Unpacking the Friction: Portuguese Tax Law Meets Pillar Two

This article analyses the implementation of the Minimum Taxation Directive (2022/2523) in Portugal, identifying friction points between the Portuguese tax framework and Pillar Two. These areas range from the unlikely qualification of autonomous taxation as a covered tax for Portuguese Pillar Two purposes, to an analysis of Portuguese tax incentives, which may lower the Portuguese effective tax rate. The authors also address the expected Pillar Two implications on M&A transactions in Portugal. This contribution demonstrates that, albeit contributing to increased tax complexity, Pillar Two offers an opportunity to rethink some features of the Portuguese tax framework and enhance its competitiveness.