Portugal’s tax and customs authority, AT, recently revealed that a substantial €522 million in taxes may be missing from the country’s major taxpayers, encompassing both individuals and companies. This discovery followed a series of intensive inspections conducted by AT in 2023, unearthing potential tax discrepancies totaling the aforementioned amount. The identified sum primarily pertains to various taxes such as VAT, IRC, Stamp Duty, and IRS, as disclosed in an anti-fraud report furnished to Parliament by the government.

Building upon the preceding investigative efforts, AT’s Large Taxpayers Unit (UGC) has been vigilantly monitoring approximately 5,000 taxpayers, including big corporations that contribute a significant portion of Portugal’s public revenue amounting to over €24 billion, constituting 41% of the total tax income (excluding municipal taxes).

In the latest round of inspections during 2023, the UGC concluded 234 cases, subsequently initiating supplementary investigations. Noteworthy corrections were implemented during the scrutiny, notably a noteworthy adjustment of €155 million linked to irregular expense deductions observed in equity transactions involving tax havens. Special attention was also directed towards “transfer pricing” practices to ascertain that enterprises with affiliated entities uphold fair market conditions akin to unrelated entities, resulting in rectifications amounting to approximately €40 million in taxable profits and €500,000 in withholding taxes.

Additionally, instances of large companies misusing tax privileges in interest and royalty payments among European Union entities, along with the misapplication of double taxation agreements, instigated corrections totaling €26 million in taxes. Further disciplinary actions were taken concerning profit diversions to entities situated in tax havens, leading to a correction of €25 million.

Further reinforcing its stance against tax evasion, AT leveraged the general anti-abuse provision to address contrived structures aimed at tax minimization, ultimately highlighting potentially missing taxes of €3.2 million. The report also outlines corrective actions taken against four taxpayers found to be exploiting tax regulations through audits conducted by other AT departments.

Moreover, the UGC expanded its monitoring purview in 2023 to encompass a broader spectrum, now overseeing 5053 taxpayers inclusive of financial institutions like banks, pension funds, insurance entities, and large companies with annual revenues exceeding €200 million. Individual taxpayers subject to surveillance include individuals with annual incomes exceeding €750,000 or possess assets valued above €5 million.

Sourced ZAP, aeiou edited by US Tax Consultants.