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It is possible to celebrate an Advance Pricing Agreement (APA) in Portugal?

Global Transfer Pricing Advance Pricing Agreement
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Alexandre Andrade
According to OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, July 2010, an APA is an arrangement that determines, in advance of controlled transactions, an appropriate set of criteria (e.g. method, comparables and appropriate adjustments thereto, critical assumptions as to future events) for the determination of transfer pricing for those transactions over a fixed period of time.

The Decree n.º 620-A/2008 regulates the process for entering into Advance Pricing Agreements (APA) in Portugal and sets out the obligations which will fall to taxpayers and the tax authorities during the terms of these agreements.

Following the approval of the Decree in Portugal, APAs now provide a useful mechanism for both taxpayers and tax authorities, given that they can establish a transfer pricing methodology for a number of years, providing greater certainty regarding the attitude of tax authorities toward the taxpayer’s transfer pricing policy. The taxpayer thus obtains a guarantee from the tax authorities that they will accept the proposed method for determining the transfer pricing used in related-party transactions (transactions with related parties or transactions between a head office and its permanent establishments) for a given period which, in the case of Portugal, is a maximum of three years, renewable at the request of the taxpayer.
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