Portugal - Statistics on 2011 transfer pricing exams; audit prospects for 2012 

Transfer pricing is specifically referenced in a Memorandum of Understanding, signed by representatives of the Portuguese government, the European Commission, the International Monetary Fund (IMF), and the European Central Bank (ECB).

Also, transfer pricing is an item listed in Portugal’s Budget Law for 2012 and in a program to address tax avoidance issues (the program is known in English as the “Strategic Plan to Prevent Fraud and Tax and Customs Evasion”) for the period between 2012 and 2014.

As noted earlier this week—TaxNewsFlash-Transfer Pricing: Portugal: First APA is signed—the first Advanced Pricing Agreement (APA) and the recent release of statistics on 2011 transfer pricing examinations and the prospects for 2012 are important landmarks.

Statistics for 2011; prospects for 2012

Transfer pricing statistics for 2011 and transfer pricing prospects for 2012 reveal the following:

• In 2011, approximately 50 tax audits were performed with the support of the transfer pricing team of the Portuguese tax authorities. These tax examiners specifically focused on issues concerning intra-group financing transactions, sale of shares, intellectual property transference, payment of royalties, rendering of intra-group services, sale of goods, transfer of real estate, and business restructuring, among others.
• Transfer pricing adjustments resulting from the audited companies during 2011 totaled approximately €270 million.
• In early 2012, the tax authorities established a “large taxpayers unit” with the purpose of increasing the control and inspection of the corporate groups concerning transfer pricing issues.
• The number of tax auditors is expected to be increased to approximately 1,300 persons, thus reinforcing the existing transfer pricing team.



KPMG observation

Transfer pricing measures included in the budget and in the recently published strategic tax plan will have both a direct and an indirect effect for multinational groups conducting business in Portugal.




Given the current pressure on Portugal to reduce its budget deficit, and also because of the increased focus on transfer pricing for coming years, tax professionals believe that the Portuguese tax authorities will concentrate their efforts on transfer pricing audits because these examinations tend to result in large tax assessments.




Taxpayers may want to give serious consideration to certain avenues, such as entering into an APA, as a way to provide certainty for certain types of intra-group transactions.





For more information, contact a tax professional with KPMG in Portugal:




Luis Magalhães

+ 351 210 110 087




Catarina Breia

+ 351 220 102 353