The Profit Split Method across Jurisdictions – Report on Portugal

Portugal’s profit split method (PSM) framework has permitted the Portuguese tax authorities to allocate zero royalties where a related-party intellectual property holder performs no development, enhancement, maintenance, protection or exploitation functions, bears no risks and incurs no costs. This approach raises unresolved questions about the PSM’s outer boundaries, now pending before the Supreme Administrative Court, making robust functional-and-risk analyses and proactive dispute resolution strategies essential for multinationals operating in Portugal.This article is part of a special issue of the International Transfer Pricing Journal on the application of the PSM. The other articles include the General Report and contributions on Belgium, France, Germany, Ireland, Italy, Korea, the Netherlands, Spain and the United States.