PortugalAccounting and Audit
New anti-avoidance rules were published on 14 February 1995 which relate to transactions with or investments in non resident entities with a favourable tax regime. For these purposes a favourable tax regime is normally one where amounts of income are taxed a rate of less than 20% or the nominal income tax rate is 20% or less.
Payments made by Portuguese residents to such countries are now presumed not to be tax deductible for the payer unless they can be demonstrated to relate to actual services made or goods provided, were not of an abnormal character and the price paid was not excessive.
Where a Portuguese resident shareholder holds directly or indirectly more than 25% of a company in such a territory (or holds more than 10% where the total shareholding by Portuguese residents is more than 50%) then undistributed profits are treated as income of the shareholder and taxed on him in Portugal. In order to be exempt from such deemed income a number of specific requirements
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