a) Which transactions must be documented (all transactions with associated enterprises, or only those which exceed a particular threshold)?
Portuguese taxpayers who are subject to the transfer pricing documentation rules must document all transactions with associated enterprises, including both resident and non-resident entities.
b) What is the definition of “associated enterprises” for the purposes of this requirement?
Under article 63 / 4 of the Portuguese Corporate Income Tax Code, for the purposes of the transfer pricing rules two entities are considered to be associated enterprises whenever one has significant direct or indirect influence over the management of the other. This is deemed to occur in the case of:
- An entity and shareholders of that entity (or their spouses or relatives) who have a direct or indirect shareholding representing at least 10% of the share capital or voting rights;
- Two entities in which the same (third) entity has a direct or indirect shareholding of at least 10%;
- An entity and the members of its corporate organs, or any board of administration, direction, management or supervision;
- Entities in which the majority of the board of directors is constituted by the same persons;
- Entities related by virtue of a subordination agreement or any other agreement of a similar nature;
- Entities in a dominant shareholding relationship as defined by the relevant legislation;
- Entities with a relationship of economic, commercial, financial, professional or legal dependence;
- Transactions between a resident entity and entities resident in a clearly more favourable tax regime (as listed in Ministerial Order 150 / 2004).
c) For EU countries, is the content of the documentation similar to that described in the EU Code of Conduct on transfer pricing documentation for associated enterprises (“EU TPD”)? If not, are taxpayers entitled to choose between the local requirements and the EU TPD?
Portuguese transfer pricing regulations as to the content of the documentation are compliant with the EU TPD.
d) Do taxpayers which are not established in your jurisdiction need to undertake to provide any specific information upon request? Can your tax authorities require the taxpayer in your jurisdiction to provide information which is located in another state?
No. The Portuguese tax authorities may only request information from Portuguese resident entities. As to information relating to non-resident entities or other jurisdictions, the Portuguese tax authorities may only request such information through the mechanisms provided under the exchange of information provisions in Tax Treaties entered by Portugal.
e) If comparable studies are to be provided, do the tax authorities generally accept regional benchmark studies (e.g. pan-European benchmark studies)?
The Portuguese tax authorities tend to prefer local comparables, but regional comparables may be allowed, particularly in situations where local comparables are limited.
f) What language(s) are to be used by taxpayers in submitting the transfer pricing documentation?
The transfer pricing documentation should be organized and filed in Portuguese. Reports in English tend to be accepted, but the Portuguese tax authorities may accept, refuse or require a translation into Portuguese.