Pillar Two - Portugal adopts the Global Minimum Tax

In brief

Law 41/2024, of 8 November, published in the Official Gazette, transposes into national legislation Council Directive (EU) 2022/2523 of 15 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups whose annual consolidated revenue is equal to or greater than 750 million euros (Pillar Two Directive). 

This new regime, formally designated as the Global Minimum Tax Regime (“Regime do Imposto Mínimo Global” or “RIMG”), follows the model rules developed by the OECD/G20 Inclusive Framework. It introduces a new top-up tax when the effective tax rate of a covered group, in any of its jurisdictions, calculated according to the newly approved rules, is less than 15%.

In detail

The Law introduces the Global Minimum Tax (“Regime do Imposto Mínimo Global” or RIMG), which includes:

• The Income Inclusion Rule (IIR): This rule requires the ultimate or intermediate parent entity of a group to calculate and pay a top-up tax on the profits of its constituent entities located in a jurisdiction where their aggregated effective tax rate is less than 15%.  
• The Undertaxed Profits Rule (UTPR): This rule ensures that the constituent entities of a multinational group pay the portion of the top-up tax that was not collected by the IIR;
• The Qualified Domestic Minimum Top-up Tax (“QDMTT”): This tax is applicable to the profits of all constituent entities located in Portugal when the group determines an effective tax rate of less than 15% in this jurisdiction.

The Law establishes various transitional provisions, notably the safeguard rules based on the Country-by-Country Report (CbCR), through which the tax due may be reduced to zero in the first three years of the regime's application. The reporting and sanctioning framework applicable is also established.

The Law is effective for fiscal years beginning on or after 1 January 2024, except for the UTPR rule, which generally applies to fiscal years beginning on or after 1 January 2025.

Following the amendments introduced to the IAS 12 accounting standard in May 2023, the entities covered should evaluate and reflect the potential impacts of this regime in their financial statements for the fiscal year 2024.

^{© 2024 PwC. This communication is of an informative nature and intended for general purposes only. It does not address any particular person or entity nor does it relate to any specific situation or circumstance. PricewaterhouseCoopers Tax Services TLS, Lda. We will not accept any responsibility arising from reliance on information hereby transmitted, which is not intended to be a substitute for specific professional business advice.}