The number of complaints that reached the Tax Authority in 2023 increased by 50% compared to the previous year, reaching 6,954, and two thirds reported situations related to omitted income, according to a report released this Tuesday -fair.
Of the 6,954 reports regarding possible tax infractions, the majority (4,936) were forwarded by other public entities, and 2,018 by external entities, including private individuals.
Among the facts subject to complaints analyzed by the AT, around two thirds (67%) refer to situations related to the omission of income, followed by irregularities relating to leasing (11%) and billing (10%).
In comparison with the 4,618 complaints about participation received in 2022, the omission of income continues to be the main reason, but possible irregularities related to leasing increased compared to the 5% they represented in that year.
Inspections of large taxpayers detect €522 million missing
In terms of inspections, IRC, VAT, Stamp Duty and IRS were the taxes that dominated the volume of corrections, and part of them were voluntarily regularized by taxpayers.
According to the 2023 report on combating tax and customs fraud and evasion, inspections of companies and individuals monitored by the Large Taxpayers Unit (UCG) resulted in corrections corresponding to around 522 million missing tax euros.
In total, 234 inspections were completed with these taxpayers, in addition to procedures related to the control of VAT refunds and control of individuals with high net worth, through the mechanism of automatic exchange of information with other countries.
“Following the procedures carried out by the UGC inspection area, corrections were identified that amount to approximately 522 million euros of potentially missing tax”, the document reads.
In 2022, this type of procedures had resulted in the detection and correction of around 700 million euros of missing taxes.
These corrections resulted, above all, from the regime for excluding capital losses with the transfer of equity instruments from entities based in ‘tax havens’ and also from the improper use of tax benefits.
The misuse of the general anti-abuse clause and the income imputation regime of non-resident entities subject to a privileged tax regime (i.e., the so-called ‘tax havens’), were other of the mechanisms that led to the detection and correction of missing tax amounts.
For a company or entity to come under the scrutiny of this AT unit, it must meet at least one criteria from a list, namely be under the supervision of the banking, insurance or markets regulator, have a turnover exceeding 200 million euros or a global value of taxes paid exceeding 20 million euros.
In addition to these, the UCG also monitors entities that enter into transfer pricing agreements or are related to reporting multinationals within the scope of the ‘Country-by-Country Report’.
At the level of individuals, the UCG’s range of action includes people with income exceeding 750 thousand euros or with an asset capacity above five million euros (directly or indirectly, in assets and direct assets), as well as people with manifestations of fortune congruent with that heritage or income.
Automatic exchanges of information between AT and tax authorities in other countries rises to 8.2 million
Another way of detecting missing taxes occurs via exchanging information with the outside world. The number of automatic information exchanges between the Tax and Customs Authority and counterparts in other countries exceeded 8.2 million in 2023, with the majority relating to records sent by Portugal.
These data are contained in the report on combating tax and customs fraud and evasion for 2023 now released.
According to the document, the 8,257,642 automatic exchanges of information between AT and the tax administrations of other countries represent an increase of 18% compared to the number recorded in 2022 – part of this increase is justified by corrections communicated for the years 2019, 2020 and 2021.
The majority corresponds to the 5,129,417 taxpayer records sent from Portugal to other jurisdictions, while Portugal received 3,128,225 records.
At issue are the automatic exchanges of information on income taxes under mechanisms such as those that resulted from the transposition of the DAC1, DAC2 and DAC4 directives, as well as the FATCA (Foreign Account Tax Compliance Act) and the Common Reporting Standard (CRS), that is, a common reporting model developed under the auspices of the Organization for Economic Co-operation and Development (OECD), and also ‘country-by-country reporting’ (CBCR).
Data from 2023 indicates that Portugal received and sent information to 98 and 85 jurisdictions, respectively, with Germany, Canada, Spain, France, Lithuania, Luxembourg, the United Kingdom and Switzerland representing 79% of the information received and 87% of that sent.
