On February 27 2012 Parliament set forth an amendment to the Penal Code to criminalise illegitimate wealth.

The amendment would make it unlawful to acquire or hold, either directly or through another individual or company, assets that are incompatible with the subject's legitimate income and assets (based on information submitted to the tax authorities), if the origin of such wealth is undetermined. The offence will be punishable by up to three years' imprisonment. No crime is committed if the sum in question is less that 100 times the minimum national salary (approximately €50,000). However, if the sum exceeds 350 times this amount, the penalty will be imprisonment for between one to five years .

The amendment also defines 'wealth' - to include all assets in Portugal or abroad - and identifies the criminal liability of companies, public officials, political office holders and other individuals (for further details please see "New crime targets illegitimate wealth").

The introduction of this new offence could prove to be a vital mechanism to prevent corruption and support tax collection. However, its legitimacy has been widely questioned. Before deciding on whether it should be promulgated, the president submitted the amendment to the Constitutional Court.

On April 4 2012 the court held that the articles of the decree which create the new offence are unconstitutional. The incriminating rules do not clearly define a criminal asset in legal terms; nor do they allow for the identification of the prohibited action or omission. They therefore violate Articles 18(2) and 29(1) of the Constitution. These articles provide that the law may not restrict the fundamental rights and liberties except as expressly set out in the Constitution, and that no one may be criminally condemned if there is no prior law that declares the action or omission to be punishable.

Furthermore, the court noted that a discrepancy between a person's wealth and that person's legitimate income and assets would be presumed to be illicit, which would violate Article 32(2) of the Constitution on the presumption of innocence.

This ruling will delay the introduction of the crime of illegitimate wealth, which will need a fundamental revision before its political proponents try to pass the amendment once again.

For further information on this topic please contact Paulo de Sá e Cunha or Marta Saramago De Almeida at Cuatrecasas Gonçalves Pereira SLP by telephone (+351 21 355 3800), fax (+351 21 355 3800) or email ([email protected] or [email protected]).