Clarifications concerning the obligation to submit the transfer pricing documentation to the Portuguese Tax Authorities have been published

Portugal - 01 / 07 / 2020

Tax Alert Portugal

A set of clarifications was made available in the official website of the Portuguese Tax Authorities (“AT”) regarding the obligation to submit the transfer pricing file to which some taxpayers are subject (please check our previous Tax Alert), following the amendments introduced by Law no. 119/2019, 18 September, to numbers 3 and 4 of article 130 of the Corporate Income Tax (“IRC”) Code.

We highlight below the most relevant ones:

Transfer pricing documentation organized by Master File / Local File will be accepted by AT, in accordance with Action 13 (Final Report) of the Base Erosion and Profit Shifting (“BEPS”) OECD project, as long as it contains all the elements listed in articles 14 to 16 of the Ministerial Order no. 1446-C/2001, 21^st December.
In cases where part of the information to be reported is common to several entities under the special taxation regime of company groups (“RETGS”), AT accepts that such information is incorporated on the Master File and delivered only by the dominant company of the group, as long as all the other companies make an explicit reference in their Local Files that such delivery was made.
The alignment of the terms and conditions agreed, accepted and practiced by the taxpayers in transactions with related entities with the arm’s length principle must be proved regarding all controlled transactions carried out, whether active and passive.
The preparation of transfer pricing file constitutes a separate obligation from the preparation of the tax file, provided for in article 130 (1) of the IRC Code.
The deadline for the submission of the transfer pricing file is the same as the one for the submission of the Annual Accounting Information (“IES”) (paragraph c) of no. 1 of article 117), i.e. the 15^th July or, for taxpayers with a tax period different from the calendar year, the 15^th day of the 7^th month following the date of the end of the tax period. Nevertheless, taking into account the pandemic derived from Covid-19, the delivery obligation may be met, exceptionally, until the 31^st August 2020 (Order no. 153/2020.XXII of 24^th April issued by the Secretary of State for Tax Affairs).
Transfer pricing documentation may be sent to AT by email ([email protected]), in a single email if it does not exceed 10 MB, or in several emails whenever necessary. Alternatively, it may be also delivered in the Large Taxpayers Unit facilities, preferably in digital format.
The AT communication also states that the failure to submit the transfer pricing documentation constitutes an infraction punished with a penalty which may vary from €500 to €10,000, plus 5% for each day of delay (no. 6 of article 117 of General Taxation Infringements Law).