Transfer Pricing: Complete Guide and Essential Rules

By Hugo Ribeiro, Certified Accountant · Member of the Order of Certified Accountants · HVR Business Consulting

Introduction to Transfer Pricing in Portugal In today's globalized economic landscape, managing transactions between entities belonging to the same business group has become a fundamental pillar of tax planning and regulatory compliance. In Portugal, the transfer pricing regime aims to ensure that commercial or financial operations carried out between entities with special relations are conducted under conditions identical to those that would be established between independent entities in comparable operations. This is known as the Arm’s Length Principle, an internationally accepted standard e…

Key Takeaways

• Apply the Arm's Length Principle according to Article 63 of the CIRC.
• Prepare the TP File if turnover exceeds €3M.
• Declare all special relations in Annex H of the IES annually.
• Use OECD methods to justify prices between group companies.

FAQ

What are special relations for transfer pricing purposes?

They exist when one entity exerts significant influence over another's management, such as 20% holdings or commercial dependency.

Who is required to prepare the Transfer Pricing File?

Companies with an annual turnover exceeding 3 million euros in the previous year.

What is the penalty for not having the transfer pricing file?

Besides high fines, the AT can make adjustments to taxable profit and the burden of proof shifts to the taxpayer.

How can I ensure legal certainty in my intra-group operations?

You can enter into an Advance Pricing Agreement (APA) with the Tax Authority, pursuant to art. 138 of the CPPT.