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Portugal: Details of transfer pricing documentation requirements, other recent developments

Portugal: Transfer pricing documentation requirements

Transfer pricing documentation in 2020 must be submitted to the Portuguese tax authority by all “major taxpayers” by a deadline of no later than the 15th day of the seventh month following the end of the corresponding tax year.


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This transfer pricing documentation submission requirement was effective 1 October 2019, and applies for taxpayers with fiscal years beginning 1 January 2019 and later. 

Determining “major taxpayers”

For these purposes, “major taxpayers” (grandes contribuintes) are identified by the following criteria:

  • Entities:
    • Under the supervision of the Bank of Portugal
    • Under the supervision of the Insurance and Pension Funds Supervision Authority (Autoridade de Supervisão de Seguros e Fundos de Pensões), with the exception of those that exercise the insurance mediation activity (insurance brokers)
    • Covered by the collective investment scheme rules and under the supervision of the Securities Market Commission (Comissão do Mercado de Valores Mobiliários)
    • With a turnover greater than €200 million
  • Holding companies incorporated under Decree-Law no. 495/88 dated 30 December 1988, with total income greater than €200 million
  • Entities with a global amount of taxes paid greater than €20 million
  • Companies not covered by any of the preceding bulleted items that are considered “relevant,” in particular in view of their corporate relationship with the companies covered by these items
  • Companies under a tax group (Regime Especial de Tributação de Grupos - REGTS), in which any entity of the tax group, either controlling or controlled, is covered by the conditions defined in any of the preceding bulleted items
  • Individuals with a total income greater than €750,000
  • Individuals who hold, directly or indirectly, or are the beneficial owners of assets, including property and rights, having a value greater than €5 million
  • Individuals whose wealth income is consistent with the income or assets referred to in the immediately preceding bullets (referencing income greater than €750,000 or asset value greater than €5 million)
  • Individuals, as well as companies and other entities, that are not covered by any of the preceding bulleted items and that are considered relevant in view of their legal or economic relationship with the taxpayers covered by those items

Read also a list of entitles classified as “major taxpayers” on the website (Portuguese) of the tax authority.

KPMG observation

The number of companies potentially covered by the obligation to submit transfer pricing documentation can be greater than the 1,644 entities listed on the tax authority’s website because Annex 3 does not include companies under a tax group (REGTS), in which any entity of the tax group, either controlling or controlled, is subject to the rules for major taxpayers. Therefore, a case-by-case analysis would be applied.

Second threshold

Notwithstanding the above listed rules, a second threshold applies, and only “major taxpayers” that recorded a total revenue, with reference to the previous fiscal year, equal to or greater than €3 million must prepare and submit the transfer pricing documentation.

Country-by-country reporting

Finally, the transfer pricing documentation rules do not follow the base erosion and profit shifting (BEPS) Action 13 recommendations—that is, Master file and Local file—except the Portuguese rules do follow the country-by-country (CbC) reporting recommendations. The domestic requirements are similar to those disclosed in the 2010 OECD Guidelines, with more detail (industry, restructurings, among others). Domestic documentation must be prepared in the Portuguese language, as a rule, and the local independence criterion must be attended (the tax authorities may accept European benchmarkings rather than domestic or Iberian analysis; however, the final set must be adjusted to the local independence criterion). 


Moreover, the use of the transactional net margin method (TNMM) is limited to entities that assume fewer functions and risks within the value chain and counterpart, and may not be used to test overall profitability except if the total (or almost total) income or costs of the routine activity are deemed with related parties or it is possible to apply to desegregated financials. A court issued a final decision in November 2019 that was not favorable to the taxpayer, with reference to TNMM and overall profitability and internal comparables. 


For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services group in Portugal:

Susana Pinto | +351 2124 87391 |

Luísa Silva | +351 2124 87420 | 

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