Académique Documents
Professionnel Documents
Culture Documents
Taxation
FUNDS AND FUND MANAGEMENT 2010
3.1
Taxation of funds
The investment funds tax regime is, mostly, governed by articles 22, 23, and 24 of the Tax Benefits Code (TBC), as well as by several other separate laws.
2 Portugal Taxation
Funds of funds
The income derived from the participation units held by funds in other funds incorporated according to the Portuguese legislation is exempt from corporate income tax (imposto sobre o rendimento das pessoas colectivas, CIT). Any other income obtained by these funds not comprised in the abovementioned rule will be subject to tax in the terms referred to for securities investment funds.
2010 KPMG & Associados - Sociedade de Revisores Oficiais de Contas, SA, a Portuguese company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
3 Portugal Taxation
Moreover, corporate restructuring and internationalization funds (fundos de investimento de reestruturao e internacionalizao empresarial, FRIE) are subject to the same tax regime as venture capital funds.
Real Estate investment funds in forest resources (fundos de investimento imobilirio em recursos florestais, FIIRF)
Income obtained by real estate investment funds incorporated and managed under the Portuguese legislation is exempt from CIT, provided that at least 75 percent of its assets are related to the exploration of forest resources and, provided that this exploration is submitted to approved and executed plans of forest management, in accordance with the regulation applied or forest certification carried through by the legally certified entity.
Real estate investment funds for housing rental (fundos de investimento imobilirio para arrendamento habitacional)
Income obtained by FIIAH (incorporated and operating under the Portuguese legislation between 1 January 2009 and 31 December 2014) is exempt from CIT. It is also important to refer that the real estate buildings assigned to the portfolio of FIIAH benefit from IMI exemption, if destined to rental of permanent lodging. The acquisitions of real estate covered by the new regime are exempt from IMT and stamp duty, as long as certain requirements are met. This incentive will be in force until 31 December 2020, date in which the FIIAH will be converted into real estate investment funds and entirely subject to the respective tax regime (in spite of the possibility of the referred funds being winded-up at an earlier date).
2010 KPMG & Associados - Sociedade de Revisores Oficiais de Contas, SA, a Portuguese company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
4 Portugal Taxation
Other funds
Fundos de gesto de patrimnio imobilirio (FUNGEPI) are open-ended real estate/property investment funds. Accordingly, their tax regime is the one applicable to the real estate/property investment funds. Special investment funds (fundos especiais de investimento, FEI) are a type of undertaking for collective investments which allow a differentiated combination of the rules, techniques, and limits applicable to securities investment funds and which may invest in assets other than securities, financial derivatives, and liquidity. These types of funds are, in principle, subject to the same tax regime as the other securities investment funds.
Entities subject to CIT and individuals that carry out a commercial, industrial, or agricultural activity, although not subject to withholding tax on income received by the funds, must include all the proceeds in their annual tax return hence being taxed at the general rates. Any amount previously withheld in the sphere of the fund will be deemed as a payment on account and, consequently, as a tax credit.
2010 KPMG & Associados - Sociedade de Revisores Oficiais de Contas, SA, a Portuguese company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
5 Portugal Taxation
Accordingly, entities subject to CIT will be taxed at the general tax rate of 12.5 percent to the amount of EUR 12,500 and 25 percent to the remaining exceeding amount plus a municipal surcharge of up to 1.5 percent on the taxable income. Individuals that carry out a commercial, industrial, or agricultural activity will be subject to the respective PIT progressive rates which may vary from 10.5 percent to 42 percent. Individual unitholders that do not carry out a commercial or agricultural activity are tax exempt. They may, however, opt to aggregate the proceeds (i.e. include them in their income tax computation) and any amount previously withheld in the sphere of the fund will be deemed as a payment on account and, consequently, as a tax credit. Unitholders are, in any event, only subject to tax on the income distributed by the fund or derived from the redemption of participation units and not on any amounts not distributed.
Securities investment funds (fundos de investimento mobilirio, UCITS) and real estate/property investment funds (fundos de investimento imobilirio, FII)
Investors receiving income derived from units in UCITS and FII, incorporated and operating under Portuguese legislation that opt to aggregate that income in their income tax computation, may deduct 50 percent of the profits or liquidation proceeds distributed to the funds under certain requirements. Capital gains obtained by resident individuals in a UCITS, as well as in a FII, are exempt from taxation. However, the mentioned income may be aggregated with the investors income. Moreover, in what concerns capital gains obtained by resident individuals having a commercial, industrial, or agricultural activity or by corporate entities are deemed as profits and the tax withheld or due by the fund is deemed as a payment on account. Furthermore, the capital losses obtained by the unitholders are not considered when the buyer is domiciled in a jurisdiction with a more favorable tax regime or in a black listed jurisdiction foreseen in the Government Rule no. 150/2004, of 13 February.
2010 KPMG & Associados - Sociedade de Revisores Oficiais de Contas, SA, a Portuguese company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
6 Portugal Taxation
out a commercial, industrial, or agricultural activity, or at the rate of 26.5 percent (12.5 percent to the amount of EUR 12,500 and 25 percent to the remaining exceeding amount plus municipal surcharge of up to 1.5 percent) if they are entities subject to CIT. However, please note that these cannot benefit from any tax credit. Income derived from units in funds of funds obtained by individuals not comprised in the above-mentioned situation or by entities subject to CIT that do not mainly carry out an activity of a commercial, industrial, or agricultural nature is exempt from taxation.
Venture capital funds (fundos de capital de risco, FCR) and real estate investment funds in forest resources (fundos de investimento mobilirio em recursos florestais, FIIRF)
The income derived from units in venture capital funds and in real estate investment funds in forest resources incorporated and operating under the Portuguese legislation are subject to withholding tax at a rate of 10 percent, and not subject to withholding tax if the unitholders entities are exempt regarding capital income. This withholding represents a final payment, whenever the unitholders are nonresident entities without permanent establishment in Portuguese territory or whenever the income is obtained by resident individuals, subject to PIT, that do not carry out a commercial, industrial or agricultural activity. However, these individuals may opt to aggregate the proceeds with their taxable income and the previously withheld amounts will be deemed as a tax credit. Capital gains from the sale of units in venture capital funds and in real estate investment funds in forest resources, whether obtained by non-resident entities who do not benefit from the exemption foreseen in article 27 of TBC1 whether obtained by resident individuals, subject to PIT, that do not carry out a commercial, industrial or agricultural activity and that do not opt to aggregate the proceeds with their taxable income, are subject to tax at a rate of 10 percent on the positive difference between the capital gains and the capital losses of the year.
1 The exemption from CIT regarding capital gains obtained by non-resident entities is not applicable whenever: (i) more than 25 percent of the non-resident entitys share capital is directly or indirectly held by Portuguese resident entities, (ii) the non-resident entity is resident in a tax haven, or (iii) the participation relates to a Portuguese real estate company (namely a company in which more than 50 percent of its assets consist of real estate property located in Portugal) or to a resident holding company which controls such real estate company.
2010 KPMG & Associados - Sociedade de Revisores Oficiais de Contas, SA, a Portuguese company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
7 Portugal Taxation
Unitholders of venture capital funds and of real estate investment funds in forest resources, incorporated and operating under the Portuguese legislation, that opt to aggregate the income obtained are only subject to tax on 50 percent of the profits distributed to the funds, at the general tax rates 10.5 percent to 42 percent if individuals or 26.5 percent (12.5 percent to the amount of EUR 12,500 and 25 percent to the remaining exceeding amount plus municipal surcharge of up to 1.5 percent on taxable income) if entities subject to CIT.
Real estate investment funds for housing rental (fundos de investimento imobilirio para arrendamento habitacional, FIIAH)
Income received by investors of FIIAH is exempt from (Imposto sobre o rendimento das pessoas singulares, PIT) and CIT, with the exception of income obtained by non-resident entities in territories subject to a privileged tax regime, cases in which a 20 percent withholding tax rate applies.
the unitholders are entities held in more than 25 percent by Portuguese resident entities;
2010 KPMG & Associados - Sociedade de Revisores Oficiais de Contas, SA, a Portuguese company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
8 Portugal Taxation
the unitholders are resident in a territory with a privileged tax regime; or the participation relates to a Portuguese resident real estate company (namely a company in which more than 50 percent of its assets consist of real estate located in Portugal) or to a resident holding company which controls such a real estate company), on the redemption of those units or profits distributed by the fund.
Income received by investors of FIIAH is exempt from PIT and CIT, with the exception of income obtained by entities resident in territories subject to a privileged tax regime.
3.6
Entitlement to income
Income arises to the investor only when it is distributed by the fund or in the case of a sale or redemption of the units.
2010 KPMG & Associados - Sociedade de Revisores Oficiais de Contas, SA, a Portuguese company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
9 Portugal Taxation
3.7
Portuguese and foreign funds may benefit from double taxation agreements (DTA) entered into between the foreign country and Portugal. In relation to foreign funds, this generally depends on a communication to the Portuguese tax authorities, including a form signed by the tax authorities of the country of origin of the beneficiary stating that the fund qualifies for the treaty purposes. Presently, Portugal has entered into 53 double taxation agreements, namely, with Argelia, Austria, Belgium, Brazil, Bulgaria, Canada, Cape Verde, Chile, Cuba, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Guinea-Bissau (pending official publication to enter into force), Hungary, Iceland, India, Indonesia, Ireland, Italy, Israel, Latvia, Lithuania, Luxembourg, Macao, Malta, Mexico, Morocco, Mozambique, Netherlands, Norway, Pakistan, Peoples Republic of China, Poland, Republic of South Korea, Republic of Singapore, Romania, Russia, Slovakia, Slovenia, South Africa,, Sweden, Switzerland, Spain, Tunisia, Turkey, the United States, United Kingdom, Ukraine, and Venezuela.
3.8
10 Portugal Taxation
Holding companies (sociedades gestoras de participaes sociais, SGPS), venture capital companies (sociedades de capital de risco, SCR), and venture capital investors (investidores de capital de risco, ICR)
The capital gains and capital losses resulting from shares held, for more than one year, by SGPS, SCR, and ICR are not accounted for their taxable income, neither is the financial expenses incurred with its acquisition. However, the rule for gains is not applicable if the shareholdings were acquired from related entities, entities domiciled in a black listed jurisdiction foreseen in the Government Rule no. 150/2004, of 13 February, or from Portuguese entities that benefit from a special regime of taxation and were held for less than three years. Should any of the above-mentioned situations occur, the SGPS, the SCR, and the ICR must aggregate capital gains obtained from the sale of shares with their taxable income, thus being subject to a tax rate of 12.5 percent to the amount of EUR 12,500 and 25 percent to the remaining exceeding amount increased to 26.5 percent if a municipal surcharge of 1.5 percent on taxable income thereon applies.
2010 KPMG & Associados - Sociedade de Revisores Oficiais de Contas, SA, a Portuguese company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
11 Portugal Taxation
However, if the sales proceeds are reinvested in another Portuguese company or in Portuguese debt certificates, those capital gains may only be taxable as to 50 percent of the amount, provided certain requisites are met. The reinvestment has to take place in the year of the sale, the preceding year or in the two subsequent years. This rule is proportionally applied should the proceeds not be fully reinvested. SCR and ICR may deduct, as a tax credit, an amount equal and up to the tax assessment of the previous five years, whenever that amount had been invested in companies with growth and valorization potential. Please note that it is expected the implementation of this regulation for societies placed in the EU, as well.
3.9
Stamp duty is levied on the commissions charged by brokers, dealers, and financial intermediaries on the purchase or transfer of securities at a flat rate of 4 percent. Capital duties are not levied on the flotation of a funds participation units.
KPMG in Portugal
Lus Magalhes KPMG & Associados - Sociedade de Revisores Oficiais de Contas, S.A. Edifcio Monumental Av. Praia da Vitria, 71 - A, 11 Lisbon 1069-006 Portugal Tel. +351 210 110 000 Fax +351 210 110 121 e-Mail: lmagalhaes@kpmg.com
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
2010 KPMG & Associados - Sociedade de Revisores Oficiais de Contas, SA, a Portuguese company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.