Portugal Approves Landmark Public Country-by-Country Reporting Legislation

September 5, 20230

In a significant development for the world of taxation, Portugal has enacted Decree-Law No. 73/2023, transposing EU Directive 2021/201 on public country-by-country (CbC) reporting. This Decree-Law enters into force on August 24 and takes effect for periods beginning on or after June 22 2024. This progressive legislation marks a pivotal shift in transparency and accountability for multinational corporations operating within the country. In this article, we delve into the key provisions and implications of this groundbreaking law, targeting tax professionals, investors, and potential clients seeking insights into the latest developments in taxation. 


Mandatory Public Reporting for Multinational Groups 

One of the central pillars of Decree-Law No. 73/2023 is the introduction of mandatory public reporting for multinational groups with consolidated revenues exceeding €750 million in each of the last two tax periods. These corporations are now obliged to disclose detailed information about their global transactions. This includes not only profits earned in various countries but also essential data such as the number of employees, a description of activities, turnover figures, and a comprehensive breakdown of income taxes and retained earnings. The reports must be made available on the reporting company’s website within 12 months following the end of the fiscal period. They should be accessible free of charge, presented in the language used for the financial statements, and at least one official language of the European Union. 


Comprehensive Geographical Scope 

The scope of CbC reporting under this legislation is far-reaching. Multinational groups are required to report on their activities in each EU Member State and in all third countries that are listed by the EU as non-cooperative jurisdictions for tax purposes. Additionally, they must provide an aggregated overview of their activities in other countries. This expansive coverage ensures that a comprehensive picture of a corporation’s global operations is available to the public. 


Transparency Through Digital Channels 

In an era where information dissemination is increasingly digital, Decree-Law No. 73/2023 embraces this trend by mandating that CbC information be published on the parent company’s website. Should the parent company not be based in the EU, the subsidiary or branch’s website can serve as the platform for disclosure. This information must be available in an official language and, significantly, in one of the official languages of the EU. Furthermore, this data must remain accessible to the public for at least five years, ensuring that stakeholders have a reliable historical record. 


Entities Under Statutory Audit Scrutiny 

Entities subject to statutory audit face additional responsibilities under this legislation. They are required to declare whether they are obliged to publish the CbC report for the preceding period. In case of an obligation, they must specify whether the report was indeed published in compliance with the law’s requirements. This provision underscores the importance of adherence to transparency and reporting standards, particularly for corporations undergoing audit scrutiny. 


Implications and Opportunities 

For tax professionals, Decree-Law No. 73/2023 represents a shift in the regulatory landscape, necessitating a deeper understanding of CbC reporting requirements. Investors keen on making informed decisions will now have access to richer data when assessing the financial health and tax practices of multinational corporations. 

Furthermore, this landmark legislation opens doors for tax technology and transfer pricing service providers. As corporations grapple with the complexities of compliance, there is a growing demand for sophisticated solutions that can streamline reporting processes and ensure accuracy. 


In conclusion, Portugal’s enactment of Decree-Law No. 73/2023 aligns the nation with global efforts to enhance transparency and corporate responsibility in the realm of taxation. This legislation not only sets a precedent within the EU but also underscores the growing importance of comprehensive CbC reporting in an interconnected world. As tax professionals, investors, and service providers adapt to this new landscape, one thing is clear: transparency is the new norm, and those who embrace it will thrive in the evolving tax ecosystem. 


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