Tax authorities discover €522 million in uncollected taxes

Tax authorities have discovered that €522 million in taxes are potentially missing from the country’s largest taxpayers, including individuals and companies.

Portugal’s AT tax and customs authority carried out a series of inspections of large companies and the largest individual taxpayers in 2023, resulting in the detection of €522 million euros in potentially missing taxes, reports Público.

The amount mainly covers VAT, IRC, Stamp Duty and IRS, as revealed in the anti-fraud report delivered by the government to Parliament.
The figure is in addition to the €700 million identified in 2022 and €620 million in 2021, says the paper.

AT’s Large Taxpayers Unit (UGC) monitors around 5,000 taxpayers, including the country’s largest companies, which are responsible for more than €24 billion in public revenue, representing 41% of total tax revenue (excluding municipal taxes).

In 2023, the UGC’s inspection teams finalised 234 cases, resulting in several additional inspections.

Among corrections made was one totalling €155 million related to irregular deductions for expenses in equity transactions involving tax havens.

The inspection also focused on “transfer pricing”, ensuring that companies with special relationships maintain conditions similar to those practised between independent entities, resulting in corrections of approximately €40 million to taxable profit and €500,000 in withholding taxes.

In addition, AT detected the improper use of tax benefits by large companies in interest and royalty payments between European Union entities, as well as abuses of double taxation conventions, correcting €26 million in taxes.

Another €25 million were corrected in relation to the diversion of profits to entities in tax havens.

AT applied the general anti-abuse clause in several situations where there were artificial constructions designed to reduce taxes – resulting in €3.2 million in potentially missing taxes.

Four taxpayers were also corrected for abuse of tax rules, according to inspections carried out by other AT services, says Público.

In 2023, the number of taxpayers monitored by the UGC increased to 5053, including banks, pension funds, insurance companies and large companies with revenues of more than €200 million.

Individual taxpayers include people with incomes above €750,000 or assets above €5 million.