimination of double taxation concluded by Portugal.

December 2019

2020 State Budget Law proposal delivered to the Parliament

On 16 December 2019, the government delivered the 2020 State Budget Law proposal to the Parliament.

November 2019

Ratification and approval of Multilateral Instrument (MLI)

Presidential Decree no. 70/2019 and Parliament’s Resolution no. 225/2019, both of 14 November 2019, were publish in the Official Gazette. They ratify and approve, respectively, the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ('Multilateral Instrument' or MLI).

Under no. 2 of Article 34 and Article 39, both of the MLI, the MLI shall enter into force in respect of Portugal on the first day of the month following the expiration of a period of three calendar months beginning on the date of the deposit of the instrument of ratification with the Secretary-General of the Organisation for Economic Co-operation and Development (OECD) (Depositary).

October 2019

Tax treaty between Portugal and Angola enters into force

Following the publication of Notice n.º 93/2019, published in the Official Gazette of 1 October, the tax treaty between Portugal and Angola for the avoidance of double taxation and prevention of fiscal evasion on matter of taxes on income entered into force on 22 August 2019. Accordingly, its provisions shall apply for the first time:

  • In Portugal:
    • Regarding taxes withheld, where the taxable event occurs on or after 1 January 2020.
    • For other taxes, regarding tax years starting on or after 1 January 2020.
  • In Angola:
    • Taxes where the taxable event occurs after 31 December 2019.

The tax treaty between Portugal and Angola for the avoidance of double taxation and prevention of fiscal evasion on matter of taxes on income foresees, among other measures, the following:

  • Dividends: Rate of 8% in case of ownership of the share capital in at least 25% for 365 days, including the day in which dividends are paid; 15% in the remaining situations.
  • Branch profit tax: Taxation of 8% of the amount of the profits repatriated.
  • Interest: Rate of 10%.
  • Royalties: Rate of 8%.
  • Technical services: Rate of 5% (includes services of a technical nature, management services, or consultancy services).

September 2019 

Law 119/2019, published in the Official Gazette of 18 September, amended several tax codes. We highlight the most relevant amendments introduced.

CIT

Profits and gains: Bonds and other subordinated securities

It is now considered as income, at the level of the issuer, the total or partial reduction of the principal debt in bonds or other subordinated securities. This rule applies provided that they do not attribute to the holder the right to receive dividends or voting rights at the General Meeting of Shareholders and are not convertible into shares.

Negative equity variations: Bonds and other subordinated securities

The specific reference to instruments of regulated financial sector entities is eliminated. The provision now covers CIT payers in general, allowing a tax deduction of the negative equity variations related with the distribution of income from bonds or other subordinated securities, provided that they do not attribute to the holder the right to receive dividends or voting rights at the General Meeting of Shareholders and are not convertible into shares.

Total or partial relief or refund of WHT on income earned by non-resident entities: Simplification of procedures

There is a simplification of the procedures applicable to non-resident entities to waive or obtain a refund, totally or partially, of the WHT on Portuguese-sourced income. It will now be necessary to present a standard form, yet to be approved, accompanied by a document issued by the competent authorities of the state of residence certifying the tax residence and subjection to income tax, in the period concerned.

Tax file: Large Taxpayers

Taxpayers followed by the Unit of Large Taxpayers are now required to file the tax file, including the transfer pricing file, by 15 July following the end of the tax period (15th day of the seventh month for entities with a tax year different from the calendar year). Entities that apply the special tax regime of group taxation (RETGS) continue to be required to deliver the tax file by 15 July following the end of the tax period (15th day of the seventh month for entities with a tax year different from the calendar year).

Turnover: Concept

Article 143 is added to the Corporate Income Tax Code. It includes a definition of 'turnover', being sales and services provided, including rents of investment properties. In case of banks, insurance companies, and other financial entities, the concept of 'turnover' corresponds to interest and similar income and commissions, gross premiums issued and commissions of insurance contracts, or provision of services contracts, depending on the nature of the activity developed by the taxable person.

As a consequence of this amendment, there is a revocation of numbers 4 and 5 of Article 106, concerning the turnover for the purposes of the Special Payment on Account.

Transfer pricing 

Covered transactions

The definition of transactions subject to transfer pricing rules was broadened to explicitly include transactions with associated enterprises within the scope of business restructurings.

Transfer pricing methods

The hierarchy of transfer pricing methods to be adopted by taxpayers to ensure the best comparability between the transactions or series of transactions conducted with associated enterprises and substantially similar transactions between independent enterprises was removed. Furthermore, a reference to the use of other methods or techniques of analysis was introduced in the case where transfer pricing methods cannot be used due to the unique or singular character of transactions or due to the lack or scarcity of reliable comparable data. These amendments aim at aligning the Portuguese transfer pricing legislation with the guidelines included in the 2017 version of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.

Company’s Simplified Information / Annual Statement

The content of the legislation has been updated to be aligned with the information included in the Company’s Simplified Information / Annual Statement regarding (i) information on transfer pricing methodologies used in the transactions, (ii) changes that occurred to the methodologies adopted (if any), and (iii) information on any transfer pricing adjustments made during the year due to the non-compliance of the arm’s-length principle in the terms and conditions of the transactions (if any).

Transfer pricing adjustments

The power of the Portuguese Tax Administration was strengthened, now allowing corrections to the taxable profit/taxable income in case of non-compliance with transfer pricing rules.

Advance Pricing Agreements (APAs)

The term of Advance Pricing Agreements is extended from three years to four years.

VAT

Payment

The legal deadlines for the payment of VAT have been extended by five days. As of 1 October 2019, the deadlines will be as follows:

  • Monthly regime, until the 15th day of the second following month.
  • Quarterly regime, until the 20th day of the second following month.

The deadlines for submitting periodical VAT returns remain unchanged.

Excise duties

Tax on drinks with added sugar or sweeteners: Introduction of new taxation brackets

Introduction of two new taxation brackets for the taxation of concentrates with a sugar content equal to or higher than 50 g/l. A reduction of the rate applicable to the previously two existing brackets is also introduced. Accordingly, there are now four tax rates that apply to sugar added beverages based on the respective sugar contents. These amendments are effective as of 1 October 2019.

Tobacco tax

Packaging wordings

Packages intended for export or to be used as board supplies will no longer be required to make reference to 'export'. Additionally, the option to include the bar code option on the packages has been revoked.

Packaging tagging

Public sales of tobacco packs manufactured for domestic consumption will be required to have a unique identifier, in addition to the special stamp, in accordance with applicable law. These changes entered into force on 1 October 2019.

Circulation Tax (IUC)

Objective incidence

For the purposes of IUC, from 1 January 2020 onwards, vehicles are considered:

  • Category A: Passenger cars and mixed-use cars with a gross weight not exceeding 2,500 kg that have been registered for the first time in national territory, in a member state of the European Union (EU), or in a member state of the European Economic Area (EEA) from 1981 until the date of entry into force of the Circulation Tax Code.
  • Category B: Passenger cars referred to in Article 2 paragraph (1) subparagraphs (a) and (d) of the Road Tax Code and mixed-use cars with a gross weight not exceeding 2,500 kg that were first registered in the national territory, in a member state of the European Union, or in a member state of the European Economic Area after the entry into force of the Circulation Tax Code.

Stamp tax

Taxpayer’s guarantees

It is now specifically foreseen that taxable persons liable to charge the tax and entities that bear the tax can file a claim under article 131, no. 1, of the Tax Process and Procedure Code (claim concerning error in case of self-assessment). This amendment entered into force on 1 January 2020.

Offset of stamp tax

Article 51 of the Stamp Tax Code is revoked. It concerned the offset of the tax due in result of the annulment or reduction of the transaction amount or material errors in the computation of stamp tax. This revocation will produce effects as from the entering into force of the monthly stamp tax statement foreseen in article 52-A of the Stamp Tax Code. In case it is not possible to offset against periods prior to the date of entry into force of the monthly statement, taxpayers shall file a claim within a two-years term.

Changes to the data reported in the monthly stamp tax statement shall be made by means of a replacement statement regarding the period to which said changes refer: (i) at any time should the change result in a higher amount of tax being levied or (ii) within one year following the filing of the statement or the date of completion of a tax audit, whichever occurs first, should the change result in a lower amount of tax being levied.

Tax refunds to the taxpayer shall be done by the end of the second month following the month in which the replacement return was filed.

The above-mentioned deadlines do not extend the deadlines for filing administrative and/or judicial claims against the tax settlement.

This amendment has entered into force on 1 January 2020.

Online bingo

Online bingo prizes are excluded from stamp tax.

Property tax (IMI)

Property registered in the name of undivided inheritances

The identification of the heirs with reference to the respective share is now included in the urban land register in case of property registered in the name of undivided inheritances.

Access to tax booklets

Lawyers and solicitors are also allowed to access to the information included in the tax booklets of the real estate owned by their clients if acting for the benefit of the client, being, however, subject to confidentiality obligations regarding the information accessed.

Aggravated tax rates for partially vacant urban properties

The IMI rates are increased threefold also to partially vacant urban properties, for buildings that are not registered under the condominium regime, levied on the part of the Tax Registration Value that corresponds to the vacant areas.

Property transfer tax (IMT)

Power of settlement

In case the IMT return (Form 1) is filed by electronic means or under the special procedure for transfer, encumbrance, and immediate registration of urban property in a single face-to-face service, the tax office of the taxpayer's domicile or head office is considered competent for the settlement of the IMT.

May 2019

Anti-Tax Avoidance Directive (ATAD) - Transposition

Law 32/2019, published in the Official Gazette of 3 May, reinforces the actions against tax avoidance practices and amends the legal regimes applicable to controlled foreign companies (CFCs), net financing costs, exit tax, and the general anti-abuse clause. With this new set of rules, Portugal partially transposes into its legal system the Council Directive (EU) 2016/1164, of 12 July 2016, laying down rules against tax avoidance practices that directly affect the functioning of the internal market.

Changes in the tax law have entered into force on 4 May 2019. 

Implementation of DAC6 - Draft Law under public consultation

A draft Law prepared by the Portuguese Government, aiming at implementing the EU Directive on the mandatory disclosure and exchange of cross-border tax arrangements, also known as DAC6, was made available for public consultation.

The draft Law follows DAC6 very closely; however, some specifications have been introduced, as follows:

  • Arrangements are reportable for being cross-border but also if purely domestic and totally or partially applicable or effective in the Portuguese territory (thus deviating from DAC6, which covers only cross-border arrangements).
  • The following taxes are in scope:
    • Regarding purely domestic reportable arrangements and cross-border reportable arrangements partially or wholly applicable or effective in the Portuguese territory: CIT, PIT, municipal surtax, state surtax, autonomous taxation, VAT, property tax (annual property tax and property transfer tax), and stamp tax, including respective tax benefits (custom duties are excluded).
    • Regarding cross-border reportable arrangements: All taxes, including the respective tax benefits (VAT, custom duties, excise duties, and social security contributions are excluded).
  • 'Cross-border arrangement', 'marketable arrangement', 'bespoke arrangement', and 'relevant taxpayer' definitions follow DAC6.
  • 'Intermediary':
    • Definition generally follows DAC6; however, deviating from DAC6, the draft Law excludes those situations where there is a juridical assessment of a pre-existing tax situation of the relevant taxpayer performed within the scope of a juridical consultation or the exercise of a mandate granted under a tax procedure (administrative, judicial, penal or infraction), including advice provided regarding the respective procedures.
    • Intermediaries must communicate reportable arrangements regardless of the legal professional privilege (LPP), thus deviation from DAC6, which allows intermediaries to notify any other intermediary or the relevant taxpayer if the reporting obligation would breach LPP.
  • Hallmarks that present an indication of a potential risk of tax avoidance are in line with DAC6; however, since purely domestic arrangements are also covered, the hallmarks established have been adjusted accordingly; as mentioned in recital (13) of DAC6, it is specifically foreseen the possibility of using the work of the OECD, and more specifically its Model Mandatory Disclosure Rules for Addressing CRS Avoidance Arrangements and Opaque Offshore Structures and its Commentary, in what concerns financial accounts information and beneficial ownership.
  • Reporting obligations:
    • Information to be communicated is in line with DAC6.
    • Because purely domestic arrangements are also covered, deviating from DAC6 there is an additional obligation for the relevant taxpayer to report to the Portuguese Tax Authorities a reportable arrangement in the situation where an intermediary exists but the relevant taxpayer is aware that the intermediary did not comply with the reporting obligation (for whatever reason).
    • The reporting timelines are in line with DAC6, although with adjustments arising because purely domestic arrangements are also covered. Accordingly, (i) reportable cross-border arrangements applied/with effects outside Portugal whose first implementation step has occurred or occurs between 25 June 2018 and 30 June 2020 and (ii) purely domestic reportable arrangements and cross-border reportable arrangements partially or wholly applied or with effects in Portugal whose availability or first implementation step has occurred or occurs up to 30 June 2020,are to be reported by 31 August 2020 (10 September 2020 at the latest).
  • Reporting deadline: From 1 July 2020 onwards, the deadline to communicate reportable arrangements is of 30 days.
  • The draft Law foresees penalties ranging from EUR 2,000 to EUR 80,000 for lack of compliance.

After the end of the public consultation period, the draft Law will go through the Portuguese legislative process, and may be subject to amendments before final voting by the Portuguese Parliament. It is also expected that standard forms for complying with this new reporting obligation are published, alongside specifications, filing instructions, and filing procedures.