Answer ... Portuguese companies operating within an economic group may choose to be taxed under the group taxation regime if the following conditions are met:
- The parent company holds, directly or indirectly - including through a company which is tax resident in another member state of the European Union or (where there is administrative cooperation for tax purposes) the European Economic Area - at least 75% of the share capital of the controlled companies and more than 50% of the voting rights;
- All group companies are tax resident in Portugal and subject to the corporate income tax general regime; and
- The parent company has held the relevant shareholding for more than one year (or from the date of its incorporation), is not controlled by any other Portuguese resident dominant company and did not renounce the application of the regime within the previous three years.
This regime is also available where the parent company is tax resident in another member state of the European Union or (where there is administrative cooperation for tax purposes) the European Economic Area and has a Portuguese subsidiary through a permanent establishment in Portugal. However, in such case one of the Portuguese tax resident controlled companies must be appointed as responsible for fulfilling all obligations under this regime (save for its permanent establishment in Portugal, the parent non-resident company will not be part of the Portuguese tax group).
In determining the group’s taxable profits, the individual tax profits and individual tax losses are aggregated to form a single tax base, a single payment is made (or non-payment if there is a tax loss in aggregate) and a single tax return is filed by the dominant company. For control purposes, individual tax returns are also filed.
This regime is only a sum of individual profits and losses. It is not true consolidation, since transactions within the group are relevant (are not eliminated) in assessing the final tax base.