Portugal-Transfer pricing law changes allow more unilateral APAs

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 counter party, are now possible regardless of the existence of an income tax treaty.

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).


March 28, 2014


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