PORTUGAL LAW AND PRACTICE Contributed by: João Gonçalo Galvão, Carolina Cardoso Alves and Miguel Paquete, CS’Associados
2.11 Legal Restrictions on Foreign Investors Without prejudice to the particular constraints that apply to sanctioned jurisdictions, foreign investment in real estate is by default granted a level of protection similar to domestic invest - ment, with no specific legal or regulatory meas - ures applying. Nevertheless, transactions targeting real estate assets are subject to a number of information requirements whose purpose is to bring addi - tional clarity and transparency, particularly as concerns anti-money laundering and anti-ter - rorism funding measures, as well as in regard to obligations concerning identification of the ultimate beneficiaries holding direct or indirect control over legal entities. Acquisitions of commercial real estate are nor - mally financed through structured syndicated loans secured by real estate assets, normally granted to an SPV with or without recourse to the sponsor. Equity contributions are normally required in order to fulfil certain loan-to-value ratio requirements. More complex transactions may involve senior and junior debt. Alternative sources of financing, such as real estate invest - ment funds and private equity, may be also con - sidered. 3.2 Typical Security Created by Commercial Investors Security structures normally consist of mortgag - es over real estate assets complemented by a pledge over shares representative of the share capital of the borrower (if an SPV), a pledge over 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
dedicated bank accounts and a pledge/assign - ment by way of security over receivables relating to the operation or development of the asset, including performance bonds from contractors (of which the lenders may be co-beneficiaries). Lenders are also normally designated as co- beneficiaries of the insurance policies relating to the financed real estate assets. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are no restrictions on granting security over real estate to foreign lenders. However, to directly benefit from a mortgage (ie, other than through the appointment of a security agent, the validity of which needs to be suitably ascer - tained), foreign lenders are required to apply for a Portuguese corporate identification number (a relatively straightforward formality). There are no restrictions on repayments being made to a foreign lender under a security docu - ment or loan agreement. Note, nevertheless, that withholding tax on payment of interest will apply. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security The granting of security is generally subject to stamp duty, calculated based on the maximum secured amount at rates of up to 0.6%, depend - ing on the maturity of the underlying secured obligations. However, stamp duty may not apply if the security is provided to secure liabilities arising from a loan granted simultaneously with the security, provided that the loan itself is sub - ject to stamp duty. Registration fees and notarial fees are also appli - cable, whose amount may vary depending on the number of securities being granted.
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