August 11, 2021
Tax changes potentially affecting non-domiciled companies in Portugal
Following the approval of the Portuguese Budget Law for 2021, a number of changes have taken effect with regard to real estate in the jurisdiction.
Similarly, to the issues we encountered in 2017 whereby the “effective control and management” was being challenged by the Portuguese Government, it has been brought to our attention by a number of Law Firms in Portugal that the new Budget has introduced further changes that may affect your current situation.
The following changes will affect corporate structures that already own, or are considering purchasing, property in Portugal:
- The general Property Purchase Tax (“PTT” or “IMT”) on purchase of properties by entities resident in blacklisted jurisdictions has been broadened. Starting as from January 1, 2021, the highest PTT rate (set at 10%) will also be applicable to the acquisition of Portuguese property by companies that are directly or indirectly controlled by companies or entities domiciled in a jurisdiction included in the Portuguese blacklist.
- The same approach applies for Municipal Property Tax (“MPT” or “IMI” – annual rates) purposes, where properties that are directly or indirectly controlled by companies or entities domiciled in a jurisdiction included in the Portuguese blacklist will be subject to an annual 7.5% rate.
Consequently, these changes can also apply to existing structures that use nominees to hold the companies’ shares, depending on where those are domiciled.
Who are the subjects/entities that can be affected by the changes?
- All corporate entities – be it nominees, shareholders, trustees, etc. – which are domiciled for tax purposes in a black-listed jurisdiction.
- Companies which are directed or indirectly part of a structure of companies, that are domiciled in a blacklisted jurisdiction.
Therefore, we believe that any client that has a US LLC with nominees, shareholders, trustees in a black listed jurisdiction such as Gibraltar, should re-valuate their current structures and consider the new rules. We would strongly recommend they contact their representative in Portugal to take the relevant advice.
Alternatively, in the same way as we previously assisted with the appointment of US Operating Managers in 2017, we can provide nominee services in the US where the company is registered and domiciled.
If this option is of interest to you please contact your Company Administrator in order to advise you of the costs and requirements as we would need to undertake various changes to the company.