• Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 3/28/2014

Portugal - Transfer pricing law changes allow more unilateral APAs 

March 28: Changes to Portugal’s corporate income tax law, enacted for 2014, also included amendments to the transfer pricing rules.

For an earlier discussion of the corporate tax law changes in Portugal, read TaxNewsFlash-Europe.

Transfer pricing rules amendments

The tax law amendments concerning transfer pricing include the following items:

  • Unilateral advance pricing agreements (APAs) that were previously limited to situations in which there was no income tax treaty between Portugal and the home country of the counterparty, are now possible regardless of the existence of an income tax treat

  • The relationship threshold for the transfer pricing rules to apply between parties was changed to 20% (from 10%) of the share capital or voting rights.

  • The “economic dependence” concept used to define a special relationship was clarified and now provides for the existence of special relationship between entities whose legal relationship allows, by its terms and conditions, the control of the management decisions of the other, arising from facts outside the commercial or professional relationship itself.

  • The transfer pricing rules apply not only to the transactions between a permanent establishment located in the Portuguese territory and its foreign headquarters or other foreign permanent establishments, but also to transactions between resident entities in Portugal and all foreign permanent establishments.

  • Books, accounts, and supporting documents must be retained for a period of 12 years (previously 10 years).

KPMG observation

The Portuguese corporate income tax reform changes are viewed by tax professionals as providing a number of opportunities (but also challenges) for multinational companies with operations in Portugal. In light of these changes, prudent companies / groups would consider conducting a specific impact analysis of these provisions.

Also, the possibility to negotiate unilateral APAs in Portugal is seen as providing new opportunities for multinational groups that may want tax certainty, given the potential reduction of tax controversies and the related transfer pricing risk from a Portuguese perspective.

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

Catarina Breia


Luis Magalhaes



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