PORTUGAL Law and Practice Contributed by: João Nóbrega, Bernardo Marques and Francisco Miguel Gomes, EY Law – Sociedade de Advogados, SP, S.A.
3.6 Taxation of Carried Interest Portugal does not have a specific tax regime for car - ried interest. The tax treatment varies depending on the form in which it is granted: • Carried Interest as Units or Shares: When car - ried interest is paid in the form of units or shares in the AIF, the income received by managers or key personnel is taxed as investment income or capital gains, following the same rules that apply to other investors in the fund (see 4.8 Tax Regime for Investors ). • Carried Interest as Variable Remuneration: When carried interest is paid as variable remuneration (such as a performance bonus under an employ - ment or service agreement with the AIFM), it is taxed as employment or self-employment income, subject to personal income tax at the ordinary progressive rates. In both scenarios, there is no preferential or reduced tax rate for carried interest in Portugal. The treatment aligns with the general income taxation rules applica - ble to the chosen form of payment. 3.7 Outsourcing of Investment Functions/ Business Operations Portuguese law allows AIFMs to delegate or outsource investment and operational functions, provided that such delegation does not compromise the AIFM’s effectiveness, governance or regulatory oversight. The delegation of portfolio management or risk man - agement may only be made to entities duly authorised to manage collective investment undertakings or dis - cretionary portfolios and must be notified in advance to the CMVM. The AIFM retains full responsibility for the outsourced activities and may not operate as a mere “letter-box entity”. Other administrative or operational tasks (such as accounting, IT, transfer agency, valuation support or compliance monitoring) may also be outsourced, pro - vided that the service provider possesses adequate resources, experience and internal controls.
All outsourcing arrangements must ensure: • clear allocation of responsibilities; • continuous oversight by the AIFM; • access by the CMVM to relevant information and premises; and • data protection and confidentiality safeguards. In line with EU standards, critical ICT outsourcing is also governed by the Digital Operational Resilience Act (DORA), which has been in effect since January 2025. This act imposes specific requirements on con - tractual oversight and risk management for ICT third- party providers. 3.8 Local Substance Requirements Portuguese AIFMs must demonstrate effective pres - ence and management in Portugal, covering both financial and organisational substance as required by the RGA and CMVM supervision. From a financial perspective, AIFMs must maintain minimum initial capital of EUR125,000, plus additional own funds equal to 0.02% of the value of assets under management exceeding EUR250 million, capped at EUR10 million in total. Self-managed investment com - panies are subject to the same capital thresholds. From an organisational standpoint, AIFMs must have: • their registered office and effective management located in Portugal; • a governance structure with at least two directors of good repute and proven experience; • qualified staff capable of performing portfolio man - agement, risk management, valuation, compliance and internal control functions; and • comprehensive internal policies covering risk, remuneration, conflicts of interest, anti-money laundering (AML)/counter-terrorism financing (CTF), business continuity and outsourcing. The CMVM assesses substance both at authorisation and on an ongoing basis, verifying that strategic and control functions are genuinely exercised in Portugal and not merely delegated or nominally based in the jurisdiction.
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