It was approved Law number 5/2016, of February 29, that transpose the amendment to the Parent Subsidiary Directive and introduces a general anti-abuse clause to the participation regime foreseen in the Portuguese Companies Tax Code.

According to the new wording of Articles 14º and 51º of the Portuguese Companies Tax Code, the participation regime is not applicable to an arrangement or a series of arrangements which, having been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of elimination of double taxation, are not genuine having regard to all relevant facts and circumstances.

As provided in the Directive, it is clarified that an arrangement or a series of arrangements shall be regarded as not genuine to the extent that they are not put into place for valid commercial reasons which reflect economic reality.