portugal - miami... · share capital remuneration borrower may deduct to the taxable profit the...
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Portugal“The 21st Century Hub for International Investments”
PORTUGAL: AGATEWAY TO
INVESTMENT
AROUND THE WORLD
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More than 600 years doing business and building a
relationship with the World - Africa, Brazil,
Macao, India, Japan, China and East Timor
HISTORIC
PERSPECTIVE
Historical Portuguese Presence in the world during the Discoveries age
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HISTORIC
PERSPECTIVE
Today Portugal has a deep understanding of these countries’
environment in various dimensions:
• Linguistic
• Cultural
• Legal (some of the legal systems
of these countries are based on
the Portuguese Law)
• Portuguese Speaking Countries
(spread out for nine countries):
A 240 million people
Portuguese
speaking market
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WHAT IS DIFFERENT
ABOUT PORTUGAL?
Type of
income
Brazil Cape Verde Mozambique Guinea-Bissau
Dividends 10/15% 10% 15% 10%
Interest 15% 10% 10% 10%
Royalties 15% 10% 10% 10%
Double Tax Treaties (Portuguese Speaking Countries)
• Portugal has already entered into DTT s with Brazil, Cape Verde, Mozambique and Guinea-
Bissau
• However, there are several other DTT s being negotiated (namely the first DTT to be
concluded by Angola) and on the verge of being approved and entering into force. In
September 2011, the DTT with East Timor was also negotiated.
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WHAT IS DIFFERENT
ABOUT PORTUGAL?
Portuguese African Countries have competitive measures
focused on the attraction of foreign investment:
• New private investment laws
• Establishing relevant tax exemptions
to entities investing in such countries
(e.g. Angola and Mozambique)
• Huge potential in different areas of
activity: Energy, Infra-structures,
Telecommunications, Real Estate,
Tourism and Agriculture
• Strong economic growth expected in the
following years
• Political stability consolidation in course
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WHAT IS DIFFERENT
ABOUT PORTUGAL?
Type of
income
South Africa Algeria India Morocco Tunisia Macao
Dividends 10%/15% 10%/15% 10%/15% 10%/15% 15% 10%
Interest 15% 15% 10% 12% 15% 10%
Royalties 10% 10% 10% 10% 10% 10%
Double Tax Treaties (other Countries)
• Portugal has also entered into DTT s with South Africa, Algeria, India, Morocco, Tunisia and
Macao
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Type of
income
IRPJ / CSL (income taxes)
(Brazil)
Another Taxes
(Brazil)
Withholding Tax
(Brazil)
Corporate Income Tax
(Portugal)
Dividends Not subject to corporate income
taxation in Brazil. However,
dividend payment is not
deductible to taxable profit
(does not allow tax saving)
Not applicable Not applicable 95% of the dividends are not subject
to taxation (article 23 (2) of PT-
BRA Double Tax Treaty)
(effective taxation at a 1,325% rate)
Share capital
remuneration
Borrower may deduct to the
taxable profit the interest paid
to the shareholders
Not applicable 15% withholding tax Interest subject to a 26,5% general
CIT rate, with a 15% deduct on
account of the withholding taxation
which occurred in Brazil
(corresponds to an effective CIT
rate of 11,5%)
Focusing on Brazil
• Portugal has entered into a quite advantageous DTT with
Brazil
• Dividends are not subject to taxation in Brazil and the DTT
foresees a competitive rule on double taxation elimination
WHAT IS DIFFERENT
ABOUT PORTUGAL?
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Type of
income
IRPJ / CSL (income taxes)
(Brazil)
Another Taxes
(Brazil)
Withholding Tax
(Brazil)
Corporate Income Tax
(Portugal)
Interest on
shareholders
loans
Borrower may deduct to the
taxable profit the interest paid to
the shareholders
Not applicable 15% withholding tax Interest subject to a 26,5% general
CIT rate, with a 15% deduct on
account of the withholding taxation
which occurred in Brazil
(corresponds to an effective CIT rate
of 11,5%)
Royalties The Brazilian entity may deduct
to the taxable profit the royalties
paid to the shareholders
CIDE: 10% rate
PIS: 1,65% rate
COFINS: 7,6% rate
(liability of the Brazilian
entity)
15% withholding tax
(to which will accrue
ISS with a rate
between 2% and
5%)
Royalties subject to a 26,5% general
CIT rate, with a 15% deduct on
account of the withholding taxation
which occurred in Brazil
(corresponds to an effective CIT rate
of 11,5%)
Focusing on Brazil
• CIT rates in Portugal are lower and Portuguese entities are
entitled to a tax credit correspondent to the tax paid in Brazil
WHAT IS DIFFERENT
ABOUT PORTUGAL?
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WHAT IS DIFFERENT
ABOUT PORTUGAL?
Brazil Cape
Verde
Mozambique Guinea-
Bissau
Angola São Tome and
Principe
East
Timor
DTT - - Negotiated
Social
Security
- - - - -
Economic
Cooperation - - - -
Turism - - -
Industry - - -
Reciprocal
Investment
Protection
Other treaties with Brazil and African Countries
• Portugal also has agreements with these countries on other
matters
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WHAT IS DIFFERENT
ABOUT PORTUGAL?
Dividends distributed by Portuguese Speaking African
Countries
• Dividend distributions made by PSAC are exempted of
Corporate Income Tax
Angola
(no DTT)
Mozambique
(DTT)
• Portuguese entity and Angolan entity must be subject to
corporate income tax
• Portuguese entity must held a minimum of 25% of the
Angolan entity share capital for at least 2 years
• Dividends are exempted from Portuguese Tax
• Portuguese entity and Mozambican entity must be subject to
corporate income tax
• Portuguese entity must held a minimum of 25% of the
Mozambican entity share capital for at least 2 years
• Dividends are exempted from Portuguese Tax
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WHAT IS DIFFERENT
ABOUT PORTUGAL?
Portuguese holding companies tax regime
• Examples on dividend distribution from Brazil, Angola and
Mozambique:
Brazil
(DTT)
Angola
(no DTT)
Mozambique
(DTT)
• Participation of at least 10%
• No withholding tax in Brazil
• 95% of the dividends are not subject to
taxation (DTT)
• SGPS exempted from capital gains
in Portugal
• Participation of at least 25%
• Participation hold for at least 2 years
• SGPS exempted from capital gains
in Portugal
• Participation of at least 25%
• Participation hold for at least 2 years
• SGPS exempted from capital gains
in Portugal
Hold CoHold CoHold Co
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WHAT IS DIFFERENT
ABOUT PORTUGAL?
Madeira s International Business Center
• Entities licensed in Madeira are entitled to benefit from EU Directives and Regulations and
DTT s entered into by Portugal
• Qualified income of entities licensed to carry out an industrial, commercial or shipping
activity and other services shall be liable to CIT at a 4% rate until December 31st, 2011 and
5% thereafter, until December 31st, 2020
• Entities who intend to benefit from this regime is required to create jobs (subject to certain
plafonds) and to invest in fixed assets
• No Municipal surcharge applicable
Ideal for trading activities: low direct and indirect taxation, state-of-the-art
infrastructure, efficient local support services, low operational costs, safety and quality
of life.
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WHAT IS DIFFERENT
ABOUT PORTUGAL?
Individuals – Non-habitual resident tax regime
• Applicable for ten years to individuals who are likely to establish a permanent or a temporary
residence in Portugal
• Flat income tax rate of 20% for some Portuguese source employment income and a tax
exemption for almost all foreign source income
• Nonresident individuals are eligible to benefit from this regime if
(i) Became resident, for tax purposes in the Portuguese territory
(ii) Were not taxed under the rules of the PIT Code as residents for tax purposes in Portugal
for the previous five years, and
(iii) Develop high added value activities of a scientific, artistic or technical nature (e.g.
engineers, computer technology and data processing activities, news service activities,
scientific investigation activities and company’s top executive employees)
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PORTUGAL: THE 21ST
CENTURY HUB FOR
INTERNATIONAL
INVESTMENTS
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Through VdAtlas, our international platform for the provision of
legal services, we support our clients abroad
We are already present in Angola and Mozambique in association
with local firms combining their local capabilities with VdA’s
know-how to provide clients with legal services of a very high
standard
In Brazil, we have been working for more than 30 years with our Best
Best Friends in relevant investment transactions and providing legal
advice to European companies investing in the Brazilian market. Now,
we partner with our Brazilian colleagues advising Brazilian companies
in their investments in Europe, Africa, Asia and other
Portuguese speaking countries
Mozambique
Angola
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CONTACTSTiago Marreiros Moreira
Tax Partner and Partner in charge of VdAtlas
Vieira de Almeida & Associados, Sociedade de Advogados, R.L.
E-mail: [email protected]
T: + 351 213 11 485
Avenida Duarte Pacheco, n.º 26
1070-110 Lisboa Portugal
A RIGHT TO
EXCELLENCE
O DIREITO
À EXCELÊNCIA
www.vda.pt