PORTUGAL AS A PLATFORM OF INVESTMENT
January 2017 1 ---C- CONTEXTUALIZATION
1 PORTUGAL ASASAS AN INVESTMENT PLATFORM
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 Regime 2. Golden Visa regime 3. Corporate Income Tax Code reform 4. Expanding tax treaty network 5. Renewal of Madeira holding tax regime 6. Renewed tax regime applicable to Investment Funds 7. Simplification of bureaucratic procedures 111-1--- CONTEXTUALIZATION
Environment and economic business contextualization
Attractive schemes atatat thethethe level ofofof individuals
Attractive schemes atatat thethethe level ofofof companies
International relations and strategic positioning
2 2 ---T- THE PORTUGUESE
GOLDEN VISA REGIME
3 2 ---T- THEHEHE PORTUGUESE GOLDEN VISA REGIME
• obtain a fully valid residency permit in Portugal Purpose • revitalization of the Portuguese economy
• valid for an initial period of 1 year Validity • 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 General • Absence of references in the Portuguese Immigration and the Schengen services • Absence of conviction of relevant crime Conditions • Minimum stay in Portugal: 7 days during the first year and 14 days during each subsequent period of two years
9 2 ---T- THEHEHE PORTUGUESE GOLDEN VISA REGIME
Investment activity performed directly by an individual or through a company for a minimum period of 5 years:
Purchase of real Capital transfer in estate in an an amount equal Creation of 10 amount equal or or above jobs above € 1 Million € 500.000
4 2 ---T- THEHEHE PORTUGUESE GOLDEN VISA REGIME
LEGISLATIVE AMENDMENTS - BROADENING Investment activity performed directly by an individual or through a company for a minimum period of 5 years:
Investments Capital transfer Investments in recovering for Investments in or Investments strengthening regarding in urban supporting maintening the scientific rehabilitation capitalisation artistic national investigation work production cultural of small and min. € min. € patromony medium- 350.000 350.000 min. € sized enterprises 250.000 min. € 250.000 min. € 500.000
5 2 ---T- THEHEHE PORTUGUESE GOLDEN VISA REGIME
20% reduction of the minimum amount of investment, when such investment is applied in a low density territory
• Conditions V Investment activities where the average is less than 100 local inhabitants per km2, or V Where the local average gross domestic product (GDP) per capita is below 75% of the national average GDP per capita.
• Exceptions -Are not concerned: V The simple capital transfer in an amount equal or above €1.000.000 and V The capital transfer in an amount equal or above €500.000 for investment in the acquisition of participation units.
6 2 ---T- THEHEHE PORTUGUESE GOLDEN VISA REGIME
Resident permit for third country citizens to invest in Portugal
Condition of the investment in Portuguese territory : Kept for 5 years (((from (from the obtention of the residence permit) + Remain in Portugal 7 days per year
7 2 ---T- THEHEHE PORTUGUESE GOLDEN VISA REGIME
The filling for the granting or renewal of the Golden Visa must be made personally by the applicant
The applicant must presentpresent::::
V Statement which declares that the investments conditions are fulfilled V Declaration of non debt issued by the Portuguese Tax Authorities and by the Portuguese Social Security V The forms of proof, according to the type of investment activity
8 2 ---T- THEHEHE PORTUGUESE GOLDEN VISA REGIME
The right to family reunification is granted to the citizen with a valid residency permit
• It concernsconcerns:::: V The familly members living outside the Portuguese territory and that have lived with that citizen in another country; V The familly members that depend or cohabitate with the citizen V Those who have legally entered in the Portuguese territory and are dependent or live together with that citizen. • The concept of family members includes underage descendants, and those who are: V Legal of age; V Dependent of the couple or of one of the spouses; V Single; and V Studying in an educational establishment in Portugal, or abroad. 9 3 ---T- THE NON---H-HABITUAL RESIDENT TAX
REGIME
10 3 ---T- THEHEHE NON---H-HABITUAL RESIDENT TAXAXAX REGIME
What are the qualifying requirements ???
TaxTaxTaxresidence in Portugal: Not taxed as Portuguese resident in anyanyany of the previous five years Stays in Portugal superior than 183 days per yearyear;; or, Have herherher/her ///hishishishishabitual abode in Portugal
11 3 ---T- THEHEHE NON---H-HABITUAL RESIDENT TAXAXAX REGIME
What isisis the procedureprocedure????
Steps Locations Deadlines Documents Responses
1.º: Obtaining the Tax Until the 31th Copy of a rental or purchase Instant NIF and Office of December contract of a property registration as a (Serviço de of the year in tax resident in Finanças) which the Portugal individuals become tax resident 2.º: Application Direcção de Until the 31th All documents certifying the Approximately for registration as Serviços de of March of change of residence and 4 to 6 months non-habitual tax Registo de the following declaration from the individual resident Contribuintes year that, during the last 5 years, the conditions required to be considered as tax resident in Portugal were not met
12 3 ---T- THEHEHE NON---H-HABITUAL RESIDENT TAXAXAX REGIME
Benefit extension • 10 years (suspendable)
Ancillary Obligations • Complete the IRS tax return (Annex L)
13 3 ---T- THEHEHE NON---H-HABITUAL RESIDENT TAXAXAX REGIME
Tax regime applicable to Portuguese sourced income earned by Non-Habitual Residents
Liable to taxtaxtax vis-visvisvis-à--à-àà-vis--vis Income exemption in the Income type TaxTaxTaxrates(2016) source Personal Income TaxTaxTax Code
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%* Portugal Capital gains (movable and Liable to tax 28%* immovable) 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 3 ---T- THEHEHE NON---H-HABITUAL RESIDENT TAXAXAX REGIME
Tax regime applicable to foreign sourced income earned by Non-Habitual Residents
Liable to taxtaxtax vis-visvisvis-à--à-àà-vis--vis exemption in the Income source Income type Personal Income TaxTaxTax Code Exempt if: i) Taxed at the source state according to the DTC ; Income from employment or ii) 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 Exempt if: those ones with a scientific, artistic or technical i)taxed at the source state according to the DTC; nature; or the provision of information linked or Foreign with the expertise acquired in the industrial, ii) taxed in another country or region according commercial or scientific sector. to a Double Tax Convention, (when there is no DTC), If they are not included in the list of tax havens (Interest, Dividends) and the earnings do not derive from Portugal. Capital gains Income from immovable property Exempt if: Pensions i) Taxed in the source state sg DTC; or ii) They have not been earned in Portugal 4 ---T- THE PORTUGUESE PARTICIPATION EXEMPTION REGIME, AND CAPITAL GAINS EXEMPTION FOR NON---RESIDENT ENTITIES
16 4 ---T- THEHEHE PORTUGUESE PARTICIPATION EXEMPTION REGIME
IRC –––The new regime of «Participation«Participation----exemption»exemption»
• One ofofof the most attractive regime ininin Europe • Cumulative criteriacriteria: ::: V Detention ofofof 555% 5% ofofof the share capital ororor voting rights V AAAminimum 242424months uninterrupted detention period
Exemption : dividends + capital gains
17 4 ---T- THEHEHE PORTUGUESE PARTICIPATION EXEMPTION REGIME
Aplication of the regime subject to the verification of the fofollowingllowing cumulative conditions: • The Portuguese company holds a shareholding not lower than 5% of the share capital 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 (as for 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, must be 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 must not be resident or domiciled in a country, territory or region subject to a more favourable tax regime included in the Portuguese “black list”. 18 4 ---T- THEHEHE PORTUGUESE PARTICIPATION EXEMPTION REGIME
Restriction to the application ofofof the regime:
• Not applicable when referring to capital gains or losses deriving from the sale of shareholdings and the value of the real estate owned by the participated company represents more than 50% of the respective assets, only considering for this purpose the real estate acquired in or after January 1, 2014 (except real estate affected to na agricultural, industrial or commercial activity that does not correspond to renting or buying and selling real estate).
19 4 ---T- THEHEHE PORTUGUESE PARTICIPATION EXEMPTION REGIME
Qualifying entitiesentities::::
• Permanent establishments located in Portugal of entities resident in an European Union (“EU”) Member State, European Economic Area (“EEA”) or State with whom Portugal has signed a Double Tax Treaty foreseeing administrative cooperation, as long as, in this last case: (i) such State is not included in the Portuguese “black list”, and (ii) the entity is, in its residency State, subject and not exempt from corporate tax.
20 55–––MMADEIRA’’’S IIINTERNATIONAL BUSINESS
CENTER 555–5–––MMADEIRA ’’’SSS IIINTERNATIONAL BBBUSINESS CENTER
Madeira’s International Business Center, which corresponds to Madeira’s free trade zone, was created in the 80s with the aim of attracting international investment, in order to boost economic growth and social development in that region.
Madeira’s free trade zone encompasses a special tax regime, which has been authorized by the European Commission as legal regional State Aid. It offers fiscal benefits to companies incorporated therein or companies that will be incorporated until December 2020, as well as to their shareholders, which may be enjoyed until December 2027. 555–5–––MMADEIRA ’’’SSS IIINTERNATIONAL BBBUSINESS CENTER
Wide list of tax benefits granted to the corporationscorporations anandd its shareholdersshareholders::::
1. Corporations can benefit from a 5% Corporate Income Tax rate, instead of the current normal rate 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 on documents, contracts and other public acts in case they are performed with nonresident entities in 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 (Real State Tax) and IMT (Real Estate Transfer Tax) that is due on the acquisition of Immovable Property needed and destined for the company’s establishment therein, as well as from other municipal taxes.
4. Companies that carry out industrial activities will be able to claim a deduction of 50% from the IRC.
5. Exemption on Personal Income Tax (PIT) or Corporate Income Tax (CIT) until 31 December 2027 for all partners and shareholders of entities authorized to carry out activities within Madeira Free Trade Zone, who are not residents in Portugal regarding certain income. 555–5–––MMADEIRA ’’’SSS IIINTERNATIONAL BBBUSINESS CENTER
Requirements to meetmeet::::
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 the first 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 the IRC (corporate income tax), provided that they meet at least two of the following conditions: i. Contribute to the modernization of the regional economy through technological innovation of products and manufacturing processes or business models; ii. Contribute to the diversification of the regional economy through the performance of new activities 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. 66–––IIIINHERITANCE AND DONATIONS
23 5 ––IIIINHERITANCE AND DONATIONS
Direct descendant or 0% ascendant spouse
Other 10%
24 77–––TTHE NETWORK OF CONVENTIONS TO
AVOID DOUBLE TAXATION
25 6 ––TTHEHEHENETWORK OF CONVENTIONS TO AVOID DOUBLE TAXATION
77 Conventions concluded
12 12 Africa America
34 19 Asia Europe
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