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Mandatory Country-by-Country Public Reporting for Transnational Corporations in Portugal

Portugal has recently enacted Decree-Law No. 73/2023, aligning its national legislation with European Union Directive 2021/201 on country-by-country public reporting (CbC).

Portugal Cbc

Key changes to affect transnational corporations

Effective as of August 24, 2023, the new Decree-Law applies across financial periods starting from June 22 of the subsequent year onward. The primary objective of the above legislative act is to bolster transparency and accountability for transnational corporations operating within the jurisdiction of Portugal.

Decree-Law No. 73/2023 introduces compulsory public reporting for transnational company groups or individual companies with a consolidated revenue of over EUR 750 million in each of the last 2 tax periods. They must submit information on the company and its global transactions, and here’s what the above information shall include:

  • profits recorded in countries of operation
  • employee headcount
  • description of company activities
  • turnover figures
  • unallocated profit amounts
  • information regarding the payment of applicable income taxes, and more.

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Under the established regulations, financial reports must be uploaded to the website of the reporting company within 1 year following the last day of the fiscal period. These reports will be accessible free of charge. Additionally, specific formatting requirements apply: reports must be in 1 (or several) official EU languages. Importantly, such data will remain available to the general public for at least 5 years.

Following the regulations of the relevant EU Directive, multinational conglomerates shall furnish reports on their operations not only within each EU member state but also within any third-party countries designated as non-cooperative jurisdictions by the EU.

What is more, these corporations are obliged to submit a concise overview of their business activities in other jurisdictions. This step is essential to offer the public comprehensive insights into the corporation’s global activities. CbC (Country-by-Country) reporting will be published on the parent company’s website. However, in cases where the parent company is situated outside the European Union, the reports must be made available on the website of its subsidiary or branch operating within the EU.

Should a transnational company be subject to compulsory audits, additional responsibilities come into play. Such companies must disclose whether they are obliged to release a CbC report for the preceding fiscal period. If such an obligation does exist, the multinational corporation must confirm whether the corresponding accounts have indeed been published as provided for by the laws currently in force.

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On a final note

The new legislation applies to the ultimate parent companies of transnational groups that meet the specified threshold set in the regulatory act. Individual companies with income that matches the established threshold also come within the provisions of Decree-Law No. 73/2023. An exception to these regulations may be granted when such enterprises or groups exclusively operate within Portugal.

The said Decree-Law includes an optional provision that allows transnational groups subject to disclosure obligations and public reporting to postpone the disclosure of commercially sensitive information for no more than 5 years. Such an exemption may only be granted if the release of the above data could significantly harm the commercial standing of the organizations whose information is included in the reports. It’s essential to note that information concerning the group’s or company’s activities in non-cooperative jurisdictions must be included in the reports without any exceptions.

Industry experts emphasize that Portugal’s adoption of Decree-Law No. 73/2023 brings the country’s legislation in line with pan-European standards thus enhancing transparency and corporate responsibility in the field of taxation. Many EU member states are also addressing the said issue, taking measures to incorporate the provisions of the corresponding EU Directive into their legal frameworks.

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Interested in opening an account with a Portuguese bank or establishing a company in Portugal? International Wealth experts will provide you with information and assistance for various banking and business needs:

At International Wealth, our seasoned experts offer consulting and support services for those looking to establish a business presence and set up a company in Portugal. To learn more, please send us an inquiry to [email protected].

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