GSL / Foreign Companies Audit / Audit Portugal

Audit of a Portuguese company, financial statements, accounting, consulting in Portugal

Portugal is a republic in the very West of Europe, on the border with Spain, and a member state of the European Union. Favourable climate, promising economy, access to the European market, possibility to open a company in low-tax areas: Madeira and the Azores. Companies are required to file annual financial and tax reports with the state authorities. Audits are not compulsory for small companies.

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Service packages Legislation Tax System Audit Services
Preparation and submission of accounts
EUR 100-350 per hour
Audit of financial statements
EUR 100-350 per hour
Preparation and submission of VAT / VIES / INTRASTAT returns
EUR 100-350 per hour
Consulting services and support during tax audits
EUR 100-350 per hour

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Legal requirements

As a member of the European Union (EU), Portugal complies with the accounting, audit and financial reporting requirements set out in EU decrees and directives incorporated into national law and decrees.

The Commercial Companies Code of Portugal sets rules for approval of annual accounts, and the Registrar of Commercial Companies of Portugal requires filing of accounts and prescribes the manner of filing them as well as requires public disclosure of information and sets out obligations connected therewith on the official website of the Ministry of Justice.

A company’s financial statements must include a balance sheet, profit and loss statement, notes to accounts, and directors’ annual report (D.O.G. 'Documento de Orgão de Gestão').

There are three types of companies that must publish their financial statements:

  • public companies,
  • limited liability companies and
  • companies listed on a stock exchange.

Financial year normally corresponds to calendar year, though resident companies and non-resident companies with permanent representation in Portugal can have a different financial year. When chosen, the same reporting period must remain for at least 5 years.

According to the law, documents are accepted in Portuguese, Spanish, French or English. In practice, all documents in languages other than Portuguese must be accompanied by a translation into Portuguese, which must be certified in the consulate of Portugal and legalized by a notary with an apostille of the Hague Convention.

All companies are allowed to apply the IFRS to make annual consolidated financial statements. International reporting standards do not apply to small and medium-sized companies, instead the Portuguese Generally Accepted Accounting Principles apply.

Audit

The companies code requires all public limited companies to be audited annually. It also requires private limited companies to get their financial statements audited annually if they exceed two of the three thresholds in two consecutive reporting periods:

  • net turnover is 3,000,000 EUR;
  • total assets are 1,500,000 EUR;
  • average number of employees per year is 50.

Private limited companies that do not exceed two of the above thresholds can be exempted from the annual audit requirement.

Moreover, all public interest entities defined as listed companies, credit institutions, insurance companies, pension funds, investment companies and some state companies must be audited in accordance with the law.

Time frame for preparation and submission of accounts

After accounts have been approved by the board of directors, they must be signed on behalf of all directors.

Directors must provide accounts and directors’ report to the Registration Chamber (ROC) 30 days before the general meeting of shareholders. The Registrar in turn must examine and issue a certified copy of the annual return.

Directors must grant shareholders access to accounts and supporting documents in the registered office of the company during working hours for 15 days before the general meeting of shareholders (period of examination).

Accounts must be provided to shareholders for approval within 3 months after the end of the financial year, for consolidated accounts, within 5 months.

The deadline for providing financial statements is the same as that for filing a tax return: the 15th day of the 7th month after the end of the financial year.

Profit tax return shall be filed via electronic means of communication by the end of May of the year following the reporting year.

Liability for late filing

If accounts have not been filed on time, there may be consequences:

  • impossibility to register certain actions related to the company;
  • administrative liquidation for companies that during 2 straight years have not filed accounts and profit tax return;
  • penalties for late filing of financial statements of 500 to 5,000 EUR;
  • penalties for late filing of tax accounts of 300 to 3,750 EUR.

Consolidated accounts

Companies must present consolidated accounts at a general meeting of shareholders within 5 months after the end of the financial year. Consolidated accounts must be made in accordance with the requirements of the IFRS.

A parent company is exempt from the obligation to make a consolidated annual return if on the date of making of the parent company’s balance sheet enterprises that must be consolidated do not exceed two of the three below criteria based on their latest annual accounts:

  1. balance sheet total is 7,500,000 EUR;
  2. annual turnover is 15,000,000 EUR;
  3. average number of employees is 250.

Exemption from consolidation does not apply to public companies whose shares are listed on an exchange. Consolidated accounts of such companies must be prepared in accordance with the Generally Accepted Accounting Principles and adopted by members of the International Organization of Securities Commissions.

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