Portuguese Cabinet approves move to align tax ‘blacklist’ with EU from 2027

On 25 June 2026, the Portuguese Council of Ministers approved a legislative amendment to the General Tax Law that would align Portugal’s unilateral ‘blacklist’ of jurisdictions designated as ‘tax havens’, which is currently based solely on national criteria, with the EU’s list of non-cooperative jurisdictions

The change, anticipated to apply from Fiscal Year 2027, could potentially reduce the number of jurisdictions subject to aggravated sanctions by Portugal’s Ministry of Finance from 77 to 10. It would also mean that Portugal’s blacklist would automatically update whenever the EU list is revised, currently twice a year, rather than requiring separate Portuguese ministerial orders.

The proposal is part of a broader move to align Portugal’s anti-tax avoidance framework with EU and OECD standards – including the global minimum tax rules under the Base Erosion and Profit Shifting (BEPS) Project.

Portugal’s current blacklist also contains several jurisdictions and territories with which Portugal has concluded either Double Taxation Agreements (DTAs) or Tax Information Exchange Agreements (TIEAs). Given the application of automatic anti-abuse rules and misalignment with EU and international law, it has increasingly faced legal challenges in both the national and European courts.

For investors with assets, investments, pensions, income streams or holdings connected to jurisdictions that are currently on Portugal’s unilateral ‘blacklist’, this could result in more favourable tax treatment in the future, as well as reducing some of the complexities currently associated with investments in affected jurisdictions.

What is the Portuguese blacklist of tax havens?

Portugal has long maintained its own blacklist of list of “countries, territories or regions with privileged and more favourable taxation”. First introduced by Ministerial Order No 150/2004 of 13 February 2004, the criteria for inclusion on the ‘blacklist’ were:

• The absence of a tax of an identical or similar nature to Portugal’s Corporate Income Tax (IRC) or, if one exists, the applicable rate is less than 60% of the general rate of the IRC.
• The rules for determining the taxable amount on which income tax is levied differ significantly from internationally accepted or practiced standards.
• The existence of special regimes or tax benefits that result in a substantial reduction in taxation.
• Legislation or administrative practice does not enable access to and effective exchange of information relevant for tax purposes.

The blacklist currently includes around 77 countries and territories and transactions involving listed jurisdictions can have significant tax and regulatory implications for both companies and individuals, including:

• Higher withholding tax rates on payments to blacklisted entities.
• Denial or restriction of the participation exemption on dividends and capital gains.
• Controlled Foreign Company (CFC) rules may lead to profits of a listed entity being directly taxed in the hands of Portuguese tax resident individuals or corporations holding, directly or indirectly, at least 25% of blacklisted CFC entities.
• Tighter deductibility rules for costs and expenses.
• Enhanced reporting and documentation obligations.
• For individuals, dividends, interest, royalties and other passive returns – as well as capital gains and trust distributions can be subject to an aggravated tax rate of 35% if any part of an investment links back to a blacklisted jurisdiction.
• Increased rates of 7.5% annual property tax (IMI) and 10% property transfer tax (IMT) are applied to immovable property acquired by entities resident in a blacklisted jurisdiction or that are controlled by an entity resident in a blacklisted jurisdiction.
• The foreign-income exemptions under the IFICI and NHR special tax status exclude income generated in blacklisted jurisdictions.
• The limitation period extends from four years to 12 years when the tax assessment relates to undisclosed taxable events connected with blacklisted tax havens or undisclosed deposit or securities’ accounts held in financial institutions located outside the EU.
• Portuguese nationals who relocate their tax residence to a blacklisted jurisdiction are subject to extended Portuguese tax liability for four years after departure.

Portugal’s blacklist of countries, jurisdictions, territories and regions has remained almost unchanged since it was introduced in 2004 with 82 countries listed. Cyprus and Luxembourg, both EU member states, were removed by Ministerial Order in 2011 because, under EU law, Portugal could not prevent the free movement of capital. Andorra was removed in 2021, while Hong Kong, Liechtenstein and Uruguay were removed as of 1 January 2026. Many other blacklisted jurisdictions have formally requested Portugal for removal.

What is the EU blacklist of non-cooperative jurisdictions for tax purposes?

The EU’s listing process seeks to encourage third countries to enhance transparency and remove harmful elements from their tax systems. The EU list of non-cooperative jurisdictions for tax purposes comprises a blacklist (Annex I) of jurisdictions that have failed to meet the EU’s criteria.

As of February 2026, this blacklist comprises 10 jurisdictions: American Samoa, Anguilla, Guam, Palau, Panama, Russia, the Turks & Caicos Islands, the US Virgin Islands, Vanuatu and Vietnam.

Where recipients of cross-border payments are resident for tax purposes in a blacklisted jurisdiction, the EU Mandatory Disclosure Rules (MDR) apply. This creates a reporting obligation irrespective of whether the transaction is aimed at generating a tax benefit.

EU Member States are also required to use the EU blacklist in applying at least one of four specific defensive measures:

• Non-deductibility of costs incurred in a listed jurisdiction.
• Controlled Foreign Company (CFC) rules.
• Withholding tax measures.
• Limitation of the participation exemption on shareholder dividends.

Portugal has chosen to implement all four legislative tax measures.

The EU also maintains a state-of-play overview (Annex II), often known as the ‘grey list’, of jurisdictions that have made sufficient commitments to reform their tax policies across transparency, harmful regimes and BEPS requirements but remain subject to close monitoring. As of February 2026, this list comprises nine jurisdictions: Brunei Darussalam, Belize, the British Virgin Islands, Eswatini, Greenland, Jordan, Montenegro, Morocco and Turkey.

When is the proposed reform likely to come into force?

The government Bill was approved by the Council of Ministers on 25 June, but technical notes issued in August 2026 stated that “nothing has changed yet”. The law must be enacted by Parliament and published in the Diário da República before it takes effect.

Once in force, the new rules are to apply to “future fiscal years”, which suggests that the first full fiscal year to which they could apply will be 2027 Fiscal Year. Transactions, payments and distributions relating to 2027 income, which will be filed in 2028, may therefore be assessed against a new, much reduced blacklist.

What is the likely practical impact for expats and investors?

If the legislative amendment to the General Tax Law as approved by the Portuguese Council of Ministers takes effect, it will mean:

• Jurisdictions currently designated as ‘tax havens’ on Portugal’s ‘blacklist’ (77) but which are not currently named on the EU list of non-cooperative jurisdictions for tax purposes (10) will be removed from the Portuguese list.
• The aggravated tax treatment and increased regulatory burden that currently applies to jurisdictions currently designated as ‘tax havens’ on Portugal’s ‘blacklist’ will no longer apply unless they are named on the EU blacklist of non-cooperative jurisdictions for tax purposes.
• Cross-border structures involving previously blacklisted jurisdictions may become less penalised for Portuguese tax purposes, subject to other anti-abuse legislation such as Controlled Foreign Companies (CFC) and Transfer Pricing (TP) rules.
• Portugal’s blacklist will automatically update whenever the EU blacklist is revised, currently twice a year, rather than requiring separate Portuguese ministerial orders.
• For companies and individuals with cross-border arrangements, the reform should create more certainty, simplify compliance and much reduce the potential for tax and regulatory penalties.

The Portuguese blacklist of “countries, territories or regions with privileged and more favourable taxation” currently includes: American Samoa, Anguilla, Antigua & Barbuda, Aruba, Ascension Island, The Bahamas, Bahrain, Barbados, Belize, Bermuda, Bolivia, British Virgin Islands, Brunei, Cayman Islands, Christmas Island, Cocos (Keeling) Islands, Cook Islands, Costa Rica, Djibouti, Dominica, Eswatini, Falkland Islands, Fiji, French Polynesia, Gambia, Grenada, Gibraltar, Guam, Guernsey, Guyana, Honduras, Jamaica, Jersey, Jordan, Qeshm Island (Iran), Kiribati, Kuwait, Labuan, Lebanon, Liberia, The Maldives, Isle of Man, Marshall Islands, Mauritius, Monaco, Montserrat, Nauru, Netherlands Antilles, Niue, Norfolk Island, Northern Marianas Islands, Oman, Pacific Islands (other islands not separately listed), Palau Islands, Panama, Pitcairn Islands, Puerto Rico, Qatar, St Helena, St Lucia, St Kitts & Nevis, St Pierre & Miquelon, St Vincent & the Grenadines, Samoa, San Marino, Seychelles, Solomon Islands, Svalbard & Jan Mayen, Tokelau, Tonga, Trinidad & Tobago, Tristan da Cunha, Turks & Caicos Islands, Tuvalu, United Arab Emirates, US Virgin Islands, Vanuatu and Yemen.