The concept of professional partnership is extended to include those which income arises in more than 75% of the combined or isolated performance of listed professional activities, as defined by article 151 of the Personal Income Tax Code, provided that (i) the respective number of partners is not higher than 5, (ii) none of the partners is a public law entity and (iii) at least 75% of the respective share capital is held by professionals carrying out the listed activities, total or partially, through the professional partnership.

It is expressly foreseen that entities that carry out a shareholding management activity and that hold participations that comply with the requirements of the “participation exemption” regime are excluded from the concept of pure (passive) asse t management entities, and therefore do not qualify for the tax transparency regime.


For purposes of applying the tax unit regime, the minimum percentage in the share capital of the participated entities is reduced to 75%, provided that such shareholding continues to grant more than 50% of the voting rights.

This new shareholding percentage can be indirectly achieved through an EU Member State or EEA resident company, provided that, in this last case, exists an obligation to administratively cooperate in tax matters identical to the one established within the EU.

When the dominant company of the group loses that status and becomes a participated company of another Portuguese resident entity that qualifies as dominant company for purposes of the tax unit regime, the latter may choose to continue to apply the tax unit regime.

Specific rules are introduced in respect of the carry forward of tax losses whenever changes occur at the level of the Group’s dominant company, notably in case the dominant company becomes a participated company of another already existing Group.

Finally, it is set forth that the lack of communication in due time of changes in the Group’s composition no longer determines the automatic cancellation of the tax unit regime.

Winding-up of Companies

The liquidation proceeds attributed to shareholders, deducted from the acquisition cost of the participations and other equity instruments, are from now on always qualified for tax purposes as a capital gain or capital loss.

When a capital gain results from a company’s winding-up it may benefit from the “participation exemption” regime, being therefore excluded from taxation provided that the necessary requirements are met.

When a capital loss results from a company’s winding-up it may be tax deductible, but only on the amount exceeding that resulting from the sum of the used tax losses within the scope of the tax unit regime and the distributed profits and reserves of the wounded - up company that have benefit from the “participation exemption” regime.

Capital losses arising from a company’s winding-up will not however be tax deductible if the wounded-up company is resident in a country, territory or region with a clearly more favorable tax regime or when the participations have been held for less than 4 years.

Finally, the amount of the capital loss deducted for tax purposes should be added to the taxable profit, increased by 15%, at the level of the shareholders of the wounded -up company, whenever they start undertaking the same activity that was performed by the wounded-up company in the 4 taxable years following the winding -up.


The concept of related entities is amended, namely through the increase of the percentage in the share capital of a company from 10% to 20% for purposes of qualification as related entities.

The cases of significant dependency between two entities within the carrying out of a business activity are now limited to the ones resulting from a legal obligation.

Transfer pricing rules are now expressly applicable to operations carried out between Portuguese resident entities and their foreign permanent establishments as well as to the ones carried out between those foreign permanent establishments.


A set of rules is introduced aiming at clarifying the Corporate Income Tax regime applicable to mergers, demergers, transfer of assets and exchange of shares that are not covered by the tax neutrality regime, notably in respect to income qualification and computation of the income liable to taxation, both at the level of the entities involved in these operations and at the level of the respective shareholders.


It is set forth that the valuation criterion to be used on the onerous transfer of shareholdings of the same nature and that grant identical rights is the “first in first out” (FIFO) criterion.

Notwithstanding, taxpayers may opt to apply the average wei ghted cost criterion, in which case the acquisition value of the shareholdings cannot be updated by the monetary coefficients foreseen in article 47 of the Corporate Income Tax Code, and to the extent that this alternative criterion applies to all shareholdings belonging to the same portfolio and is used for a minimum 3-year period.


The ordinary tax credit to avoid international juridical double taxation is now assessed by country, taking into account the total amount of income arising in respect to each country, with the exception of income attributable to foreign permanent establishments of Portuguese resident entities, in which case the computation is made on an individual basis.

The amount of the tax credit that cannot be deducted on the tax period in which it was generated due to lack of tax due may once again be deducted within the following 5 taxable years.


Some ancillary obligations have been simplified, notably by replacing the need to obtain previous authorizations from the Portuguese tax authorities for mere communications, as it is the case for instance of adopting a tax period different from the calendar year and the use of depreciation or amortization rates lower than the minimum rates.

The necessary formalities for waiving or reducing the domestic applicable withholding tax or the reimbursement of the tax withheld in respect to income obtained by non - Portuguese resident entities, pursuant to the provisions of the Agreements on the Avoidance of Double Taxation, any other International Law agreements or applicable Portuguese legislation, have been simplified.

In fact, it is now allowed the submission of the RFI-forms accompanied by a document issued by the tax authorities of the State of Residence of the beneficiary of the income confirming the latter’s tax residence in the period at stake as well as the liability to income tax in such State, as an alternative to submission of such RFI -Forms duly certified by the referred tax authorities.