PORTUGAL

Source: IMF, International Financial Statistics, July 2021.

• The Portuguese central bank is Banco de Portugal (www.bportugal.pt).
• The Banco de Portugal is a member of the European System of Central Banks (ESCB) and operates certain activities, such as issuing currency, under the authority of the European Central Bank (ECB – www.ecb.europa.eu).

Bank supervision

• In November 2014, the ECB, via the Single Supervisory Mechanism (SSM), assumed responsibility for supervising the financial stability of banks operating within the euro zone. However, while the ECB has final supervisory authority over all banks operating within the euro zone, it will only directly supervise those banks classified as ‘significant’ under the terms of the SSM (115 significant banking groups have been recognized to date). ‘Less significant’ banks will continue to be supervised by the national supervisory authority, i.e. the Banco de Portugal.
• The National Council of Financial Supervisors (CNSF) promotes cross-sector financial supervision and cooperation with overseas regulators.

• Lifting fees are applied on payments between resident and non-resident bank accounts.

• DISCLOSED / UNDISCLOSED 

Both are available. Undisclosed programmes are only offered to well-rated companies. 

• RECOURSE / NON-RECOURSE 

Mainly non-recourse factoring, however recourse programmes are offered to high quality clients. 

• STRUCTURED PRODUCTS 

Reverse factoring under conditions rating in the group. 

• EXPORT / IMPORT 

Export factoring is usually done through the BNP Paribas Factoring network and FCI. 

• CONCENTRATION REQUIREMENTS 

A maximum limit of 50% applies. 

• MAX. PREPAYMENT % 

Average 95%. 

• CREDIT COVER % 

90% to 95%, reinsurance is a must. 

• USUAL FUNDING PERIOD 

Maximum 90 days after due date. 

• OFF-BALANCE SHEET SOLUTIONS 

Ability to create structures that meet the requirements of independent auditors, to be classified as “Off-balance sheet”. 

• INVOICE TRANSFER 

Integrated IT solutions offered (TeleFactor). 

• ON-LINE APPLICATIONS 

Integrated IT solutions are offered for portfolio information: TeleFactor, own developed system by BNP Paribas Factor France. 

• DELAYED DUNNING 

Available, usual terms between 30 and 45 days. 

• DATA FACTORING 

Available. 

• CURRENCIES OF FINANCE 

EUR, USD, GBP and JPY.

• Credit transfers are used by companies to pay salaries and suppliers, and to make tax and treasury payments.
• The use of credit transfers increased 8% in volume and 3.5% in value in 2020. Instant transfers increased by 81.3% in volume and 50.4% in value.
• SEPA credit transfers can be settled via SICOI’s SEPA Credit Transfers subsystem or STEP2.
• Approximately 36 banks in Portugal participate in the SEPA credit transfer scheme.
• Low-value, non-SEPA credit transfers are settled via SICOI on a next-day basis.
• High-value and urgent domestic and cross-border (within the euro zone) credit transfers with a value greater than EUR 100,000 are settled in real time via TARGET2.
• High-value and urgent cross-border credit transfers can also be settled with end-of-day value via the Euro Banking Association's EURO1 system. Five banks in Portugal participate directly in EURO1.
• High-value, cross-border credit transfers in domestic and other currencies can be processed via SWIFT and settled through correspondent banking and bank branch networks.
• The European Payment Council’s SCT Inst scheme (a pan-European 24/7 instant payment scheme for SEPA credit transfers) enables the transfer of funds (the maximum threshold value is EUR 100,000) to another account in less than ten seconds. There are 16 participants.
• EBA Clearing and Italy’s SIA Group have developed and implemented a pan-European platform for instant EUR payments called RT1. It is fully compliant with the SCT Insts scheme and is in line with the ISO 20022 global messaging standards for instant payments.
• EBA Clearing has launched a pan-European request to pay (R2P) infrastructure solution with the support of 27 payment service providers from 11 countries. The new 24/7 service is compatible with the SCT and SCT Inst schemes and allows payees to take the initiative to request a specific payment from the payer.
• TIPS is a pan-European service for the settlement of instant payments in central bank money. The service enables payment service providers and ACHs with access to TARGET2 to offer fund transfers 24/7, 365 days a year. TIPS is aligned with SCT Insts. It is primarily focused on EUR payments but is technically capable of settling payments denominated in other currencies.

• Direct debits are used for regular payments, such as utility bills.
• SEPA CORE and B2B direct debit schemes can be settled on a same-day basis via SICOI’s SDD SEPA subsystem or STEP2. There are 29 participants in the Core SDD scheme and 12 on the B2B SDD scheme.

• The cheque is an important cashless payment instrument used by both consumers and companies. In 2020, cheque volume and value declined 27.9% and 27.8% respectively.
• Low-value cheques (with a value of EUR 10,000 or less) are truncated into electronic items before being settled via SICOI on a next-day basis.
• High-value cheques (with a value greater than EUR 10,000) are processed via the CIIC, the interbank cheque image exchange system. There are 40 participants in the CIIC.
• Cheques with a value greater than EUR 500,000 are processed via TARGET2-PT.

• Card payments are increasingly popular, especially for retail transactions. In 2020, card payments accounted for 85% of the volume of total cleared transactions.
• There were 24.7 million debit cards and 8.65 million credit and charge cards in circulation at the end of 2020.
• Visa Electron, Maestro and Cirrus-branded debit cards are the most widely issued.
• Visa and MasterCard-branded credit cards are the most widely issued. UNIBANCO, a national credit card, is issued by UNICRE.
• Card payments are cleared via Multibanco.
• Contactless card technology is available in Portugal. In 2020, contactless payments accounted for 23.6% of total card payments in terms of volume and for 12.9% in terms of value.
• The majority of cards issued are SEPA-compliant with EMV chips.

• There were 14,300 ATMs in Portugal at the end of 2020.
• There were 393,600 EFTPOS terminals in Portugal at the end of 2019.
• All payments are cleared via Multibanco.
• All ATMs and POS terminals are EMV-compliant.

• Electronic wallet schemes are becoming increasingly popular in Portugal.
• Pre-paid cards are issued by some retailers, phone companies and universities.
• Mobile payment schemes such as paysafecard and Google Pay are available but adoption to date has been slow.

• BNP Paribas' Global Trade Solutions (GTS) team in Portugal offers a comprehensive range of trade finance products and solutions to corporates headquartered in, and operating in Portugal. The local GTS team comprises a senior trade manager based in Lisbon, with the support of the GTS team in Spain for advisory services. In addition, a team of 3 senior trade officers is dedicated to letters of credit, guarantees and documentary collections. As a result of the strength of this expertise, BNP Paribas is able to offer customised solutions, advisory and training to support clients' diverse needs.

• The EU has trade agreements in place with over 30 countries.
• The EU is currently in free trade negotiations with a number of countries, including the Association of Southeast Asian Nations (ASEAN), Australia, Indonesia, Mercosur (the Southern Common Market), Uruguay, and the USA.
• The EU-UK Trade and Cooperation Agreement came into force on 1 May 2021.

Sources: IMF, International Financial Statistics, July 2021.

• Import licences are required for items with quantitative restrictions from outside the EU and for items from within the EU that are deemed to be of national interest or of a strategic nature.

• Tariffs are set according to the EU customs code for all imports from outside the EU, with higher tariffs for agricultural imports.

• None 

• None 

• Portugal prohibits the import of certain items in line with EU regulations and UN Security Council resolutions.
• Specific imports are prohibited in order to protect fauna and flora, for health and safety or moral reasons, and/or for national security.

• Licences are required when exporting goods subject to international controls. 
• Licences are also required when exporting items subject to strategic controls, dual-use goods, precursor chemicals; and agricultural goods subject to the Common Agricultural Policy (CAP).

• None

• None 

• Portugal has implemented the EU directive on export credit insurance.
• Companhia de Seguros de Créditos (COSEC), Portugal’s national export credit agency, provides state-supported export credit insurance.
• Export credit insurance is also available from private insurance companies.
• Export financing is available from commercial banks.

• Portugal prohibits the export of certain items in line with EU regulations and UN Security Council resolutions.

• Portugal does not apply exchange controls.

• Tax rules follow accounting rules with regard to financial instruments. Revaluations registered in the profit and loss account are recognised for tax purposes unless they represent more than 5% of the share capital of the company or assets not registered on the stock market (in this event, the revaluations are taxed on the disposal of the assets). Revaluations recognised against equity are only relevant at the point of disposal of financial instruments.

• Interest and financing costs considered indispensable to the company’s activity are accepted as costs for tax purposes, except for pure holding companies (sociedades gestoras de participações sociais) when related to the acquisition of shares that lead to exempt capital gains or losses.

• Foreign exchange gains or losses are taxed when registered in the profit and loss account of financial statements, except for those related to assets that generate capital gains for tax purposes. The income subject to taxation is always assessed in EUR.

• Three types of rulings are available to taxpayers: general, advance and advance pricings agreements (APAs).
• A general ruling provides the tax authorities’ general interpretation of the law.
• An advance ruling provides the taxpayer with the tax authorities’ position on a specific transaction.
• In an APA, the taxpayer obtains an agreement on the transfer pricing policies that will be adopted in transactions between related entities.

• Realised capital gains are included in taxable profits for corporate tax purposes, but gains on the disposal of shares may be exempt from tax under the participation exemption regime.
• The acquisition cost of capital assets disposed of after a minimum ownership period of two years may be adjusted for inflation, using official indices.
• Fifty per cent of gains derived from the disposal of tangible fixed assets and financial assets held for at least one year may be excluded from taxation if the total disposal proceeds are re-invested within a prescribed period. The reinvestment regime is not applicable to gains assessed in the context of mergers, demergers or asset-for-share deals, nor will it apply when assets are transferred with purposes other than the business carried out by the taxpayer.
• Capital gains derived from the indirect disposal of certain immovable property located in Portugal are subject to corporate income tax. This includes the disposal by a non-resident company of the shares (or similar rights) held in another non-resident company, if, during the 365 days preceding the disposal, more than 50% of the value of those shares (or rights) is related , directly or indirectly, to immovable property in Portugal (subject to certain conditions).

• Interest paid to a non-resident company is subject to withholding tax at 25% is applicable (35% if paid to a listed tax haven) unless reduced under a tax treaty. Under the EU Interest and Royalties Directive, payments to qualifying EU recipients are exempt.
• Dividends paid to a non-resident company are subject to withholding tax at 25% (35% if paid to a resident of a listed tax haven). The rate may be reduced to 0% where the conditions for the domestic participation exemption regime are met and the recipient of dividends is resident in the EU/EEA or a tax treaty jurisdiction. If the participation exemption does not apply, the rate may be reduced under a tax treaty.
• Royalty payments made to a non-resident company are subject to withholding tax at 25% (35% if paid to a resident of a listed tax haven) unless the rate is reduced under a tax treaty. Under the EU Interest and Royalties Directive, payments to qualifying EU recipients are exempt.
• Technical service fees paid to a non-resident company are subject to withholding tax at 25% unless that rate is reduced or eliminated under a tax treaty.

• Portugal has 80 tax treaties, of which 78 are in force.
• The OECD MLI entered into force on 1 June 2020.
• Portugal, as part of the OECD/G20 Base Erosion and Profit Shift (BEPS) initiative, has signed a multilateral co-operation agreement with 30 other countries (‘the MCAA’). Under this multilateral agreement, information will be exchanged between tax administrations, giving them a single, global picture on some key indicators of economic activity within multinational enterprises (MNE).
• With country-by-country reporting, tax administrations of jurisdictions where a company operates will have aggregate information annually relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in. The information will be collected by the country of residence of the MNE group, and will then be exchanged through exchange of information supported by such agreements as the MCAA. First exchanges under the MCAA started in 2017–18 on 2016 information. Thin capitalisation

• Specific limitations apply to the tax deductibility of interest expense. Net financial costs are deductible only up to the greater of the following thresholds: EUR 1 million or 30% of the EBITDA as adjusted for tax purposes.  Companies reporting under a tax group regime may apply the relevant thresholds at group level. The amount exceeding the threshold in a given year may be carried forward to the following five years up to the 30% threshold.

• Portugal’s transfer pricing rules generally follow OECD transfer pricing guidelines. The tax authorities may make pricing adjustments if special relations exist between the parties. Companies must prepare documentation to support their transfer pricing policies.
• Taxpayers can request from the Portuguese tax authorities an APA, which sets out the transfer pricing methods and will ensure compliance with the arm’s-length principle in transactions entered into between related parties. The agreement will be binding on the Portuguese tax authorities, once concluded. 

• Subject to exemptions, stamp duty is levied on various types of agreements, deeds and documents, as well as certain transactions not subject to VAT, such as the acquisition of real estate, leases and subleases, financial transactions, insurance premiums and certain bets.

•  There are no specific tax rules that apply to cash pooling arrangements.

• Please see Stamp duty above.

All information supplied by Deloitte Touche Tohmatsu and Deloitte Highlight 2021 (see www.deloitte.com).