{"id":1874,"date":"2013-12-05T15:25:31","date_gmt":"2013-12-05T15:25:31","guid":{"rendered":"https:\/\/msmadvogados.pt\/notes-on-the-revision-of-the-collective-investment-undertakings-tax-regime\/"},"modified":"2021-09-16T16:00:10","modified_gmt":"2021-09-16T16:00:10","slug":"notes-on-the-revision-of-the-collective-investment-undertakings-tax-regime","status":"publish","type":"post","link":"https:\/\/msmadvogados.pt\/en\/notes-on-the-revision-of-the-collective-investment-undertakings-tax-regime\/","title":{"rendered":"Notes on the revision of the Collective Investment Undertakings tax regime"},"content":{"rendered":"

In the national legal system, Collective Investment Undertakings, or CIUs in abbreviation, are institutions, whether or not endowed with a legal personality, which seek collective investment from investors as a means of sharing risks and subject to the pursuit of the exclusive interest of the participants.<\/p>\n

At the domestic level, and following the transposition into Portuguese law of the Community Directives and following the guidelines and recommendations of the European Securities and Markets Authority on this matter, their legal and regulatory systems were recently revised and altered, abandoning the closed types of CIU and defining new terms and conditions under which investment units may be established, marketed and admitted to trading.<\/p>\n

From a taxation point of view, as CIUs function as vehicles for attracting investment, the State Budget for 2014 (recently approved by Parliament and which will come into force on 1 January) includes, among other measures, legislative authorisation granted to the government to revise the tax regime applicable to CIUs and CIU participants.<\/p>\n

As we know, tax matters are not the only factors determining an investment decision, however, good reforms will certainly promote an increase in the competitiveness of the Portuguese economy as a destination for foreign investment.<\/p>\n

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  1. Therefore, in the light of the current CIU tax framework (provided for in articles 22 and following of the Tax Benefits Statute), it was firstly considered appropriate, under the terms of the legislative authorisation referred to above, to introduce into the system a factor of modernisation and thereby strengthening the international competitiveness of this type of investment vehicle.<\/li>\n<\/ol>\n

    As a result, in terms of the income earned by CIUs, the direction and extent of the changes introduced were as follows:<\/p>\n

    (i) fiscal neutrality in the taxation regime of these entities, that is, taxation will be passed on to the investors at the time of income distribution or redemption of the investment units at a single, subsequently defined, rate;<\/p>\n

    (ii) imposition of a minimum annual distribution of between 70% and 90% of the results; and<\/p>\n

    (iii) subject to Stamp Duty, corresponding to a fixed percentage of between 0.01% and 0.2% on the net value of the assets.<\/p>\n

    Furthermore from this point of view, legislative authorisation is granted for the establishment of a transitory regime allowing for the transition from investment funds to investment companies.<\/p>\n

    In the area of investors, unit-holders and\/or shareholders, residents and non-residents, corporate bodies and individuals, this revision will cover, in particular, the rules on the time of taxation, the rate to be applied, the option for aggregation of income, the elimination of double taxation and the exemptions applicable to distributed income.<\/p>\n

    Finally, this legislative authorisation also covers the treatment of the matter in relation to other CIUs that apply the tax system currently set out in articles 22 and following of the Statute of Tax Benefits.<\/p>\n

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    1. The legislative authorisation in question also takes the opportunity to introduce anti-abuse rules and control mechanisms into the system that are necessary for the Tax Authority to verify the requirements for the material application of the tax regime to be created. The government is therefore authorised to legislate on matters relating to<\/li>\n<\/ol>\n

      (i) the regime of proof of the quality of the investor<\/p>\n

      (ii) compliance with ancillary obligations<\/p>\n

      (iii) the obligation to disclose relevant information on distributed values and withholding tax;<\/p>\n

      (iv) legal consequences of non-compliance with the regime; and<\/p>\n

      (v) the joint and various liabilities of the management entities.<\/p>\n

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      1. In addition to the aforementioned legislative measures, it should also be noted that in 2014 the Government was also authorised to review and systematise the special taxation regime for income from debt securities and to establish a tax regime for interest due or paid by companies with registered offices or effective management in Portuguese territory arising from loans granted by credit institutions from another European Union or European Economic Area member state.<\/li>\n<\/ol>\n

        All these legislative authorisations have a direct impact on the corporate income tax reform occurring in parallel with the 2014 State Budget. The reform aims to attract investment and strengthen international competitiveness by simplifying the tax system, enhancing its certainty and efficiency, reducing complexity and restructuring the Portuguese international tax policy in line with the tax policies adopted in Europe and internationally.<\/p>\n

        In short, despite the segregation of measures, the reforms clearly aim to make Portuguese taxation more attractive internationally.<\/p>\n

        in FundsPeople
        \n5th December 2013<\/p>\n

        See Article<\/a><\/p>\n<\/div><\/div><\/div>