The decision comes after opposition by the National Data Protection Commission and consumer watchdogs, whichthe indiscriminate access to people’s bank accounts was unconstitutional.
The decision to limit access to taxpayers with balances of 50,000 euros or more is said to be based on the argument that tax evasion is less likely for taxpayers with lower amounts of cash in their bank accounts.
The revision of the law by the government follows a law decree that was approved at the end of April.
The law was created following the issuing of an EU directive seeking to facilitate the exchange of banking information among member states in a bid to combat tax fraud.
The information obtained from accounts held by residents in Portugal is expected to be used to investigate suspicion of tax evasion, while the details of non-residents will be passed on to their respective countries of origin.
Currently, the only information banks are compelled to disclose are interest or dividend payments received by their clients.
Bank secrecy was relaxed back in 2009 under the previous Socialist cabinet, when the government brought in new legislation that saw the onus of proof being inverted.
This means that the taxpayer now needs to provide evidence of compliance with tax laws whenever a cloud of suspicion arises over financial history or when apparent signs of wealth emerge which are deemed incompatible with declared earnings.
Previously, roles were reversed, with the taxman first needing to justify suspicions of fraud or a fiscal crime.
The mere failure to hand in a tax declaration has since 2009 empowered the taxman to delve into the financial history of a targeted taxpayer.
Also the transfer of cash from Portuguese banks to offshore accounts now triggers an automatic alert.