Executive summary

Law no. 26/2026 (the Law), published in Portugal on 3 June 2026, transposes Council Directives (EU) 2023/2226 of 17 October 2023, and 2025/872 of 14 April 2025, both of which amended Directive 2011/16/EU on administrative cooperation in the field of taxation, with a particular focus on Pillar Two filings.

The Law also refines the scope of the domestic Income Inclusion Rule (IIR) as set forth in Law no. 41/2024 of 8 November, which introduced Portugal's Pillar Two regime.

Background

Under article 8.1.2 of the Global Anti-Base Erosion (GloBE) Model Rules, a constituent entity is not required to file a GloBE Information Return (GIR) with the tax administration of its jurisdiction if a qualified GIR has been filed by either (1) the ultimate parent entity (UPE) located in a jurisdiction that has a Qualifying Competent Authority Agreement in effect with the constituent entity's jurisdiction for a specific reporting fiscal year, or (2) a designated filing entity located in a jurisdiction that has a Qualifying Competent Authority Agreement in effect with the constituent entity's jurisdiction for the reporting fiscal year.

In those cases, a constituent entity located in a Pillar Two implementing jurisdiction or a designated entity acting on its behalf must notify the respective tax administration regarding the GIR filing entity's identity and the jurisdiction in which that filing entity is located.

Considering this framework, the European Union (EU) adopted amendments to its procedures on administrative cooperation to streamline the exchange of tax information and the operation of the GIR within EU Member-States. Portugal has now transposed those changes into domestic law.

Portuguese law

Law no. 26/2026, published by the Portuguese Parliament, introduces two main sets of changes to Portugal's Pillar Two framework.

First, it refines the scope of the IIR under the Portuguese Pillar Two regime, merely replacing the "controlling interest" with "ownership interest" in relation to entities located in a low-tax jurisdiction (Portugal or abroad) that are held by (1) an intermediary parent entity where the UPE is not subject to a qualified IIR or is an excluded entity or (2) a partially owned parent entity.

Second, the new law updates the GIR filing rules to reflect the EU administrative cooperation framework, under which the following must be considered:

1. Each Constituent Entity located in Portugal must file a GIR, but this obligation may be fulfilled by:
   1. A designated local entity
   2. The UPE of the relevant group located in Portugal
   3. The designated reporting entity of the relevant group located in Portugal
2. The GIR reporting obligation (which includes the IIR, undertaxed profits rule (UTPR) and qualified domestic minimum top-up tax (QDMTT)) does not exist if the registration/GIR notification form indicates that the GIR is submitted centrally, in the jurisdiction of the respective location, by the UPE or by the designated reporting entity of the group. In addition, the UPE or designated reporting entity must be located either in (1) an EU Member State that applies a qualified IIR, a qualified UTPR or a qualified national top-up tax for the tax year to which the information return relates, or (2) a jurisdiction with which, for that tax year, a qualified agreement between competent authorities entered into by the Portuguese competent authority is in force for that tax year.
3. Notwithstanding the above, if the Portuguese Tax Authorities do not receive the GIR information exchanged by another jurisdiction within three months of being notified of that exchange of information, a local filing will be required. In such cases, the local designated entity (if any), or any of the constituent entities of the group located in Portugal will be notified to submit the GIR to Portuguese Tax Authorities, within three months of that notification.
4. The Portuguese GIR will follow the template as designed by the Inclusive Framework on Pillar Two, as well as the model set out in Section IV of Annex VII to Council Directive (EU) 2025/872 of 14 April 2025.

Implications

Groups with constituent entities in Portugal should assess whether their GIR filing obligations can be satisfied through central filing and whether the applicable conditions for exemption from local filing are met. In addition, taxpayers should ensure that GIR registration/notification through form "Modelo 62" was properly made and that the exchange-of-information process is robust, given the possibility of a fallback local filing requirement if the Portuguese Tax Authorities do not timely receive the relevant information.

Affected entities should consult with their tax advisors for help with navigating these new updates and supporting Pillar Two compliance.