European Union: Portuguese EU Mandatory Disclosure Rules Draft Legislation

Last Updated: 26 June 2019
Article by Joana Pires De Mello and António Moura Portugal

Portugal has published draft legislation regarding the implementing of the EU Directive on mandatory disclosure rules (Council Directive 2018/822, also known as DAC 6).

We list below some of the key features of the draft legislation:

Reportable arrangements

As per the Portuguese draft legislation, an arrangement is reportable if:

  • the arrangement is considered to be a domestic arrangement or it is a cross-border arrangement (as defined by DAC 6); and
  • the arrangement meets at least one of the DAC 6 hallmarks or the additional Portuguese hallmarks.

For non-domestic arrangements, the scope of the taxes covered under the Portuguese draft legislation meets the directive and applies to all taxes with the exception of VAT, customs duties, excise duties and compulsory social security contributions. However, the Portuguese draft legislation includes VAT in the covered taxes in domestic arrangements and cross-border arrangements that are to be applied or produce effects, totally or partially, in Portugal.


In addition to the directive's hallmarks, the Portuguese draft legislation includes additional hallmarks, extensions to the scope of the DAC6 hallmarks, and clarifications on the interpretation of the DAC6 hallmarks:

  • In addition to the hallmarks under category A of DAC 6, which contains three hallmarks that are subject to the Main Benefit Test (MBT), the Portuguese draft legislation has added an arrangement that excludes or limits the responsibility of the relevant taxpayer, the intermediary or any other participant in the arrangement.
  • Under the specific hallmark (Category B under DAC 6) subject to the MBT, the Portuguese draft legislation has added an arrangement which includes the participation of persons or entities without legal personality not subject to tax, or are fully or partially exempt or taxed more favorably.
  • On the specific hallmark on the conversion of income subject to the MBT (DAC 6 hallmark B2), the Portuguese draft legislation extends it to cover situations where the aim is to obtain a deduction of payments taxed more favorably, exempt or not subject to tax at the level of the beneficiary, or to obtain a deduction related to the depreciation of an asset by more than one entity.
  • On the specific hallmark on cross-border arrangements not subject to the MBT (DAC 6 hallmark C1 b) ii)), the list of non-cooperative jurisdictions has been extended to include all countries, territories or regions on the Portuguese blacklist (currently 81 countries, territories and regions).
  • On the specific hallmark on cross-border arrangements subject to the MBT (DAC 6 hallmark C1 b) i)), it has been clarified that an almost nil tax rate means a nominal tax rate lower than 1% or an effective taxation below 60% of the tax that would have been paid in Portugal.
  • On the specific hallmark related to transfer pricing safe harbors (DAC 6 hallmark E1), the draft legislation clarified that unilateral safe harbors should only trigger reporting obligations if they are not foreseen in the international consensus stated in the OECD transfer pricing guidelines. This means, for example, that a 5% safe harbor for low value-added services would not trigger reporting obligations in Portugal.

Who has to report?

The Portuguese draft legislation defines an intermediary by reference to Portuguese connection. The primary reporting obligation falls on these Portuguese intermediaries. Further, intermediaries are always required to report domestic arrangements, even if they also have a cross-border feature and have already been reported in another EU member state.

Relevant taxpayers with a Portuguese connection (residency, permanent establishment, income source and activity) – including entities without legal personality – may have a reporting obligation in Portugal. Although there may be an intermediary, relevant taxpayers are required to report the arrangements when becoming aware that the intermediary did not comply (regardless of the reason) with the primary reporting obligation. Relevant taxpayers are always required to report domestic arrangements, even if they also have a cross-border feature and have already been reported in another EU member state.

Exception from reporting obligation based on legal professional privilege

Importantly, the Portuguese draft legislation does not provide for any reporting exemptions based on legal professional privilege (LPP). Therefore, intermediaries that would otherwise benefit from LPP in Portugal will not be exempt from the reporting obligation. This aspect is likely to be discussed further, and an exemption based on LPP may yet be introduced.

Reporting deadlines

The Portuguese reporting deadlines are expected to fully align with DAC 6 deadlines. However, for domestic arrangements, the retroactive reporting requirement will cover arrangements made available for implementation, ready for implementation or where any of the steps is implemented between the date in which the Portuguese legislation enters into force and July 1, 2020.

In the case of multiple intermediaries and/or relevant taxpayers, the Portuguese draft legislation provides that an intermediary and/or a relevant taxpayer will be exempt from the reporting obligation if they prove to the tax authority that the reporting was already completed in another EU member state or in Portugal by another intermediary or relevant taxpayer within ten days of the reporting deadline.

If the relevant taxpayer needs to report due to a failure to report by the intermediary, a 20-day extension is included in the draft legislation to comply with this obligation.

Under the Portuguese draft legislation, the tax authority can request additional information from the intermediary/relevant taxpayer, which should be provided within 10 to 20 days.


Penalties ranging from EUR6,000 to EUR80,000 are applicable for any failure to report or a delay in reporting by intermediaries/relevant taxpayers, where it is proven that the arrangement was already reported in another EU member state or by another intermediary/relevant taxpayer. Payments of penalties imposed do not waive compliance with the reporting obligations. In addition, omissions or inaccuracies in the reported information and failure/delay in providing additional information when requested may be fined from EUR2,000 to EUR60,000 and EUR3,000 to EUR80,000, respectively.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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