Portugal transposed the EU DAC6 rules into law on July 21, 2020. This EU Directive covers the mandatory automatic exchange of tax information related to reportable cross-border arrangements. Following this implementing law, the Portuguese tax authorities (PTA) published guidelines on the practical implementation of DAC6 in Portugal. The PTA’s guidelines may create unexpected reporting obligations in Portugal for a ‘relevant taxpayer’ regarding cross-border arrangements when a Portuguese nexus exists.
The takeaway: While many taxpayers have been subject to DAC 6 reporting obligations for a while, these Portuguese guidelines add a new level of complexity with possible additional reporting requirements.
Under the PTA’s guidelines on the implementing law, a ‘relevant taxpayer’ must report in Portugal either a cross-border or a domestic arrangement, regardless of its place of tax residence, whenever there is a connection with Portugal, as follows:
Observation: Under the guidelines, the PTA is taking a broad approach with respect to reportable obligations by the relevant taxpayer under DAC6 following the implementing law. Namely, a relevant taxpayer with a Portuguese nexus may also be required to report in Portugal the filing of information on an arrangement that already was reported by itself, another relevant taxpayer, or by the intermediary, in another EU Member State.
Under the implementing law, a Portuguese nexus exists for a given relevant if the taxpayer:
Observation: The PTA’s interpretation may create reporting obligations that otherwise might not arise, namely, those cases of reportable arrangements where an intermediary or a relevant taxpayer reported an arrangement in another EU Member State and/or where no Portuguese intermediaries exist, no tax advice was provided in Portugal, or the Portuguese tax advisor does not have complete information regarding the arrangement. If any of these situations has a Portuguese nexus as indicated above, reporting obligations apply.
Lack of reporting is punishable by fines that range between EUR 3,000 and EUR 160,000, per reportable arrangement. The reporting of arrangements under DAC6 is subject to automatic exchange of information between EU tax authorities.