anti-evasion legislation and autonomous taxation
|
| The tax authorities may directly consult banking documents where the voluntary provision or authorisation to check the same has been refused.
|
In this context, we advise all of our clients to solely perform bank transactions related to the licensed activities of their companies in Madeira, which should be duly reported and fully supported with documents by the company, as referred to above.
|
|
|
| Confidential or non-documented expenses are taxed at the rate of 70%.
|
|
|
| Entertainment expenses, which are basically expenses related to receptions, meals, trips, excursions, and shows offered to clients, suppliers or any other entities, are taxed at the rate of 5%, irrespective of whether the company is exempt from corporate income tax or not.
|
|
|
| Under Portuguese law, payments made by Madeira companies to entities residing in tax havens are not deductible for the purpose of calculating taxable profit, but are subject to a specific tax at the rate of 55%, unless the purchaser can prove that said charges correspond to operations effectively implemented in circumstances that are not abnormal and the amount involved was also not excessive.
|
|
|
| According to the Portuguese transfer pricing rules, which follow the OECD’s guidelines on transfer pricing, operations between related parties must always be transacted at full market price.
|
In the context of transfer pricing regulation, operations between an entity residing in Portugal and another entity residing in a territory on Portugal’s list of tax havens must be considered to be operations between related parties, even if no shareholding or control relationship exists between the two parties.
|
Only transacting entities with net sales and other income greater than EUR 3,000,000, must possess a duly organised “tax documentation process”, with components capable of proving market parity in operations with related parties and the methods used to ascertain transfer prices.
|
|