Transactions with related entities and income obtained abroad (Annex H)
2019 Declarations and Later Periods (HEIs)
They entered into force on October 1, 2019, resulting from the amendments to the IRC Code published by Law No. 119/2019 of September 18, some news regarding the theme of Transfer Prices.
Thus, the HEI for 2019 (to be delivered in 2020) has undergone some changes, notably in the detail of Annex H, such as the identification of the transfer pricing methodologies used and the changes to the methodologies and an indication of the value of the corrections made in determining taxable profit by non-compliance with the principle of full competition.
This attachment allows you to add as many lines as you need to in both frames.
It should be noted that in previous years transfer prices were dealt with in Annex A – Q10 – Operations with related entities (national territory) – and In Annex H – Operations with non-residents.
It should be noted that, for the purposes of justifying the terms and conditions of transactions carried out between entities with special relations, taxable persons shall keep the documentation relating to the policy adopted in transfer pricing.
In moreover, in accordance with Article 63(15) of the CIRC are subject to regulation by order of the member of the Government responsible for finance:
(a) the definition of the rules for the application of transfer pricing methods;
(b) the assessment of the degree of comparability;
(c) the rules for the application of the principle of full competition to cost-sharing agreements, intra-group services and restructuring operations;
(d) the procedures applicable in the event of adjustments in the determination of profit;
(e) the type, nature and content of the documentation contained in the Tax File, as well as the situations in which compliance with this obligation is waived.
It is also clarified that entities subject to a clearly more favourable tax regime, listed on the black list (see Ordinance No. 150/2004 of February 13, as amended by Ordinance No. 345-A/2016 of December 30, however repealed by the OE2018 Law) related parties are always considered, regardless of whether there may be no relationship, as regulated by paragraph 4 of Article 63 of the CIRC.
Table Q031 – Operations with related entities
This table shall be completed whenever the irc or IRS taxable person has carried out transactions with resident or non-resident entities with which he is in a special relationship.
This table shall include linked transactions of more than €100,000:
- by nature and entity, for transactions with nature loans granted/obtained and guarantees and/or collaterals granted/ obtained (point (3) to (6)]; Or
- by code of operation and entity, for transactions with the nature of the transmission/acquisition of goods and/or services, use of assets and others (point (1) and (2)],
Provided that the total amount of excluded operations does not exceed €500,000.
The name of [coluna (4)] the entity must be fulfilled in the case of a non-resident entity.
The value of the transactions shall be completed taking into account:
- Transmission/acquisition of goods and/or services, use of assets and others and acquisition (point 1 and 2): amount that influenced the net income for the period;
- Loans granted and obtained (point 3 and 4): average monthly balance;
- Guarantees and/or collateral granted and obtained (point 5 and 6): total annual amount of liabilities.
Table Q04 – Income obtained abroad
Income obtained (received or made available) from non-resident entities shall be included.
In this table it is necessary to use a line for each income and country of origin code of income.
In accordance with Article 117(6) of the RGIT, the failure to submit the documentation on the transfer pricing policy and the failure to submit, within the legally prescribed period, of the identification of the reporting entity or the country-by-country financial and tax declaration relating to the entities of a multinational group is punishable by a fine of € 500 to € 10 000, plus 5 % for each day of delay in complying with these obligations.