Portugal: local rules

Portugal applies the arm's length principle through Article 63 of the Corporate Income Tax Code (CIRC). Related parties must use terms that independent parties would agree in comparable deals. Special relations include a holding of 20% or more of capital or votes, shared management, group control and a clear tax haven link (art. 63(4)). The tax authority can adjust taxable profit (art. 63(9)) and must make a matching adjustment for the other Portuguese taxpayer (art. 63(13)). Portaria 268/2021 sets the detailed rules and recommends following the OECD Guidelines (July 2017 version and later OECD guidance). It applies to tax periods starting on or after 1 January 2021 for the documentation rules.

A taxpayer with total annual income of EUR 10m or more must keep a transfer pricing file made of a Master File (Dossier Principal) and a Local File (Dossier Específico), delivered together (Portaria 268/2021 art. 17). Below EUR 10m no file is needed, and above it related-party deals of up to EUR 100,000 per counterparty and EUR 500,000 in total are also exempt, but never deals with tax haven counterparties. Small and medium enterprises that are not exempt can use a simplified file (art. 19). The file must exist by the IES deadline, 15 July for a calendar year, and be kept for 10 years (CIRC art. 130(1)). It is handed over when the tax authority notifies the taxpayer, but taxpayers followed by the Large Taxpayers Unit must deliver it with the IES (art. 130(3)). The IES must also say whether there were related-party deals and, if so, give the entities, amounts, methods and corrections (art. 63(7)).

CIRC art. 63(3) and Portaria art. 6 list five methods: comparable uncontrolled price, resale price minus, cost plus, profit split and transactional net margin. There is no fixed order. The taxpayer picks the most appropriate method based on the nature of the deal, reliable data and comparability (art. 6(2)). Another accepted valuation method may be used when the deals are unique or data is scarce, for example for real estate, unlisted shares, credit rights and intangibles. If comparable data gives a range with a high degree of comparability, no correction is needed when the price falls inside it, and a tax authority correction normally refers to the median (art. 6(5) and (6)). A comparability study can stay valid for three years if the facts do not change, with the financial data updated each year (art. 17(12)).

Not delivering the transfer pricing documentation, the CbC notification (Modelo 54) or the CbC report (Modelo 55) on time is fined EUR 500 to EUR 10,000, plus 5% for each day of delay (RGIT art. 117(6)). Omissions or errors in returns are fined EUR 375 to EUR 22,500, or a quarter of that range if no tax is due (RGIT art. 119). A late or missing Modelo 22 is fined EUR 150 to EUR 3,750 (RGIT art. 116(1)). For Pillar Two, a missing or late return is fined EUR 5,000 to EUR 100,000 plus 5% for each day of delay, and omissions or errors EUR 500 to EUR 23,500 (RIMG art. 51(1) and (2)). The Pillar Two fines are waived for fiscal years that start by 31 December 2026 and end before 1 July 2028 if the entity acted in good faith on a plausible reading or the error did not cut the tax due (art. 51(3)).

Law 41/2024 of 8 November 2024 adds the EU Pillar Two directive to Portuguese law as the Global Minimum Tax Regime (RIMG). It covers Portuguese entities of groups with revenue of EUR 750m or more in at least two of the four prior years. The top-up taxes (IIR and the Portuguese domestic top-up tax, ICNQ-PT) apply to fiscal years starting on or after 1 January 2024, and the UTPR to years starting on or after 1 January 2025 (2024 if the group parent is in an EU state that chose the deferral option). Three filings are due through the Portal das Finanças: Modelo 62 (registration, by the last day of the 9th month after year end, 12 months in the group's first year in scope), Modelo 63 (GloBE information return) and Modelo 64 (assessment and payment), both within 15 months, or 18 months in the first year in scope (RIMG art. 46). Despachos moved the 2024 Modelo 62 to the end of the 15th month after year end (31 March 2026 for a calendar year), the 2024 Modelo 63 and 64 to 30 September 2026, and the 2025 Modelo 62 to the end of the 12th month after year end (31 December 2026 for a calendar year). Since Lei 26/2026 no local GIR is needed if Modelo 62 says the parent or a designated entity files it in an EU state with qualified rules or in a country with a qualifying agreement.

The Modelo 22, IES, Modelo 54 and all Pillar Two deadlines say they apply whether or not the last day is a working day (CIRC arts. 120 and 121, RIMG art. 46), so they never move for weekends or holidays. Only the CbC report, which has no such wording, moves to the next working day: CPPT art. 20(1) moves a deadline that ends on a day when tax offices are closed (weekends and national holidays) to the next working day. The Secretary of State for Tax Affairs often extends the Modelo 22 by despacho (to 15 July 2024, 30 June 2025 and 30 June 2026 for calendar-year companies) and sometimes the IES (to 31 July 2024 and 25 July 2025), but no extension was found for the 2026 IES. Advance pricing agreements are available and last up to four years (CIRC art. 138), and matching adjustments and mutual agreement requests follow Portaria 268/2021 arts. 20 to 25. This research covers mainland rules.