Overall findings
Portugal’s legal framework implementing the AEOI Standard is in place but needs improvement in order to be fully consistent with the requirements of the AEOI Terms of Reference. While Portugal’s international legal framework to exchange the information with all of Portugal’s Interested Appropriate Partners (CR2) is consistent with the requirements, its domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (CR1) has a deficiency significant to the proper functioning of elements of the AEOI Standard. More specifically, the deficiency relates to the approach to non-Participating Jurisdictions.
The methodology used for the peer reviews and that therefore underpins this report is outlined in Chapter 2.
Overall determination on the legal framework: In Place But Needs Improvement
Conclusions on the legal framework
General context
Portugal commenced exchanges under the AEOI Standard in 2017.
In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, Portugal:
enacted Decree-Law No. 64/2016, of 11 October (as amended by Decree-Law No. 83/2017); and
introduced several Ministerial Orders.
Under this framework Reporting Financial Institutions were required to commence the due diligence procedures in relation to New Accounts from 1 January 2016. With respect to Preexisting Accounts, Reporting Financial Institutions were required to complete the due diligence procedures on High Value Individual Accounts by 31 December 2016 and on Lower Value Individual Accounts and Entity Accounts by 31 December 2017.
With respect to the exchange of information under the AEOI Standard, Portugal:
is a Party to the Convention on Mutual Administrative Assistance in Tax Matters and activated the associated CRS Multilateral Competent Authority Agreement in time for exchanges in 2017;
has in place European Directive 2011/16/EU on Administrative Cooperation in the Field of Taxation as amended by Directive 2014/107/EU;
has in place European Union agreements with five European third countries;1 and
put in place a bilateral agreement.2
Detailed findings
The detailed findings for Portugal are below, organised per Core Requirement (CR) and sub-requirement (SR), as extracted from the AEOI Terms of Reference (see Annex B).
CR1 Domestic legal framework: Jurisdictions should have a domestic legislative framework in place that requires all Reporting Financial Institutions to conduct the due diligence and reporting procedures in the CRS, and that provides for the effective implementation of the CRS as set out therein.
Determination: In Place But Needs Improvement
Portugal’s domestic legislative framework is in place and contains most of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures, but it needs improvement in relation to defining the term Particpating Jurisdiction (SR 1.2)..
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
Portugal has defined the scope of Reporting Financial Institutions in its domestic legislative framework in accordance with the CRS and its Commentary.
Recommendations:
No recommendations made.
SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.
Portugal has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and incorporated the due diligence procedures that must be applied to identify them in a manner that is largely consistent with the CRS and its Commentary. However, a deficiency has been identified. More specifically, Portugal’s legislative framework does not incorporate the requirements in relation to certain Entities not located in Participating Jurisdictions in line with the AEOI Standard. This deficiency is material to the proper functioning of the AEOI Standard as it does not ensure that all Investment Entities that are not in Participating Jurisdictions are subject to the “look-through” approach to identify their Controlling Persons.
Recommendations:
Portugal should amend its domestic legislative framework to ensure that the approach taken with respect to the eight jurisdictions defined as Participating Jurisdictions and with which Portugal does not have an agreement to exchange CRS information with (and which have not implemented the AEOI Standard), is in accordance with the AEOI Standard.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
Portugal has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.
Recommendations:
No recommendations made.
SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.
Portugal has a legislative framework in place to enforce the requirements in accordance with the CRS and its Commentary.
Recommendations:
No recommendations made.
CR2 International legal framework: Jurisdictions should have exchange relationships in effect with all Interested Appropriate Partners as committed to and that provide for the exchange of information in accordance with the Model CAA.
Determination: In Place
Portugal’s international legal framework to exchange the information is in place, is consistent with the Model CAA and its Commentary and provides for exchange with all of Portugal’s Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from Portugal and that meet the required standard in relation to confidentiality and data safeguards) (SRs 2.1 – 2.3).
SR 2.1 Jurisdictions should have exchange agreements in effect with all Interested Appropriate Partners that permit the automatic exchange of CRS information.
Portugal has exchange agreements that permit the automatic exchange of CRS information in effect with all its Interested Appropriate Partners.
Recommendations:
No recommendations made.
SR 2.2 Such an exchange agreement should be put in place without undue delay, following the receipt of an expression of interest from an Interested Appropriate Partner.
Portugal put in place its exchange agreements without undue delay.
Recommendations:
No recommendations made.
SR 2.3 Jurisdictions should ensure that the exchange agreements in effect provide for the exchange of information in accordance with the requirements of the Model CAA.
Portugal’s exchange agreements provide for the exchange of information in accordance with the requirements of the Model CAA.
Recommendations:
No recommendations made.
Comments by the assessed jurisdiction
Portugal agrees with the contents and conclusions of this assessment. To address the recommendation made, Portugal has recently amended its regulations concerning the implementation of the term “Participating Jurisdictions” for the purposes of the AEOI Standard, by the Order (Despacho) no. 150/2024-XXIV, of 23 October 2024, of the Secretary of State for Tax Affairs.