PORTUGAL Law and Practice Contributed by: João Gonçalo Galvão, Carolina Cardoso Alves, Miguel Paquete and Mafalda Oliveira Cordeiro, CS’Associados
for part of the municipal area, whereas the latter details any proposals for occupation of land, namely by establishing construction areas and volume, spe - cific construction rules, location of infrastructure or public spaces. The drafting of all such plans is subject to public con - sultation. 4.2 Development Process, Challenges and Enforcement The right to develop a new project or complete a major refurbishment is obtained through a prior con - trol procedure (ie, through a permitting procedure or the submission of a prior communication, depending on the type of works or their location). The permitting procedure mainly entails the approval of an architec - tural project by the municipalities and other compe - tent external entities, and the issuance of the permit. It is common practice in some municipalities to request a public consultation stage for specific works. The prior communication is a more streamlined procedure entailing: (i) preliminary assessment of the request; and (ii) payment of municipal fees. Development rights might be secured through plan - ning or transfer of development rights’ agreements entered into with municipalities, through a planning and operation unit or, specifically, urbanisation or detailed plans requiring the execution of an urbani - sation agreement between the municipality and the developer. The right of appeal of any authority’s decision in respect of an application for development permis - sion or the carrying out of designated use must be exercised within the municipality (through an appeal to the decision’s author or by a hierarchical appeal) or judicially with the competent administrative courts (by means of an action or an injunction against the municipality). Planning and zoning restrictions are enforced: (i) at the stage of consultation with external entities as part of a licensing procedure, since these entities will be authorised to issue an opinion or decision (eg, an envi - ronmental impact assessment declaration or a binding opinion for works carried out in a classified building);
or (ii) by the approval and implementation of measures or correction orders such as the embargo of works, their modification or their demolition. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets The most common entities to hold real estate assets are as follows. • Private limited liability companies (Lda.) Typically used for small to medium-sized investments, offer - ing limited liability and a streamlined management structure. • Public limited liability companies (S.A.) Used for larger investments or public listing, facilitating capi - tal raising but requiring more complex governance and regulatory compliance. • Real estate investment funds/companies These vehicles pool capital to invest in real estate, provid - ing passive investment opportunities with shared risks and returns. They can assume the form of investment funds or investment companies, closed or open-ended (in the latter case, entitling new investors to step in and existing investors to step out), and assume the form of real estate investment vehicle, or have an open-ended investment policy entitling them to invest in other types of assets. • Real estate investment and management compa- nies (SIGIs) See 5.3 REITs . 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity The main features for the set-up of each type of entity used to invest in real estate, along with tax benefits and costs, are as follows. • Lda. These are simple to establish, with a minimum of one investor and low administrative costs. Sub - ject to a corporate income tax (CIT) rate of 16% for income up to EUR50,000 and 20% if higher. • S.A. These have a more complex governance structure and regulatory obligations, with a five- investor minimum. Subject to a CIT rate of 16% for income up to EUR50,000 and 20% if higher.
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