Ministry of Foreign Affairs
Notice No. 87/2013 of 1 August
Announcing the completion of the internal constitutional requirements for the approval of the Convention between the Portuguese Republic and the Republic of Cyprus to Avoid Double Taxation and Prevent Tax Evasion in Matters of Income tax, signed at Brussels on 19 November 2012.
Lei No. 55/2013 of 08 August
Completing the transposition of Council Directive 2003/49/EC of 3 June 2003, on a common system of taxation applicable to interest and royalty payments made between associated companies in different Member States, and amending the Corporate Income Tax Code, adopted by Decree-Law No. 442-B/88, of 30 November.
In accordance with this legislative change, interest or royalty payments due or paid by commercial or civil companies incorporated under a commercial form, cooperatives and public companies resident in the Portuguese territory, or by a permanent establishment of a company of another Member State of the European Union therein located, are exempt from Corporate Income Tax imposed on those payments in Portugal, provided that the beneficial owner of the interest or royalties is a company of another Member State of the European Union or a permanent establishment situated in another Member State of the European Union of a company of a Member State of the European Union and the requirements and conditions set out in the Directive are met.
This exemption from Corporate Income Tax also applies to interest and royalty payments between a company residing in Portuguese territory or a permanent establishment therein situated and a company resident in the Swiss Confederation or a permanent establishment therein situated, under the terms and conditions referred to in article 15 of the Agreement on taxation of interest and royalties between the European Community and the Swiss Confederation, whenever the requirements and conditions set out in the Directive are met.
The effects of Law No. 55/2013 of 8 August apply to interest and royalty due or paid after 1 July 2013.
Ministry of Finance
Portaria (Ordinance) No. 255/2013 of 12 August
Approving the new official forms attached to section 40 (VAT adjustments in favour of the taxable person) and 41 (VAT adjustments in favour of the State) of the VAT return.
Law No. 56/2013 of 14 August
Amending Law No. 103/97 of 13 September, on the specific tax regime for sports companies.
Among the amendments made, the following are noteworthy:
- Rules on specific expenses: the amounts granted to the founder club having the status of public utility, invested by the latter in facilities or sports training are entirely considered tax deductible period costs.
Additionally, and without prejudice to the application of article 23 of the Corpo-rate Income Tax Code, 20% of the amounts paid by sports companies for the use of the image rights of players and coaches are tax deductible costs.
- Amendment to the legal framework of amortization of the contracting rights of professional players: the amount subject to depreciation of the contracting right can include the costs incurred with the player’s training, provided that duly certified by an independent chartered accountant.
The amounts paid by sports companies to non-resident entities and therein subject to a clearly more favourable tax regime, in particular where their territory of residence is included in the list approved by ordinance of the Government member in charge for finance, are not tax deductible.
Ministry of Foreign Affairs
Notice No. 88/2013 of 16 August
Announcing the completion of the internal requirements for the approval of the Convention between the Portuguese Republic and Japan to Avoid Double Taxation and Prevent Tax Evasion in Matters of Income Tax, signed in Lisbon on 19 December 2011.
Ministry of Finance
Portaria (Ordinance) No. 274/2013 of 21 August
Amending for the fourth time Portaria No. 321-A/2007 of 26 March, creating the tax audit file template.
Law No. 70/2013 of 30 August
Approves the legal regime of the Employment Compensation Fund ("fundo de compensação do trabalho" – "FCT"), the Equivalent Mechanism ("mecanismo equivalente") and the Employment Compensation Guarantee Mechanism ("fundo de garantia de compensação do trabalho" – "FGCT").
Among the amendments made, with tax relevance, the following are noteworthy:
- Tax levied under the Personal Income Tax ("IRS"): compensation paid, under article 33 no. 2 of the Law No. 70/2013 of 30 August, by the FCT to an employee where the employment contract is terminated and the employee has right for a compensation under article 366 of the Labour Code, is subject to IRS under the article 2 no. 4 to 7 of the IRS Code.
- Deductible costs for Corporate Income Tax ("IRC") purposes: payments made by the employer to the FGCT are considered tax deductible costs under the article 23.º no. 1 paragraph a) of the IRC Code.
- Taxable income: the reimbursement of the employee’s individual account balance to the employer is deemed to be a taxable income, in an amount corresponding to the positive valuation generated by the investment of amounts allocated to FCT, deducted from the related administrative expenses.