portugal as an investment platform - rff & associados ......portugal has been implementing several...

PPPPORTUGALORTUGALORTUGALORTUGAL ASASASAS AAAA PLATFORMPLATFORMPLATFORMPLATFORM OFOFOFOFINVESTMENTINVESTMENTINVESTMENTINVESTMENT

January 2017

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1 1 1 1 ---- CCCCONTEXTUALIZATIONONTEXTUALIZATIONONTEXTUALIZATIONONTEXTUALIZATION

Portugal has been implementing several tax measures, with an increasing tone on international taxation, with the aim of:• Improving the country’s competitiveness• Attracting foreign investment

1. Non-Habitual Resident Regime2. Golden Visa regime3. Corporate Income Tax Code reform4. Expanding tax treaty network 5. Renewal of Madeira holding tax regime6. Renewed tax regime applicable to Investment Funds7. Simplification of bureaucratic procedures

PPPPORTUGALORTUGALORTUGALORTUGAL ASASASAS ANANANAN INVESTMENTINVESTMENTINVESTMENTINVESTMENT PLATFORMPLATFORMPLATFORMPLATFORM

EnvironmentEnvironmentEnvironmentEnvironment andandandand economiceconomiceconomiceconomic business business business business contextualizationcontextualizationcontextualizationcontextualization

AttractiveAttractiveAttractiveAttractive schemesschemesschemesschemes atatatat thethethethe levellevellevellevel ofofofof individualsindividualsindividualsindividuals

AttractiveAttractiveAttractiveAttractive schemesschemesschemesschemes atatatat thethethethe levellevellevellevel ofofofof companiescompaniescompaniescompanies

InternationalInternationalInternationalInternational relationsrelationsrelationsrelations andandandand strategicstrategicstrategicstrategic positioningpositioningpositioningpositioning

1111---- CCCCONTEXTUALIZATIONONTEXTUALIZATIONONTEXTUALIZATIONONTEXTUALIZATION

2

2 2 2 2 ---- TTTTHEHEHEHE PPPPORTUGUESEORTUGUESEORTUGUESEORTUGUESE

GGGGOLDENOLDENOLDENOLDEN VVVVISAISAISAISA RRRREGIMEEGIMEEGIMEEGIME

3

PurposePurposePurposePurpose

ValidityValidityValidityValidity

General General General General

ConditionsConditionsConditionsConditions

• obtain a fully valid residency permit in Portugal• revitalization of the Portuguese economy

• valid for an initial period of 1 year• then renewed for subsequent periods of 2 years.

• Keep the investment for a minimum period of 5 years• Funds for investment should come from abroad• Entry in Portugal with a valid Schengen visa• Absence of references in the Portuguese Immigration

and the Schengen services• Absence of conviction of relevant crime• Minimum stay in Portugal: 7 days during the first year

and 14 days during each subsequent period of twoyears

9

2 2 2 2 ---- TTTTHEHEHEHE PPPPORTUGUESEORTUGUESEORTUGUESEORTUGUESE GGGGOLDENOLDENOLDENOLDEN VVVVISAISAISAISA RRRREGIMEEGIMEEGIMEEGIME


Investment activity performed directly by an individual

or through a company for a minimum period of 5 years:

Capital transfer in

an amount equal

or above

€ 1 Million

Creation of 10

jobs

Purchase of real

estate in an

amount equal or

above

€ 500.000

4

LEGISLATIVE AMENDMENTS - BROADENING

Investment activity performed directly by an individual or through a company

for a minimum period of 5 years:

Investments

regarding

scientific

investigation

min. €

350.000

Investments

in

supporting

artistic

production

min. €

250.000

Investments

in recovering

or

maintening

national

cultural

patromony

min. €

250.000

Investments

in urban

rehabilitation

work

min. €

350.000

Capital transfer

for

strengthening

the

capitalisation

of small and

medium-

sized enterprises

min. € 500.000


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20% reduction of the minimum amount of investment, when suchinvestment is applied in a low density territory

• ConditionsConditionsConditionsConditions� Investment activities where the average is less than 100 local

inhabitants per km2, or� Where the local average gross domestic product (GDP) per

capita is below 75% of the national average GDP per capita.

• ExceptionsExceptionsExceptionsExceptions-Are not concerned:

� The simple capital transfer in an amount equal or above€1.000.000 and

� The capital transfer in an amount equal or above €500.000 for investment in the acquisition of participation units.


6

Resident permit for third country citizens to invest in Portugal

Condition of the investment in Portuguese territory :

KeptKeptKeptKept for 5 for 5 for 5 for 5 yearsyearsyearsyears ((((fromfromfromfrom the obtention the obtention the obtention the obtention of the of the of the of the residenceresidenceresidenceresidence permit) + permit) + permit) + permit) + RemainRemainRemainRemain in in in in

Portugal 7 Portugal 7 Portugal 7 Portugal 7 daysdaysdaysdays per per per per yearyearyearyear


7

The filling for the granting or renewal of the Golden Visa must bemade personally by the applicant

The The The The applicantapplicantapplicantapplicant must must must must presentpresentpresentpresent::::

� Statement which declares that the investments conditions are fulfilled

� Declaration of non debt issued by the Portuguese TaxAuthorities and by the Portuguese Social Security

� The forms of proof, according to the type of investmentactivity


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The right to family reunification is granted to the citizen with a validresidency permit

• It It It It concernsconcernsconcernsconcerns::::� The familly members living outside the Portuguese territory

and that have lived with that citizen in another country;� The familly members that depend or cohabitate with the

citizen� Those who have legally entered in the Portuguese territory

and are dependent or live together with that citizen.• The concept of The concept of The concept of The concept of familyfamilyfamilyfamily membersmembersmembersmembers includesincludesincludesincludes underageunderageunderageunderage descendants, and descendants, and descendants, and descendants, and

thosethosethosethose whowhowhowho are:are:are:are:� Legal of age;� Dependent of the couple or of one of the spouses;� Single; and� Studying in an educational establishment in Portugal, or

abroad.


9

3 3 3 3 ---- TTTTHEHEHEHE NNNNONONONON----HHHHABITUALABITUALABITUALABITUAL RRRRESIDENTESIDENTESIDENTESIDENT TTTTAXAXAXAX

RRRREGIMEEGIMEEGIMEEGIME

10

WhatWhatWhatWhat are the are the are the are the qualifyingqualifyingqualifyingqualifying requirementsrequirementsrequirementsrequirements ????

3 3 3 3 ---- TTTTHEHEHEHE NNNNONONONON----HHHHABITUALABITUALABITUALABITUAL RRRRESIDENTESIDENTESIDENTESIDENT TTTTAXAXAXAX RRRREGIMEEGIMEEGIMEEGIME

TaxTaxTaxTax residenceresidenceresidenceresidence in Portugal:in Portugal:in Portugal:in Portugal:

StaysStaysStaysStays in Portugal in Portugal in Portugal in Portugal superiorsuperiorsuperiorsuperior thanthanthanthan 183 183 183 183 daysdaysdaysdays per per per per yearyearyearyear; or,; or,; or,; or,

Have Have Have Have herherherher////hishishishis habitualhabitualhabitualhabitual abodeabodeabodeabode in Portugalin Portugalin Portugalin Portugal

NotNotNotNot taxedtaxedtaxedtaxed as as as as PortuguesePortuguesePortuguesePortuguese residentresidentresidentresident in in in in anyanyanyanyof the of the of the of the previouspreviouspreviousprevious five five five five yearsyearsyearsyears

11

StepsStepsStepsSteps LocationsLocationsLocationsLocations DeadlinesDeadlinesDeadlinesDeadlines DocumentsDocumentsDocumentsDocuments ResponsesResponsesResponsesResponses

1.º: Obtaining the NIF and

registration as a tax resident in

Portugal

TaxOffice

(Serviço de Finanças)

Until the 31th of Decemberof the year in

which the individualsbecome tax

resident

Copy of a rental or purchasecontract of a property

Instant

2.º: Application for registration as non-habitual tax

resident

Direcção de Serviços de Registo de

Contribuintes

Until the 31th of March of

the followingyear

All documents certifying the change of residence and

declaration from the individualthat, during the last 5 years, the conditions required to beconsidered as tax resident in

Portugal were not met

Approximately4 to 6 months

WhatWhatWhatWhat isisisis the the the the procedureprocedureprocedureprocedure????


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• 10 years (suspendable)BenefitBenefitBenefitBenefit extensionextensionextensionextension

• Complete the IRS tax return

(Annex L)

AncillaryAncillaryAncillaryAncillary ObligationsObligationsObligationsObligations


13

IncomeIncomeIncomeIncomesourcesourcesourcesource

IncomeIncomeIncomeIncome typetypetypetype

Liable to Liable to Liable to Liable to taxtaxtaxtax visvisvisvis----àààà----vis vis vis vis exemption in the exemption in the exemption in the exemption in the

PersonalPersonalPersonalPersonal IncomeIncomeIncomeIncome TaxTaxTaxTaxCodeCodeCodeCode

TaxTaxTaxTax rates(2016)rates(2016)rates(2016)rates(2016)

PortugalPortugalPortugalPortugal

Income from employment Liable to tax 20% ('high added value')*

Income from personal services Liable to tax 20% ('high added value')*

Interest and dividends Liable to tax 28%*

Capital gains (movable and immovable)

Liable to tax 28%*

Income from immovable property Liable to tax 28%*

Pensions Liable to tax 48% + up to 5%

* Option to consolidate the tax assessment so that the general personal income tax code tax rates are applicable

Tax regime applicable to Portuguese sourced income earned by Non-Habitual Residents


IncomeIncomeIncomeIncome sourcesourcesourcesource IncomeIncomeIncomeIncome typetypetypetypeLiable to Liable to Liable to Liable to taxtaxtaxtax visvisvisvis----àààà----vis vis vis vis exemption in the exemption in the exemption in the exemption in the

PersonalPersonalPersonalPersonal IncomeIncomeIncomeIncome TaxTaxTaxTax CodeCodeCodeCode

ForeignForeignForeignForeign

Income from employment

Exempt if:i) Taxed at the source state according to the DTC;

orii) Taxed at the source state and not earned in

Portugal (when there is no DTC)

Income from personal services activities related to high added value services providing such as

those ones with a scientific, artistic or technical nature; or the provision of information linked with the expertise acquired in the industrial,

commercial or scientific sector.

Exempt if: i)taxed at the source state according to the DTC;

orii) taxed in another country or region accordingto a Double Tax Convention, (when there is no

DTC), If they are not included in the list of tax havensand the earnings do not derive from Portugal.

(Interest, Dividends)

Capital gains

Income from immovable property

PensionsExempt if:

i) Taxed in the source statesg DTC; orii) They have not been earned in Portugal

Tax regime applicable to foreign sourced income earned by Non-Habitual Residents


4 4 4 4 ---- TTTTHEHEHEHE PPPPORTUGUESEORTUGUESEORTUGUESEORTUGUESE PPPPARTICIPATIONARTICIPATIONARTICIPATIONARTICIPATIONEEEEXEMPTIONXEMPTIONXEMPTIONXEMPTION RRRREGIMEEGIMEEGIMEEGIME, , , ,

ANDANDANDAND CCCCAPITALAPITALAPITALAPITAL GGGGAINSAINSAINSAINS EEEEXEMPTIONXEMPTIONXEMPTIONXEMPTION FORFORFORFORNONNONNONNON----RESIDENTRESIDENTRESIDENTRESIDENT ENTITIESENTITIESENTITIESENTITIES

16

IRC IRC IRC IRC –––– The new The new The new The new regimeregimeregimeregime of «Participationof «Participationof «Participationof «Participation----exemption»exemption»exemption»exemption»

• OneOneOneOne ofofofof thethethethe mostmostmostmost attractiveattractiveattractiveattractive regimeregimeregimeregime inininin EuropeEuropeEuropeEurope

• CumulativeCumulativeCumulativeCumulative criteriacriteriacriteriacriteria::::

� DetentionDetentionDetentionDetention ofofofof 5555%%%% ofofofof thethethethe shareshareshareshare capitalcapitalcapitalcapital orororor votingvotingvotingvoting rightsrightsrightsrights

� AAAA minimumminimumminimumminimum 24242424 monthsmonthsmonthsmonths uninterrupteduninterrupteduninterrupteduninterrupted detentiondetentiondetentiondetention periodperiodperiodperiod

Exemption : Exemption : Exemption : Exemption : dividendsdividendsdividendsdividends + capital gains+ capital gains+ capital gains+ capital gains

17

4 4 4 4 ---- TTTTHEHEHEHE PPPPORTUGUESEORTUGUESEORTUGUESEORTUGUESE PPPPARTICIPATIONARTICIPATIONARTICIPATIONARTICIPATION EEEEXEMPTIONXEMPTIONXEMPTIONXEMPTION RRRREGIMEEGIMEEGIMEEGIME

• The Portuguese company holds a shareholding not lower than 5% of the sharecapital or of the voting rights of the entity distributing the dividends or

originating a capital gain or loss;

• Shareholding is kept for a minimum period of 24 months, uninterruptedly (asfor dividends, the shareholding may be kept for a lower period and kept

afterwards for the time required in order to complete the mentioned 24 months

period);

• The entity that distributes the dividends, or whose shareholding is sold, mustbe subject and not exempt of IRC or other corporate tax, at a rate not lower

than 60% of the applicable IRC rate (i.e., 12,6% in 2015) – this condition might

not be fulfilled as long as certain conditions are met;

• The entity that distributes the dividends, or whose shareholding is sold mustnot be resident or domiciled in a country, territory or region subject to a more

favourable tax regime included in the Portuguese “black list”.

AplicationAplicationAplicationAplication of the regime subject to the verification of the following of the regime subject to the verification of the following of the regime subject to the verification of the following of the regime subject to the verification of the following cumulative conditions:cumulative conditions:cumulative conditions:cumulative conditions:


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• Not applicable when referring to capital gains or losses derivingfrom the sale of shareholdings and the value of the real estateowned by the participated company represents more than 50%of the respective assets, only considering for this purpose thereal estate acquired in or after January 1, 2014 (except realestate affected to na agricultural, industrial or commercialactivity that does not correspond to renting or buying andselling real estate).


RestrictionRestrictionRestrictionRestriction to to to to thethethethe applicationapplicationapplicationapplication ofofofof thethethethe regime:regime:regime:regime:

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• Permanent establishments located in Portugal of entitiesresident in an European Union (“EU”) Member State, EuropeanEconomic Area (“EEA”) or State with whom Portugal has signeda Double Tax Treaty foreseeing administrative cooperation, aslong as, in this last case: (i) such State is not included in thePortuguese “black list”, and (ii) the entity is, in its residencyState, subject and not exempt from corporate tax.


Qualifying Qualifying Qualifying Qualifying entitiesentitiesentitiesentities::::

20

5555–––– MMMMADEIRAADEIRAADEIRAADEIRA’’’’SSSS IIIINTERNATIONALNTERNATIONALNTERNATIONALNTERNATIONAL BBBBUSINESSUSINESSUSINESSUSINESS

CCCCENTERENTERENTERENTER

Madeira’s International Business Center, which corresponds to Madeira’s free trade zone, was created in the80s with the aim of attracting international investment, in order to boost economic growth and socialdevelopment in that region.

Madeira’s free trade zone encompasses a special tax regime, which has been authorized by the EuropeanCommission as legal regional State Aid. It offers fiscal benefits to companies incorporated therein orcompanies that will be incorporated until December 2020, as well as to their shareholders, which may beenjoyed until December 2027.

5555–––– MMMMADEIRAADEIRAADEIRAADEIRA’’’’SSSS IIIINTERNATIONALNTERNATIONALNTERNATIONALNTERNATIONAL BBBBUSINESSUSINESSUSINESSUSINESS CCCCENTERENTERENTERENTER

Wide Wide Wide Wide list of tax benefits granted to the corporations and its list of tax benefits granted to the corporations and its list of tax benefits granted to the corporations and its list of tax benefits granted to the corporations and its shareholdersshareholdersshareholdersshareholders::::


1. Corporations can benefit from a 5% Corporate Income Tax rate, instead of the current normalrate of 21% applicable to corporations not registered under this scheme.

2. Companies registered under the CINM regime are entitled to 80% exemption from stamp duty ondocuments, contracts and other public acts in case they are performed with nonresident entitiesin Portugal or that those entities are not registered under the CINM regime.

3. Companies registered under the CINM scheme will be granted an 80% exemption from IMI (RealState Tax) and IMT (Real Estate Transfer Tax) that is due on the acquisition of ImmovableProperty needed and destined for the company’s establishment therein, as well as from othermunicipal taxes.

4. Companies that carry out industrial activities will be able to claim a deduction of 50% from theIRC.

5. Exemption on Personal Income Tax (PIT) or Corporate Income Tax (CIT) until 31 December2027 for all partners and shareholders of entities authorized to carry out activities within MadeiraFree Trade Zone, who are not residents in Portugal regarding certain income.

1. Companies registered under the CINM regime shall meet one of the following requirements:i. Creation of one to five jobs in the first six months of activity, and an investment of

minimum € 75.000 through the acquisition of fixed, tangible or intangible assets, in thefirst two years of activity; or

ii. Creation of six or more jobs in the first six months of activity.

2. Companies that carry out industrial activities will be able to claim a deduction of 50% from theIRC (corporate income tax), provided that they meet at least two of the following conditions:

i. Contribute to the modernization of the regional economy through technologicalinnovation of products and manufacturing processes or business models;

ii. Contribute to the diversification of the regional economy through the performance of newactivities with high added value;

iii. Promote the hiring of highly qualified human resources;iv. Contribute to the improvement of environmental conditions;v. Create at least 15 jobs, for a minimum period of five years.

RequirementsRequirementsRequirementsRequirements to to to to meetmeetmeetmeet::::


6666–––– IIIINHERITANCENHERITANCENHERITANCENHERITANCE ANDANDANDAND DONATIONSDONATIONSDONATIONSDONATIONS

23

Direct descendant or Direct descendant or Direct descendant or Direct descendant or

ascendant ascendant ascendant ascendant spousespousespousespouse

OtherOtherOtherOther

5 5 5 5 –––– IIIINHERITANCENHERITANCENHERITANCENHERITANCE ANDANDANDAND DONATIONSDONATIONSDONATIONSDONATIONS

0%

10%

24

7777–––– TTTTHEHEHEHE NETWORKNETWORKNETWORKNETWORK OFOFOFOF CCCCONVENTIONSONVENTIONSONVENTIONSONVENTIONS TOTOTOTO

AVOIDAVOIDAVOIDAVOID DOUBLEDOUBLEDOUBLEDOUBLE TAXATIONTAXATIONTAXATIONTAXATION

25

6 6 6 6 –––– TTTTHEHEHEHE NETWORKNETWORKNETWORKNETWORK OFOFOFOF CCCCONVENTIONSONVENTIONSONVENTIONSONVENTIONS TOTOTOTO AVOIDAVOIDAVOIDAVOID DOUBLEDOUBLEDOUBLEDOUBLETAXATIONTAXATIONTAXATIONTAXATION

77 Conventions 77 Conventions 77 Conventions 77 Conventions concludedconcludedconcludedconcluded

12 Africa12

America

19 Asia34

Europe26

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