Decree-law no. 7/2015, dated 13 January, introduced important changes to the taxation system of revenues obtained by investors in all funds located and operating in Portugal.

Taxation in Portugal had hitherto been levied on gains and other revenues earned by funds irrespective of costs incurred in achieving them.

One of the negative consequences of this regime was that it did not allow investors, particularly foreign ones, to obtain any tax credit from the authorities of their country of residence. Consequently, this lead to economic double taxation in both countries: the one where the fund is located and the one where the investor is a resident.

Portuguese government concluded that this taxation is not competitive vis-à-vis other countries where tax regimes are more favourable for investors.

The new tax regime provides for direct taxation of investors to be levied on revenues distributed by the fund, and this will allow an easier comparison to be made with similar foreign funds as a means to attract more foreign investment in Portuguese funds.