Ordinance No. 51/2019 in Portugal refers to a modification of the local finance law, enacted on August 16, 2019, as part of the country’s broader administrative decentralization process. This ordinance specifically created a decentralization financing fund and redefined how municipalities participate in VAT revenues. It was implemented alongside Law No. 50/2018, which transferred various powers from the state to local authorities and intermunicipal entities to enhance efficiency, local governance, and territorial cohesion.

Ordinance No. 51/2019 in Portugal is associated with the decentralization of administrative powers and the creation of a decentralization financing fund, redefining how municipalities participate in VAT revenues. The main changes include:

• Establishment of a fund to finance the transfer of new responsibilities from the central government to municipalities.
• New rules for sharing VAT revenue with local authorities.
• Implementation of mechanisms to ensure municipalities have the financial resources needed for their new competencies.

Country by Country Reporting

Ordinance No. 51/2019 in Portugal is directly related to the implementation and enforcement of country-by-country reporting (CbCR) requirements for multinational enterprises (MNEs). Specifically, this ordinance introduced a new transfer pricing (TP) disclosure form that must be filed by taxpayers for fiscal years starting on or after 1 January 2019. The form standardizes the reporting of transactions, making it easier for tax authorities to identify and monitor transfer pricing issues and to ensure compliance with CbCR obligations.

Key Points:

• Ordinance No. 51/2019 mandates detailed TP disclosures, supporting the broader CbCR framework required by OECD BEPS Action 13 and EU directives.
• Failure to comply with CbCR obligations, including notification and submission of the CbC report, can result in significant penalties under Portuguese law.
• The ordinance complements other legislative measures in Portugal that require MNEs with consolidated revenues above €750 million to file CbC reports, aligning with international standards for tax transparency.