Portugal has adopted the global minimum tax for large multinational and domestic groups, effective from 18 October 2024. This legislation aligns with Council Directive (EU) 2022/2523 and the OECD Pillar Two Model Rules.

The law introduces the Pillar Two income inclusion rule (IIR) and the undertaxed payment/profit rule (UTPR) to ensure a minimum tax rate of 15% for multinational enterprise (MNE) groups with annual consolidated revenue of at least EUR 750 million in at least two of the last four financial years. It also includes provisions for a qualified domestic minimum top-up tax (QDMTT).

The new legislation mandates compliance for Portuguese-based groups and foreign subsidiaries, requiring each entity to file a return identifying the responsible party for the Global Minimum Tax Information Return, due nine months after the relevant tax year ends, with a twelve-month extension for the first year.

Penalties for failing to meet filing obligations range from EUR 5,000 to EUR 100,000, plus an additional 5% per day of delay. Errors or omissions can incur penalties between EUR 500 and EUR 23,500. However, penalties may be waived in the first year if certain conditions are met.

The IIR and QDMTT will apply to tax years beginning on or after 1 January 2024, while the UTPR will take effect for tax years starting on or after 1 January 2025.

Earlier, Portugal’s Council of Ministers approved Draft Law 21/XVI/1 for implementing the Pillar Two global minimum tax, in line with Council Directive (EU) 2022/2523 of 14 December 2022 on 11 September 2024.

Portugal’s Minister of Finance Joaquim Miranda Sarmento, had announced the approval of the project bill for the transposition of the EU’s Pillar Two Directive.

This decision followed a public consultation period that began on Wednesday, 10 July 2024.