Portugal vs “A Wide Range, LDA”, April 2026, Supremo Tribunal Administrativo, Case No 01721/10.5BEPRT.SA1
Table of Contents
Case Information
Court: Supremo Tribunal Administrativo, Secção do Contencioso Tributário
Case number: 01721/10.5BEPRT.SA1
Citation: JSTA000P35388 / SA22026041501721/10
Applicant: A…, LDA
Respondent: Autoridade Tributária e Aduaneira (AT)
Jurisdiction: Portugal
Judgment date: 15 April 2026
Judgment Summary
This is a preliminary admissibility decision (apreciação preliminar) on an exceptional review appeal (recurso de revista excepcional) lodged by A…, LDA with the Supremo Tribunal Administrativo under Article 285.º of the Código de Procedimento e de Processo Tributário (CPPT).
The appeal was brought against the judgment of the Tribunal Central Administrativo Norte (TCAN) of 26 June 2025, which had revoked the first-instance judgment of the Tribunal Administrativo e Fiscal do Porto and held the company's judicial challenge to an additional IRC assessment for the year 2004 to be unfounded.
The Supremo Tribunal Administrativo, sitting in the formation provided for in Article 285.º, n.º 6 of the CPPT, admitted the appeal on the basis that the questions raised assume fundamental legal and social importance and that the court's intervention is necessary for a better application of the law.
Background
A…, LDA was the subject of a tax inspection that resulted in an additional assessment of Imposto sobre o Rendimento das Pessoas Colectivas (IRC) for the year 2004. The correction arose from the tax authorities' view that the company had not complied with transfer pricing rules.
The inspection services accepted that the transfer pricing method chosen by the company was correctly selected and that the comparability search criteria used in the comparability study contained in the Dossier de Preços de Transferência (DPT) were aligned with transfer pricing rules. However, the inspection services considered the comparability sample produced by the study to be too wide and introduced two additional criteria: (i) the dimension of the entities taken as comparables, requiring operational revenues of at least €3,000,000.00, and (ii) the exclusion of retail companies, on the grounds that the company's activity was wholesale trade.
Applying those additional criteria, the inspection services produced an arm's length range with a minimum of -0.07% and a maximum of 13.77%, and then selected the value at the first quartile of the comparables sample, being 2.38, as the transfer pricing indicator to be applied.
The company challenged the additional IRC assessment by way of judicial impugnation. The Tribunal Administrativo e Fiscal do Porto found in favour of the company. On appeal by the AT, the TCAN revoked that judgment by its decision of 26 June 2025 and held the impugnation to be unfounded, upholding the correction. The company then lodged the present exceptional review appeal.
Core Dispute
The company argued that the TCAN incorrectly interpreted the rules set out in Articles 58.º, n.º 6 and 121.º of the Código do IRC and in Portaria n.º 1446-C/2001 of 21 December, in the versions in force at the time of the facts, as well as the arm's length principle.
Three specific legal questions were placed before the Supremo Tribunal Administrativo for determination.
First, whether it is compatible with transfer pricing rules and the arm's length principle to correct an arm's length range on grounds of its width, when that range was produced on the basis of a comparability study accepted by the tax authorities and drawn up in strict compliance with those rules and OECD Guidelines, and when the legislature did not define the degree of reliability of that range but only the need to ensure "the highest degree of comparability".
Second, whether, given that Article 5.º of Portaria n.º 1446-C/2001 does not expressly provide for the inclusion of additional search criteria beyond those set out in the law, and given that the criteria and methodology used by the company were adequate, additional criteria may be introduced that necessarily lead to a result different from that reached by the company and that do not ensure "a high degree of comparability" as required by Article 58.º, n.º 2 of the Código do IRC.
Third, whether it is compatible with transfer pricing rules to select, arbitrarily, any indicator within the transfer pricing range when neither the law nor the arm's length principle determines which indicator should be selected by default.
Court Findings
The court noted that, as a matter of principle, decisions delivered at second instance by the central administrative courts are not susceptible to appeal to the Supremo Tribunal Administrativo. Exceptionally, such decisions may be the subject of a review appeal in two situations: (i) when the question at issue is, by reason of its legal or social relevance, of fundamental importance, or (ii) when admission of the review is clearly necessary for a better application of the law, pursuant to Article 285.º, n.º 1 of the CPPT.
The court recalled its settled case law that the concept of fundamental legal relevance is met when the question to be assessed is of elevated complexity or of legal complexity superior to the ordinary, whether by reason of the difficulty of the exegetical operations to be performed, a particularly intricate normative framework, the need to concatenate various legal regimes and institutions, or where the treatment of the matter has raised serious doubts at the level of case law or doctrine. Fundamental social relevance is met when the situation presents indicators that the solution may constitute a guide for the assessment of other cases, or when a question of special capacity for social repercussion is at stake.
The court further recalled that the clear necessity for admission of the review for a better application of the law must result from the possibility of repetition of the question in an indefinite number of future cases and the consequent need to guarantee the uniformity of the law in important matters treated by the lower instances in an inconsistent or contradictory manner.
The court observed that the present case is in all respects similar to the situation assessed by the same formation on 11 March of the current year in proceedings n.º 2508/10.0BEPRT.SA1, differing only in the tax year in question. It therefore adopted, by reference, the reasoning set out in that earlier decision, which had found the questions to be of fundamental legal and social importance and had found the court's intervention to be objectively useful for a better application of the law in the area of the transfer pricing legal regime.
Outcome
The judges of the Secção do Contencioso Tributário of the Supremo Tribunal Administrativo, sitting in the formation provided for in Article 285.º, n.º 6 of the CPPT, unanimously admitted the exceptional review appeal. Costs were reserved to be determined at the end of the proceedings.
TP Method Highlighted
The company used the transactional net margin method (the precise method name is not expressly stated in the judgment, but the judgment refers throughout to an arm's length range expressed as percentage indicators, to quartiles, and to the selection of an indicator at the first quartile of 2.38, consistent with a net margin-based method). The inspection services accepted the method selected by the company as correctly chosen. The dispute concerned the comparability study, not the choice of method itself.
Major Issues / Areas of Contention
- Whether an arm's length range produced in strict compliance with transfer pricing rules and OECD Guidelines, and accepted by the tax authorities, may be corrected solely on grounds of its width.
- Whether the tax authorities may introduce additional comparability search criteria beyond those set out in Article 5.º of Portaria n.º 1446-C/2001 when the criteria and methodology used by the taxpayer were already accepted as adequate.
- Whether the two additional criteria introduced by the inspection services, namely a minimum operational revenue threshold of €3,000,000.00 and the exclusion of retail companies, were lawfully applied.
- Whether the legislature's failure to define the degree of reliability or adequacy of an arm's length range, beyond requiring 'the highest degree of comparability' under Article 58.º, n.º 2 of the Código do IRC, opens the door to arbitrary corrections.
- Whether the selection of the first quartile value (2.38) as the applicable indicator within the arm's length range is compatible with transfer pricing rules when neither the law nor the arm's length principle specifies which indicator must be selected by default.
- Whether the questions raised are of sufficient fundamental legal and social importance and whether the court's intervention is necessary for a better application of the law, so as to satisfy the admissibility conditions in Article 285.º, n.º 1 of the CPPT.