Article 121-A of Portugal’s Corporate Income Tax Code establishes the requirements for Country-by-Country Reporting (CbCR) for multinational groups operating in Portugal. This provision aligns with international standards, particularly the OECD’s BEPS Action 13 and relevant EU directives.

Who Must File

The obligation to submit a CbCR applies to:

• The ultimate parent company (or its substitute) of a multinational group with total consolidated turnover of at least €750 million in the preceding tax year, if resident in Portugal.
• Portuguese subsidiaries of foreign multinational groups, under certain conditions, such as when the foreign parent is not required to file a CbCR in its jurisdiction, there is no effective information exchange agreement, or there is a systemic failure in the parent’s jurisdiction.

Content of the CbCR

The report must include, on an aggregate basis by country or jurisdiction:

• Gross income, distinguishing related and unrelated party transactions
• Earnings before tax
• Amount of corporate income tax due and paid (including withholding taxes)
• Share capital, retained earnings, and other equity items
• Number of full-time employees (or equivalents)
• Net value of tangible assets (excluding cash and equivalents)
• List of all group entities (including permanent establishments), their tax residency, and main business activity
• Any other relevant information and explanations as needed.

Deadlines and Penalties

• The CbC report must be filed within 15 months after the end of the group’s fiscal year (18 months for the first reporting period).
• Failure to submit the report can result in penalties ranging from €1,000 to €20,000.

International Exchange

Portugal exchanges CbC reports automatically with other jurisdictions under the OECD Convention on Mutual Administrative Assistance, bilateral tax treaties, or tax information exchange agreements.

In summary, Article 121-A ensures transparency in the tax affairs of large multinational groups by requiring detailed annual reporting of their global activities and tax positions to the Portuguese tax authorities, in line with international standards.