The government's move to ease taxes on investments applies to investors who hold shares or participations in funds, as well as to Portuguese companies that decide to enter the stock markets.
The new law granting tax benefits to investments in the capital market has been approved by Parliament and promulgated by the President of the Republic. It is therefore important to know what the law says, in order to understand what is at stake and what cases it covers.
Furthermore, the Minister of Treasury and Finance, João Silva Lopes, promised favorable conditions for investments in the capital market, particularly with regard to the financial nature associated with them.
He himself later stated that these measures constituted “a first step in creating a competitive, innovative and conducive environment for economic growth.”
What type of investments will be covered and in what form?
The law proposed by the government stipulates that the current balance between capital gains and losses on securities, as well as shares in investment funds, will be reduced after two years of investment. In this context, taxes could be reduced from 28% to a minimum of 19.6%.
More specifically, for investments with a duration of between two and five years, 10% of the income generated is now excluded from taxes, meaning that the overall tax rate drops to 25.2%. For investments with a duration of between five and eight years, the proposal excludes 20% of the income, meaning that the tax rate is now 22.4%.
Finally, for investments over 8 years, the proposal exempts 30% of the income generated from taxes, bringing the total rate to 19.6%.
For investments less than two years old, the rate remains at 28%.
Are there also changes to the corporate tax framework?
Yes, the issue is IRC exemption on income obtained through investments such as venture capital and credits, as long as they are formed and operated in accordance with national legislation.
For companies moving forward with listing on the stock exchange, what changes?
For Portuguese companies that become listed on the stock exchange, under certain criteria, it will be possible to deduct the expenses (such as fees and commissions) that this process entails from the IRS.
Among the requirements, the law states that the company must have at least 20% of its distributed capital, a context in which expenses are increased “by an amount equal to 100% of the amount in question, for the purposes of determining taxable profit.”
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