Executive Summary
General Requirements
- Transfer pricing in Portugal is governed by Article 63 of the Corporate Income Tax Code and Ministerial Order no. 268/2021.
- The framework mandates that commercial or financial transactions between related parties comply with the arm’s length principle.
- Related party status is triggered when one entity exercises significant influence over management decisions, which is presumed at a 20% capital or voting rights threshold.
- Compliance obligations apply to both domestic and cross-border transactions, as well as dealings between resident entities and their foreign permanent establishments.
Documentation Requirements
- Taxpayers must maintain contemporaneous documentation consisting of a Master File and a Local File following the OECD three-tier approach.
- Documentation must generally be prepared in Portuguese, though English may be accepted with valid justification provided the authorities do not demand a translation.
- Entities under the authority of the Large Taxpayers Unit are required to submit their transfer pricing files by the 15th day of the seventh month after the fiscal year-end.
- All companies engaged in related-party transactions must file Annex H of the Simplified Business Information (IES) return annually to disclose transaction nature and values.
Results of Non-Compliance
- Failure to submit or prepare transfer pricing documentation is subject to penalties ranging from EUR 500 to EUR 10,000, increased by 5% for each day of delay.
- The provision of inaccurate information in documentation or tax returns can result in fines between EUR 375 and EUR 22,500.
- A taxpayer who refuses to submit requested documentation faces a maximum penalty of EUR 150,000.
- Non-compliance shifts the burden of proof to the taxpayer and grants the tax authority the right to apply secret comparables during assessments.
Country Specific Information
- The documentation obligation specifically applies to taxpayers with total annual income equal to or exceeding EUR 10 million.
- Safe harbor guidelines exist for specific transactions such as intra-group financing and management services for small and medium-sized enterprises.
- Benchmarking studies must adhere to a strict 20% independence threshold for selected comparable companies.
- Recent regulatory changes have implemented Public Country-by-Country Reporting for fiscal years beginning on or after 22 June 2024.
Compliance Table
| Document | Deadline | Language | Thresholds, Scope & Penalties |
| Local File | 15th day of 7th month post-FY (July 15 for calendar year). | Portuguese (English may be accepted with justification). | Turnover $\ge$ EUR 10M. Required for transactions > EUR 100k per counterparty or EUR 500k total. No threshold for blacklisted jurisdictions. Penalty: EUR 500–10k + 5% per day late. |
| Master File | 15th day of 7th month post-FY (July 15 for calendar year). | Portuguese (English may be accepted with justification). | Turnover $\ge$ EUR 10M. Applies globally for eligible groups. Local specific content requirements exceed OECD standards. Penalty: EUR 500–10k + 5% per day late. |
| CbC Notification | Last day of the 5th month following the fiscal year-end (May 31 for calendar year). | Portuguese. | Group revenue $\ge$ EUR 750M. Mandatory for all local constituent entities of an MNE group to identify the reporting member. Penalty: EUR 500–10k + 5% per day late. |
| CbC Report | 12 months after the last day of the reporting fiscal year. | Portuguese (English may be accepted). | Group revenue $\ge$ EUR 750M. Filed by the ultimate parent or surrogate entity. Penalty: EUR 500–20k + 5% per day late. |
| Other / SMEs | 15th day of 7th month post-FY. | Portuguese. | Turnover < EUR 10M. Entities qualify for a simplified documentation model unless transacting with blacklisted jurisdictions. |
Disclaimer: This information is obtained from secondary sources and is included for informative purposes. It should be confirmed by a local advisor.
