PORTUGAL Law and Practice Contributed by: Tânia de Almeida Ferreira, João Pedro Albuquerque, Filipe Gomes da Silva and Pedro Neves, CCA Law Firm
CIT at the applicable rates (please refer to 3.2 Busi- ness Profits ). However, such gains may be exempt under the partic - ipation exemption regime, provided that: (i) the com - pany whose shares are disposed of is not resident in a blacklisted jurisdiction and is subject to and not exempt from corporate tax; (ii) the company is not, nor should it be treated as, fiscally transparent; (iii) the shareholder holds, directly or indirectly, at least 10% of the share capital; and (iv) such participation has been held uninterruptedly for a minimum period of one year. The exemption does not apply where more than 50% of the assets of the company whose shares are being disposed of consist, directly or indirectly, of immov - able property located in Portugal, except where such immovable property is allocated to an agricultural, industrial or commercial activity other than the pur - chase and sale of immovable property. Capital gains realised by non-resident legal entities without a PE in Portugal are, in principle, exempt from CIT under the Portuguese domestic exemption. This exemption does not apply where: • the non-resident legal entity is directly or indirectly held, by more than 25%, by Portuguese resident legal entities, unless it is resident in another EU/ EEA member state bound by administrative coop - eration in tax matters; • the transferor is resident in a jurisdiction included in the Portuguese list of clearly more favourable tax regimes; • more than 50% of the assets of the company whose shares are being disposed of consist, directly or indirectly, of immovable property located in Portugal; • at any time during the 365 days preceding the transfer, the value of the shares or rights in a (non- resident) legal entity derived, directly or indirectly, more than 50% of their value from immovable property located in Portugal, except where such property is allocated to an agricultural, industrial or commercial activity other than the purchase and sale of immovable property.
Immovable property capital gains are subject to CIT. A 50% rollover relief may apply where the proceeds are reinvested in eligible tangible fixed assets, pro - vided that the disposed property is not, and was not required to be, recognised as investment property. Please refer to 3.2 Business Profits for the applica - ble CIT rates. Securities Capital gains arising from the disposal of shares are calculated as the difference between: (i) sale value; and (ii) acquisition value, the latter being adjusted by the applicable inflation (currency devaluation) coef - ficients where at least 24 months have elapsed since the acquisition date. In case of individuals, such gains are, as a rule, sub - ject to taxation at a flat rate of28%. An effective rate of 14% may apply where the shares relate to a micro or small company, provided that the statutory require - ments are met. However, capital gains must be mandatorily aggre - gated with the taxpayer’s remaining income and taxed at progressive PIT rates where they derive from assets held for less than 365 days and the taxpayer’s taxable income, including the capital gain, equals or exceeds EUR86,634. Non-resident individuals may, in principle, benefit from an exemption from Portuguese tax on capital gains arising from the disposal of shares. However, this exemption does not apply where: (i) the individual is resident in a jurisdiction included in the Portuguese list of clearly more favourable tax regimes; or (ii) the shares disposed of relate to a company resident in Portugal whose assets consist, directly or indirectly, of more than 50% immovable property located in Portu - gal, including cases where the company holds a con - trolling interest in other Portuguese resident entities meeting that threshold. A similar effect (exemption) may also result from the application of an applicable DTT, where the treaty allocates exclusive taxing rights to the state of residence of the transferor. Capital gains realised by resident legal entities are included in the entity taxable profits and subject to
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