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New Law amends Budget Law for 2013


Portugal has introduced Law 18/2013 amending the Budget Law for 2013. Taxand Portugal takes a look at 2 key changes this law will bring to tax legislation.

Amendments to the special tax regime on debt securities

Under Decree-Law 193/2005 (special tax regime on debt securities), Portuguese sourced interest and capital gains derived by qualified non-resident beneficial owners from the holding/disposal of public or private debt securities issued by Portuguese resident entities are exempt from Portuguese personal and corporate income tax, provided certain conditions are met.

The main changes to Decree-Law 193/2005 include:

  • Extension of the scope of the regime to cover securities of monetary nature
  • Extension of the beneficiaries of the regime
  • Extension of the Quick Refund period from 90 days to 6 months
  • Clarification that standard reclaim (full reclaim) to Portuguese Tax Authorities may be undertaken until the end of the second year following the year the payment took place
  • The regime provides for procedures for withholding tax mechanism for securities issued by Portuguese entities integrated and registered exclusively with international central securities depositories (ICSDs)

Companies licensed to operate in international business centre of Madeira

Under the Portuguese Tax Benefits Code, a special regime applying for companies operating under the Madeira IBC is applicable until 31 December 2020. Under the current regime, a 5% CIT rate is applicable until the end of 2020 based on taxable income ceilings, which are connected with number of jobs.

The EU Commission issued on July 2013 a decision allowing Portugal to increase by 36.7% the taxable income ceilings to which the reduced 5% CIT rate apply. Law 18/2013 transposes the new taxable income ceilings into Portuguese legislation which are applicable as from 1 January 2013. 

Discover more: New Law amends Budget Law for 2013

Your Taxand contacts for further queries are:
Fernando Castro Silva
T. + 351 21 891 32 32

Miguel C. Reis
T. +351 22 615 88 62

Tiago Cassiano Neves
T. +351 218 913 232

Also published in Thomson Reuters' Taxnet Pro, 16 December 2013

Taxand's Take

The changes to the special tax regime on debt securities are bound to stimulate further the debt instruments market in Portugal and facilitate the raising of financing from non-resident investors.

Groups operating on the Madeira international business centre should continue to monitor the impact of revised taxable income ceilings and also of proposed changes to the CIT (still pending in parliament), which are also bound to have a positive impact on current or new corporate structures.

Taxand's Take Author