Portugal

Taxable period

The tax year is, as a general rule, the calendar year. A different tax year is allowed in the case of companies obligated to accounting consolidation and of PEs of non-resident entities, which can adopt the tax period of the non-resident company. The different tax year should, however, coincide with the period to which the financial statements concern. If the option of a tax year different from the calendar year is taken, the new tax period must be maintained for a minimum of five years. The five-year minimum period is not applicable if the taxpayer is transferred to a group of companies that are subject to consolidation of financial statements and the holding company has a fiscal year different from the one that was being adopted by the taxpayer.

Tax returns

The annual CIT return must be submitted by electronic data transmission by the last day of May of the year following the year of income. Whenever the tax year ends on a date other than 31 December, the annual CIT return shall be submitted by electronic data transmission by the last day of the fifth month following the year-end. The system is one of self-assessment.

Payment of tax

Tax is paid in instalments. Three payments on account are due in July, September, and up to 15 December of the year in which taxable income arises corresponding to 95% of the previous year's corporate tax assessment (for taxpayers with a turnover above EUR 500,000; 80% if below this amount). Payments on account are not required if the previous year's corporate tax assessment is less than EUR 200. The third payment may be suspended upon declaring that no further tax is due in respect of the current year. However, interest is assessed at a rate of 4% if this results in postponing more than 20% of the tax that would otherwise have been paid.

A last instalment is paid (or received) through self-assessment upon filing the annual tax return in May of the following year.

If the tax year ends on a date other than 31 December, interim payments take place in the seventh, ninth, and up to the 15th of the 12th month of the tax year.

Filing of the annual tax return together with the final payment is in the fifth month following the close of the tax year.

Three additional payments on account of Derrama Estadual (or Derrama Regional, in the case of the Autonomous Regions of Madeira and of the Azores) are due on the same dates as the interim payments mentioned above. The additional payments on account correspond to 2.5% of the taxable profit above EUR 1.5 million and up to EUR 7.5 million, 4.5% of the taxable profit above EUR 7.5 million and up to EUR 35 million, and 8.5% of the taxable profit above EUR 35 million, assessed in the previous year.

Interest and penalties

Late assessment interest is due in case of delay on the assessment of taxes due. Late assessment interest is computed on a daily basis. The current rate of late assessment interest is 4% (year).

Late penalty interest is due in case of delay in the payment of the tax assessed. The current rate is 5.997%. Late penalty interest is computed on a daily basis. Tax penalties for companies are capped at EUR 165,000 in the case of intention and EUR 45,000 in the case of negligence. In general, in case of failure or late payment of CIT, companies are liable to a penalty varying between 30% and 100% of the tax due, capped at EUR 45,000 (in case of negligence).

Specific tax penalties apply regarding transfer pricing documentation (including CbC reporting) and the CFC regime (between EUR 1,000 and EUR 10,000 for companies) and regarding omissions or inaccuracies regarding ruling requests (between EUR 750 and EUR 22,500 for companies in the case of urgent rulings or 25% of the previous amounts in the case of non-urgent rulings).

There is the possibility of applying for penalty reduction, provided certain requirements are met (e.g. regularisation of the tax situation/payment of the tax due; situation where there was no damage to the Revenue).

Tax file

Taxpayers followed by the Unit of Large Taxpayers are required to send the tax file to the PTA, 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 calendar year).

Tax audit process

Taxpayers are audited by the PTA based on several criteria, as detailed in a specific document prepared by the PTA.

The PTA must notify the taxpayers of the preliminary conclusions reached in cases where these may lead to tax assessment acts unfavourable to the taxpayers, further to which taxpayers may present their argumentation.

The PTA must then prepare a final report of the tax audit performed, identifying the facts detected.

Tax audits may be initiated within the statute of limitations (see below).

Tax audits must be concluded within six months. A prorogation of the deadline to one year may apply under certain conditions (e.g. complexity of the facts involved, necessity to make use of mechanisms of mutual assistance on tax matters, additional/new information being provided by the taxpayer).

The PTA releases, on a periodical basis, a list of taxpayers that, due to the nature of their activities, their turnover, or other criteria, are subject to regular monitorisation. There is also a specific department for large taxpayers.

Statute of limitations

The statute of limitations period is four years. Regarding facts involving black-listed jurisdictions, the statute of limitations for the right to assess taxes is extended to 12 years while the time period allowed to collect taxes is extended to 15 years. The statute of limitations period is also increased from four to 12 years in case of facts related to deposit and securities accounts in financial institutions outside the European Union.

When a tax inspection is legally suspended, the statute of limitations period is also suspended.

Topics of focus for tax authorities

The criteria for the selection of taxpayers for tax audits is foreseen in the Tax and Customs Audit Procedure legal framework (Regime Complementar do Procedimento de Inspecção Tributária e Aduaneira or RCPITA) and in the annual national activity plan for tax and customs audits (Plano Nacional de Atividades da Inspeção Tributária e Aduaneira or PNAITA). These criteria consider EU and international guidelines, whistleblowers complaints, as well as significant deviations from standard economic patterns in the taxpayers’ behaviour in view of the activity developed or the assets it owns, or any acts or omissions that may indicate a tax infraction. There is a special focus on tax planning, including the general and the specific anti abuse-rules, transfer pricing, corporate restructuring, derivatives, and non-residents without a PE. 

In addition, general criteria are made available in the annual report on the fight against tax and customs fraud and evasion. The 2022 annual report, published June 2023, stated the following criteria: tax fraud, aggressive tax planning, cross-border transfers of funds, sale of real estate, board members with low income reported, use of credit and debit cards, VAT recurrent credit position without refunds being requested, control of taxpayers that request VAT refund without being audited, control of VAT deductions and margins, excessive allowances (such as travels and meal expenses), control of initial and final inventories, R&D tax incentives, income tax discrepancies, impairment losses, goodwill amortisation, and variations in worth.

Finally, the Tax Authority 2023 public activity plan (Plano de Atividades 2023) , released November 2023, states the intention of strengthening and empowering the resources of the Tax Authority to deal with aggressive tax planning mechanisms, leveraging on the existing legal reporting framework for domestic as well as cross-border arrangements (e.g. to ensure the compliance with Council Directive (EU) 2018/822, of 25 May 2018, amending Directive 2011/16/EU, of 15 February, hereafter ’DAC 6‘, as regards the mandatory automatic exchange of information in the field of taxation). There is also the intention to continue applying international cooperation instruments, such as exchange information agreements, tax treaties, protocols, and administrative cooperation.

Anti-avoidance

A general anti-avoidance provision is in force, pursuant to which contracts and other acts are ineffective whenever it is demonstrated that they were put in place for the main purpose or one of the main purposes of reducing the taxation that would be due under contracts bearing a similar economic effect, in which case taxation would be based on the latter. This general anti-avoidance provision was revised to be in line with the provisions of the EU Directive 2016/1164 (ATAD I).

The anti-avoidance procedure is initiated within the general term foreseen (statute of limitations) and is flexible in terms of proof by the PTA.

Anti-avoidance rules are not applicable in cases where a request for obtaining binding information is not answered by the PTA within 150 days.

Binding rulings

Binding rulings can be:

• Urgent: A decision should be taken in 75 days; these are subject to the payment of a fee ranging between EUR 2,550 and EUR 25,500, depending on the complexity of the matter; if no decision is taken within the deadline established, there is a tacit approval of the taxpayer's understanding of the tax matter.
• Non-urgent: A decision should be taken in 150 days; no fees are charged; a decision is required (no tacit approval, as in case of an urgent ruling).

Fight against tax fraud and evasion

It is mandatory that payments above EUR 1,000 are made by a means that allows the identification of the recipient of the income (e.g. bank transfer, nominative cheque, direct debit).

Council Directive 2011/16/EU, on the matter of administrative cooperation in the field of taxation, has been transposed to the Portuguese legislation, reviewing the exchange information mechanisms between tax authorities and aiming at a more effective action against tax evasion and fraud at an international level.