The fight against international tax evasion and fraud has led States to strengthen mechanisms aimed at preventing abusive transactions in the field of income and wealth taxes.

In Portugal, the "blacklist" of jurisdictions with clearly more favourable tax regimes has recently been updated, in a review process that is now undergoing a new development with the presentation of a legislative initiative aimed at changing the very criteria for identifying the jurisdictions covered.

BACKGROUND

In the fight against international tax evasion and fraud, Portugal uses, among other measures, a list of countries, territories and regions with clearly more favourable tax regimes, commonly known as the "list of tax havens".

The list is approved by ordinance of the member of the Government responsible for finance, after the opinion of the Tax and Customs Authority. The jurisdictions included in it may request a review of the respective framework, with the changes taking effect only for the future.

Ordinance No. 292/2025/1, of 5 September, excluded Hong Kong, Liechtenstein and Uruguay from the list approved by Ordinance No. 150/2004, of 13 February, with effect from 1 January 2026.

In July 2026, Draft Law No. 90/XVII/1 was submitted to the Assembly of the Republic, aimed at authorising the Government to review the criteria for identifying jurisdictions with clearly more favourable tax regimes and to integrate, in the national list, the jurisdictions included in the European Union list. The initiative has not yet been approved by the Assembly of the Republic, and the current regime remains applicable.

THE CURRENT REGIME AND THE PROPOSED REVISION

Portugal adopts a mixed system, combining the national list with defensive measures dispersed across the various taxes, the controlled foreign companies regime and the open clause of paragraph 5 of article 63-D of the LGT.

The criteria for inclusion on the "blacklist" are:

• The absence of a tax of an identical or similar nature to CIT or, if there is, the application of a rate lower than 60% of the general CIT rate provided for in paragraph 1 of article 87 of the CIT Code
• The significant divergence of the rules for determining the tax base from internationally accepted or practiced standards
• The existence of special regimes or tax benefits resulting in a substantial reduction in taxation
• The lack of effective access and exchange of tax-relevant information in law or administrative practice

Draft Law No. 90/XVII/1 provides for the revision of these criteria, seeking to articulate the national regime with European and international standards.

The draft decree-law annexed to the proposal: (i) now considers, in the criterion of non-existence or low taxation, the absence of a qualified national complementary tax in accordance with the rules of the Inclusive Framework (Pillar 2); (ii) densifies the criteria relating to double non-taxation, double or multiple deduction and the absence of adequate economic activity or substance; (iii) requires the assessments of the European Union, the Global Forum, the Forum on Harmful Tax Practices and the FATF to be considered; and (iv) determines the integration, in the national list, of the jurisdictions included in the European Union list.

In addition to the criteria for inclusion in the list of jurisdictions, Article 63-D(5) of the LGT contains an open clause. An unlisted jurisdiction may be treated as a clearly more favourable tax regime when it does not have a tax similar to CIT or the applicable rate is less than 60% of the general CIT rate and, cumulatively:

• there is an express reference, in the applicable tax codes and laws, to paragraph 5 of article 63-D of the LGT
• there are special relationships, under the terms of Article 63(4)(a) to (g) of the Corporate Income Tax Code, between the persons or entities involved in the operations covered

Paragraph 6 excludes from this clause the Member States of the European Union and the Member States of the European Economic Area that are bound by administrative cooperation in the field of taxation equivalent to that established in the European Union.

Thus, the mere existence of an instrument for the exchange of information with a third jurisdiction does not, in itself, determine the inapplicability of paragraph 5.

The existence of a CSD, accession to the Convention on Mutual Administrative Assistance in Tax Matters or a favourable assessment in the Global Forum does not automatically lead to exclusion from the national list. These elements are relevant, however, in the assessment of the transparency and cooperation of the jurisdiction and in the relationship, on a case-by-case basis, between domestic defensive measures and the applicable convention.

The proposed revision does not replace the national list with the European Union list: it maintains the internal criteria, determines the integration of jurisdictions into its own list and requires the consideration of assessments by bodies with different purposes, including the FATF. This accumulation may make the assessment more comprehensive, but it also increases the complexity of the regime and requires inclusion, review and exclusion criteria, which will necessarily have to be objective, predictable and proportionate to the applicable tax consequences under the Constitution.

THE RELEVANCE OF THE QUALIFICATION AS A "TAX HAVEN"

The classification of a jurisdiction as subject to a clearly more favourable tax regime may trigger, among others, depending on the tax and the transaction: (i) the rate of 35% in personal income tax and corporate income tax on certain capital income associated with entities domiciled in listed jurisdictions; (ii) the rate of 10% of IMT on certain acquisitions made by entities domiciled in those jurisdictions or controlled or controlled by them; (iii) rates of 7.5% in IMI and AIMI applicable, under the legal terms, to real estate held by certain entities; (iv) restrictions on the deductibility of payments and losses in CIT; and (v) the application of the regime of controlled foreign companies, under the terms provided for by law.

A CSD may limit withholding tax rates or allocate tax powers, where the respective requirements are met, but it does not necessarily neutralise the other defensive measures provided for in domestic law. The articulation must therefore be assessed on a case-by-case basis.

NON-COOPERATIVE JURISDICTIONS FOR TAX PURPOSES (THE EUROPEAN UNION LIST)

The Council of the European Union distinguishes between Annex I, which contains the list of non-cooperative jurisdictions for tax purposes, and Annex II, which identifies jurisdictions with outstanding commitments (the so-called "grey list").

The assessment is prepared in the framework of the Council's Code of Conduct Group (Business Taxation) and is based on three groups of criteria:

• Fiscal transparency
• Fair taxation
• measures against base erosion and profit shifting (BEPS)

The absence of corporate income tax or the application of a zero nominal rate is considered within the scope of the fair taxation test, in particular as regards the requirement of real economic activity and economic substance.

The Council shall regularly update both Annexes in the light of the reforms adopted by the jurisdictions and the fulfilment of the commitments made.

In the update adopted by the Council on 17 February 2026, Annex I includes 10 jurisdictions:

• American Samoa
• Anguilla
• Guam
• Palau
• Panama
• Russia
• Turks and Caicos Islands
• United States Virgin Islands
• Vanuatu
• Vietnam

Annex II – often referred to as the "grey list" – includes nine jurisdictions with outstanding commitments:

• Belize
• British Virgin Islands
• Brunei
• Eswatini
• Greenland
• Jordan
• Montenegro
• Morocco
• Turkey

CONCLUSIONS

The exclusion of Hong Kong, Liechtenstein and Uruguay, with effect from 1 January 2026, and which was noted in the previous update on this subject, constituted a circumscribed change in the national list of "tax havens". Draft Law No. 90/XVII/1 now opens a broader review of the qualification criteria.

The proposal densifies the criteria relating to economic substance, double non-taxation, double or multiple deduction and global minimum taxation. It also determines the integration, in the national list, of the jurisdictions listed in Annex I of the European Union and the weighting of international assessments.

The solution, however, goes beyond a simple alignment with the European list. By maintaining the national criteria and having assessments produced for different purposes, including those of the FATF, take into account, it may extend the margin of discretion without ensuring greater predictability. The coexistence of the list with CSDs concluded by Portugal does not in itself constitute a legal incompatibility, but raises a question of coherence and transparency of legislative policy in the field of international tax law.

The proposal thus represents an unused opportunity to simplify and coordinate Portuguese international tax policy. Without clearer rules on the inclusion, review and exclusion of jurisdictions, the reform could increase the complexity of the regime and reduce legal certainty – which is, of course, not desirable.

The initiative has not yet been approved by the Assembly of the Republic and remains under parliamentary consideration. Until the approval of the authorisation law and the entry into force of the authorised decree-law, article 63-D of the LGT and Ordinance no. 150/2004, of 13 February, as amended, remain applicable.

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Rogério Fernandes Ferreira
Álvaro Silveira de Meneses
João de Freitas Jacob
José Sousa Guerreiro
Mafalda Andrade
Lara Fernandes da Silva
Bernardo Mendonça Rodrigues
Mariana de Oliveira Monteiro