Financial Crime World

Portugal’s Financial Reporting Requirements Tighten Grip on Businesses

The Portuguese business environment has become increasingly stringent in its financial reporting requirements, leaving companies with little room for error in their accounting and tax obligations.

Tax Year and Accounting Periods

In Portugal, the tax year typically runs from January 1st to December 31st. However, resident companies and non-resident companies with a permanent establishment can opt for an alternative tax year. Once selected, this same tax accounting period must be maintained for at least five years.

Accounting Standards

Portugal’s accounting standards are largely influenced by International Financial Reporting Standards (IFRS), which apply to all domestic and foreign public companies. Small and Medium-Sized Enterprises (SMEs) have the option of adopting IFRS or Portuguese national accounting standards, while subsidiaries of foreign non-IFRS companies must adhere to local accounting standards.

Regulation and Compliance

The Commission for National Companies (CNC) plays a crucial role in regulating Portugal’s accounting sector. According to regulations, company financial statements must include:

  • A balance sheet
  • Profit and loss account
  • Notes to the accounts
  • An annual report known as D.O.G.

Public companies, limited liability companies, and those listed on the stock exchange are required to publish their financial statements annually. Failure to comply with these requirements can result in severe penalties.

Professional Accounting Bodies

Professional accounting bodies such as:

  • Order of Chartered Accountants (OCC)
  • Portuguese Association of Accounting Technicians (APOTEC)
  • Portuguese Association of Accountants (APC)

play a vital role in ensuring that accountants are properly trained and certified.

Annual Audit

Companies must also undergo an annual audit by a statutory auditor, which can be conducted by external auditors such as:

  • Mazars
  • Ernst&Young
  • KPMG
  • PwC
  • D.F.K e Associados
  • Moore Stephens

This ensures that financial statements are accurate and compliant with regulatory requirements.

Consequences of Non-Compliance

With the Portuguese government cracking down on financial reporting non-compliance, businesses must ensure they are meeting all accounting and tax obligations to avoid serious consequences. It is essential for companies to prioritize financial reporting compliance to maintain a good reputation, avoid penalties, and minimize legal risks.