The President of the Republic promulgated a law providing tax incentives for investments in the capital market

This Thursday, the President of the Republic promulgated a law that provides tax incentives for investments in the capital market, such as IRC deductions for Portuguese companies that are listed on the stock exchange.

“The President of the Republic promulgated a decree of the Assembly of the Republic approving fiscal measures to stimulate the capital market, amending the Personal Income Tax Code, the Stamp Duty Code and the Tax Incentive Regulations,” said a statement issued this Thursday.

One of the changes in the law approved by Parliament is to allow a Portuguese company that goes public, under certain criteria, to deduct expenses incurred in this process (such as fees and commissions or other charges) in the IRC.

To do this, the company must have a minimum share capital variance of 20%, in which case the law states that expenses “are increased by an amount corresponding to 100% of the relevant amount for purposes of determining the taxable amount.” benefit”.

The law also includes an exemption from IRS taxation of capital gains resulting from capital market investments, with this exemption being greater the longer the period during which a person holds the assets.

Thus, 10% of income is excluded from IRS taxation if it comes from assets held for a period of two to five years.

If assets are held for a period of five to eight years, 20% of gains are excluded from tax, with the exemption percentage increasing to 30% of income if they result from assets held for a period equal to or greater than eight years. .

The law also reduces the taxation of alternative investment entities that include venture capital and credit. Income of any nature received by alternative risk investment entities and loans that are established and operated under Portuguese law is exempt from IRC (corporate income tax), while income attributable to equity interests or shares of these entities is subject to the IRS or IRC Withholding Tax at the rate of 10% (unless holders are exempt).

Owners of income attributable to units or shares of investment enterprises constituting income are entitled to a deduction of 50% of income attributable to dividends.

The legislation, following a government proposal, creates a special tax regime applicable to collective real estate investment organizations (CRIs) that invest in housing included in the affordable leasing program or in other rental or subletting projects at affordable prices, “provided that which are legally qualified as similar [ao PAA]”.

The now-released thesis also attributes IRS tax benefits to investments in a pan-European personal pension product (PEPP) similar to those provided to pension plans (PPRs).

On May 23, Finance and Finance Minister João Silva López announced at the annual conference of the Securities Market Commission (CMVM) that the government will provide favorable conditions, including fiscal ones, for market-based capital investment.

Most recently, on June 11, when debating the diploma in Parliament, the Secretary of State said the measures under consideration “are the first step in creating the competitive, innovative and enabling environment for economic growth” that the government wants to promote.