PORTUGAL Law and Practice Contributed by: Francisco Cabral Matos, Rita Pereira de Abreu and Margarida Campelo, VdA
9.3 International Tax International tax issues have gained an increasingly high profile in Portugal, particularly as the country seeks to enhance its competitiveness and reputa - tion on the global stage. This heightened attention has influenced the country’s priorities, reflected in the expansion and updating of Portugal’s double tax treaty network (almost 80 treaties, including the new UK treaty effective from January 2026). Maintaining robust international tax relations, especially with Por - tuguese-speaking African countries, is also a strategic consideration. The public and policy focus on international tax mat - ters, along with Portugal’s drive to attract foreign investment, has ensured close alignment with inter - national initiatives such as the OECD/G20 BEPS rec - ommendations. This is evident in Portugal’s active implementation of BEPS-related measures – such as progressive reductions in the CIT rate, the extension of the Madeira International Business Centre regime (offering a 5% CIT for qualifying entities through 2026), and incentives for innovation and technology like SIFIDE II and the patent box regime. In summary, the prominent public and governmental profile of international tax issues in Portugal supports a proactive stance on BEPS, shaping both legislative action and treaty policy to balance competitiveness with compliance. 9.4 Competitive Tax Policy Objectives Please refer to 9.3 International Tax . Along with the measures mentioned above, one of Portugal’s clear strategies for becoming more com - petitive on the international and European stages is the progressive reduction of the CIT rate, which stood at 21% in 2024 and is scheduled to be reduced to 17% by 2028 (with a rate of 19% in 2026). 9.5 The Competitive Tax System Portugal’s competitive tax features that are most exposed to challenge are preferential or ring-fenced regimes that are not clearly tied to substantial local activity. Under EU law, tax measures – particularly regional incentives – must avoid harmful practices and comply with anti-avoidance and transparency stand -
• Action 5 (harmful tax practices): Patent box aligned to the OECD nexus approach; spontaneous exchange of advance tax rulings. • Action 6 (treaty abuse): Adoption of the OECD Mul - tilateral Instrument (MLI) with the principal purpose test. • Action 12 (mandatory disclosure): DAC6-based reporting of cross-border arrangements. • Action 13 (CbC reporting): Mandatory country-by- country reporting (CbCR) and exchange for large multinational enterprise groups. • Action 14 (dispute resolution): Enhanced MAP framework; MLI-based arbitration/clarified time - lines where opted. • BEPS 2.0 – Pillar Two: Global minimum tax enact - ed. 9.2 Government Policy and Objectives Approach Portugal has generally been supportive of the OECD/ G20 BEPS agenda, aligning domestic and EU meas - ures to restrain profit shifting, enhance transparency, and tie preferential regimes to substantial activity requirements. The EU’s anti-tax avoidance frame - work and automatic exchange rules, which Portugal applies, explicitly reference and operationalise BEPS outcomes (eg, CbCR and anti-abuse measures). This policy stance has also been invoked in EU state aid contexts involving Portugal to emphasise substance requirements and alignment with anti-avoidance rules. Pillar Two: Portugal is implementing the EU Minimum Tax Directive, which enacts the OECD Pillar Two rules (Income Inclusion Rule and Undertaxed Profits Rule) and permits a qualified domestic top-up tax. The 2025 amendment to the Directive on Administrative Coop - eration (DAC) further operationalises Pillar Two report - ing and exchange within the EU, reinforcing applica - tion of the GloBE framework. Overall impact areas in Portugal: Large companies subject to the 15% minimum will face top-up tax exposures, increased compliance obligations (such as GloBE information returns and exchanges), and potential adjustments to IP, financing and hold - ing structures. Tax administration will intensify risk assessment and cross-border information use under the EU administrative co-operation framework.
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