PORTUGAL Law and Practice Contributed by: Leonor Futscher de Deus, Broseta Abogados, SLP
Insurers Premiums received by Portuguese-based insurers are deemed as taxable income and are subject to corpo- rate income tax (CIT) general rules at rates of up to 29.5%. Additionally, tax on insurance premiums must be paid at the following rate to the ASF (the “ASF Tax”) by Portuguese-based insurers and overseas-based undertakings acting in Portugal: • life insurance ‒ 0.078% on registered earnings; and • non-life insurance ‒ 0.242% on registered earnings. 3. Overseas Firms Doing Business in the Jurisdiction 3.1 Overseas-Based Insurers or Reinsurers EU Undertakings An authorisation granted to an insurer or reinsurer to conduct insurance business by a supervisory author- ity from another EU member state shall be valid in Portugal (an “EU passport”), covering freedom of establishment (FoE) (through a branch) or freedom of services (FoS), where applicable. Insurers Any insurer that wishes to act in Portugal under FoS or FoE must first notify the supervisory authorities of its home member state about such intention; they will thereafter communicate this information to the ASF. Within two months of receiving the information, the ASF will communicate to the supervisory authorities of the home member state the “general good” provisions that must be complied with when acting in Portugal. The insurer may start business: • under FoS, from the date on which it is informed by the supervisory authority of the home member state about the communication provided to the ASF; or • as a branch, from the date on which the supervi- sory authority of the home member state received said communication from the ASF, or on expiry of the above-mentioned two-month period (provided the branch is registered with the companies regis- ter, tax authorities and social security).
to mental incapacity or other cause (save for civil compensation). 2.3 Taxation of Premium Portuguese law subjects the premiums of insurance contracts covering risks situated in Portuguese terri- tory (or regarding which Portugal is the member state of the commitment) to the indirect taxes and parafiscal charges foreseen in Portuguese law, regardless of the law applicable to the contract.
Policyholders Life insurance
• Tax to the Medical Emergency Institute ( Instituto Nacional de Emergência Médica , or INEM) ‒ 2.5% on premiums concerning life insurance in case of death (as well as supplementary covers). • Stamp duty ‒ exempted.
• VAT ‒ exempted. Non-life insurance
• Tax to INEM ‒ 2.5% on premiums regarding sick- ness, accidents, land vehicles and motor vehicle liability. • Stamp duty (different rates apply): (a) suretyship – 3%; (b) accidents and health – 5%; (c) credit – 5%; (d) agriculture and livestock – 5%; (e) goods in transit – 5%; (f) ships and aircraft – 5%; and (g) other non-life risk classes – 9%. • VAT ‒ exempted. • Other specific taxes depending on the risk class (motor insurance guarantee fund, tax on green Income corresponding to the positive difference between the amounts paid as redemption of a life insurance contract and the premiums paid is subject to PIT as investment income. Taxable income is sub- ject to a 28% final rate, however, the policyholder may benefit from reduced taxation provided certain legal criteria are met. cards, civil protection, etc). Personal income tax (PIT)
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