PORTUGAL Trends and Developments Contributed by: João Riscado Rapoula and Hugo Leonardo, VdA
a global talent hub, provided that all application rules and eligibility criteria are carefully observed. VAT Groups in Portugal Portugal’s newly introduced VAT Group regime, estab - lished by Law 62/2025, reflects a decisive move towards greater efficiency and stability in the country’s business landscape. Taking effect from July 2026, this regime is aligned with the principles set out in Article 11 of the EU VAT Directive, enabling groups of com - panies to consolidate their VAT positions and optimise their financial and administrative management. At its core, the VAT Group regime is designed to treat legally distinct entities as a single taxable person when they demonstrate close financial, economic and organisational links. By focusing on the consolidation of VAT balances across the group, the regime offers a solution to streamline cash flows and centralise tax administration – reducing the complexity and ineffi - ciencies often associated with monthly VAT payments and refunds. Importantly, Portugal’s approach distinguishes itself from similar European regimes by maintaining VAT on intra-group transactions. Rather than focusing on exemption, it emphasises operational transparency and simplification, while still delivering substantial efficiency gains through the offsetting of creditor and debtor VAT positions and centralised management. This new framework is directly aligned with Portugal’s broader strategy to create a stable business environ - ment and provide flexible alternatives for corporate groups. By reducing inefficiencies and enhancing cash management, Portugal is strengthening its attractive - ness as an investment destination, supporting sus - tained growth and innovation for both domestic and international investors. Pillar Two implementation Portugal has successfully transposed the EU’s Pillar Two Directive (Council Directive (EU) 2022/2523 of 15 December 2022), which aims to establish a global minimum tax level for multinational enterprises (MNEs) and large-scale domestic groups. Law 41/2024, effec - tive from 9 November 2024, applies to entities with annual consolidated revenue equal to or greater than
EUR750 million. Within this scope, the Portuguese Ministry of Finance, through Ordinance 290/2025/1, has approved the Modelo 62 Registration Declara - tion, which is designed to satisfy the initial reporting obligations under this new framework. The global minimum tax regime ( Regime do Imposto Mínimo Global – RIMG) introduces a global minimum effective tax rate (ETR) of 15%. The primary objective of this regime is to mitigate tax competition and curb profit shifting to jurisdictions with lower tax rates. The RIMG is structured around three fundamental rules: • Income Inclusion Rule (IIR): According to this rule, a group’s ultimate or intermediate parent entity must calculate and pay a top-up tax on profits of its constituent entities located in a jurisdiction where the aggregate ETR is below 15%. • Undertaxed Profits Rule (UTPR): This rule ensures that any remaining top-up tax not collected under the IIR is paid by the constituent entities of an MNE group. • Qualified Domestic Minimum Top-Up Tax (QDMTT): This rule applies to the profits of constituent enti - ties in Portugal if the group’s ETR in Portugal is below 15%. One notable feature of Ordinance 290/2025/1 is the option – rather than an obligation – for a single dec - laration submitted by a designated local entity to cover all Portuguese constituent entities. The decla - ration must identify the ultimate parent or designated reporting entity located in a jurisdiction with a quali - fied information exchange agreement. Key identifi - cation details, including foreign and Portuguese tax numbers (as appropriate), jurisdiction, legal name and address, must be provided. If no qualified information exchange agreement exists, submission of the GloBE Information Return will be required in Portugal. Raising of financing for non-resident investors: Portuguese Special Debt Securities Regime gets increased attention Under the Portuguese Special Debt Securities Regime (Decree-Law 193/2005), interest and capital gains derived from Portuguese public and private debt
501 CHAMBERS.COM
Powered by FlippingBook