Portuguese Stability and Growth Program 2010

Paris, 12 juillet 2010 - Visualiser l'eAlerte

Under the Stability and Growth Program for 2010 and 2011, the Portuguese Government has introduced several measures with a tax impact, including increases of some tax rates.

Corporate Income Tax

The withholding tax rate applicable for several types of income will be increased from 20% to 21.5%. The increased rate applies to income such as interest, dividends, employment income, professional and pension income, as well as other types of capital income.

Additional Tax

For companies with a head office, effective management, or permanent establishments operating within Portugal, a new tax rate of 2.5% was added to Corporate Income Tax (named “Derrama Estadual”). This new tax rate is only applicable to individual annual taxable profits exceeding EUR 2 million prior to the deduction of tax loss carry forwards. For consolidated tax groups the tax should be assessed on each company's taxable profit.

Stamp Tax

Stamp Tax rates on capital for loans granted to consumers were also increased. The new rates are expected to be effective July 1, 2010.

Tax Information Exchange Agreements

Following the signing of Tax Information Exchange Agreements (TIEA) with Gibraltar and Andorra, Portugal has signed similar agreements with Bermuda and Cayman Islands. The entrance into force of the TIEAs shall lead to the removal of those territories from the "black list" of tax heavens. This is especially relevant as their inclusion on the “black list” precluded any entities resident in those jurisdictions from benefiting from the domestic exemption applicable to capital gains and capital income derived from bonds by non-resident entities. Note that since these jurisdictions are still low tax countries, CFC and other anti-avoidance rules continue to apply.

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