PORTUGAL LAW AND PRACTICE Contributed by: Joana Torres Fernandes, José Manuel Pereira da Costa, Danielle Avidago, Javier Mateo, António Pratas Nunes, Joana Loureiro Veríssimo, Madalena Mourão and David Serras Pereira, LVP Advogados
CFC Rules Under Portugal’s Controlled Foreign Company rules, profits or income obtained by a non-resident entity may be attributed to a Portuguese tax resident entities where such income originates from a jurisdiction sub - ject to a clearly more favourable tax regime, provided the Portuguese resident holds, directly or indirectly, at least 25% of the share capital, voting rights, or rights over the income or assets of that entity. Blacklisted Jurisdictions Portugal has, by means of a specific ministerial order, identified an extensive list of jurisdictions considered to have a clearly more favourable tax regime. Income paid to or received from entities in those jurisdictions is subject to several tax aggravations. A tax rate of 35% applies to capital income and securities capital gains arising from or paid to those jurisdictions. Exit Tax Rules Where an individual taxpayer of Portuguese nationality transfers their tax residence to a jurisdiction identi - fied as having a clearly more favourable tax regime, that individual may continue to be treated as a Portu - guese tax resident for taxation purposes in the year of the transfer and the following four years, unless they can demonstrate that the transfer was motivated by legitimate reasons, such as the temporary exercise of an activity in that territory on behalf of an employer domiciled in Portugal. 5.8 Tariffs Portugal, as a Member State of the European Union, does not operate an independent tariff regime. Cus - toms and trade policy are an exclusive EU compe - tence, meaning that the tariffs applicable to goods imported into Portugal from third countries are those established under the EU Common Customs Tariff, applied uniformly across all Member States.
• the resale price method; • the cost plus method; • the profit split method; and • the transactional net margin method.
Where none of these methods can be applied due to the unique nature of the transactions or the absence of reliable comparable data, other generally accept - ed economic valuation techniques may be used, in particular where the transactions involve real estate rights, shares in unlisted companies, credit rights or intangibles. 5.7 Anti-Evasion Rules Anti-Avoidance Framework Portugal has a number of rules designed to prevent and combat tax avoidance and evasion. As a starting point, it should be noted that Portugal has a general anti-abuse rule, which may always be invoked where a situation considered abusive for tax purposes is at issue. Under this rule, arrangements or series of arrangements that are put in place with the principal purpose of obtaining a tax advantage that defeats the object or purpose of the applicable tax law, and that are carried out through an abuse of legal forms or are not considered genuine having regard to all relevant facts and circumstances, are disregarded for tax purposes. Taxation is then applied in accordance with the rules applicable to the transactions or acts that reflect the underlying economic substance, and the intended tax advantages are not recognised. The rule operates as a safeguard against aggressive tax planning. An arrangement is considered non-gen - uine to the extent that it is not carried out for valid economic reasons that reflect economic substance. An arrangement may consist of more than one step or part. In addition to the general anti-abuse rule, which may be invoked by the tax authority whenever it consid - ers a given structure or transaction to be abusive, a number of specific rules deserve mention.
6. Competition Law 6.1 Merger Control Notification
The Portuguese regulator competent to enforce com - petition law in Portugal, including the rules on merger control, is the Autoridade da Concorrência (Portu - guese Competition Authority, PCA).
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