January 31, 2024
Background
The European Commission has initiated an infringement procedure against Portugal and eight other Member States due to the failure to communicate national measures transposing the Minimum Corporate Income Tax Directive (EU Directive 2022/2523 of the Council dated December 14, 2022), which should have been implemented in domestic legislation by December 31, 2023.
Implications
In response to the non-compliance, the Commission has formally notified the eight Member States.
If the concerned countries do not respond to the formal notice letters and/or fail to fulfill the transposition obligations within two months, the Commission may issue a reasoned opinion of non-compliance.
In the case of Portugal, the European Commission has granted a two-month period to transpose the law concerning a minimum effective tax rate on the profits of multinational companies.
Failure to comply may lead the Commission to issue a reasoned opinion – the next stage in the infringement process – potentially resulting in legal actions against Portugal.
What is the Minimum Corporate Income Tax Directive?
The Minimum Corporate Income Tax Directive of the European Union, in effect since January 1, aims to introduce a minimum effective tax rate of 15% on large companies operating in EU Member States.
It applies to both multinational corporations (groups of companies) and large national groups with consolidated financial revenues exceeding 750 million euros annually.
The Directive follows the Global Agreement reached by the G20 and the OECD and seeks to create a more equitable and stable global tax system, preventing a downward trajectory in corporate taxation (“race to the bottom”) and erosion of taxable bases in favor of fiscally more favorable regimes.
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The information above is not intended to be an exhaustive analysis of all the changes to the current legal regime, but a selection of those that we believe to be the most relevant, and do not dispense with consulting our Company and/or the diplomas to which they refer.
For more information contact: Catarina Breia (+351 91 7575 832 or cbreia@pt-nexia.com)) from our Tax Department.