PORTUGAL LAW AND PRACTICE Contributed by: João Gonçalo Galvão, Carolina Cardoso Alves and Miguel Paquete, CS’Associados
five-investor minimum. Subject to a CIT rate of 16% for income up to EUR50,000 and 20% if higher. • Real estate investment funds/companies: These involve complex regulatory require - ments due to their collective investment structure and the need for ongoing reporting. Profits are exempt from CIT including real estate income, capital gains, interest and dividends. Foreign investors may benefit from a special 10% withholding tax rate on income Portuguese REITs, so-called SIGIs, focus on acquiring real estate rights for rental or other economic uses, shares in companies with similar purposes and investing in real estate investment funds with similar income distribution policies or funds or companies for residential lease. SIGIs are required to take the S.A. form, with a specific supervisory structure (audit committee and external auditor). SIGIs are available to for - eign investors and can be set up with or without public subscription. Within one year from set-up, their share capital must be traded in a regulated market or multilateral trading system operating in Portugal or within the EU/EEA. At least 20% of the share capital of SIGIs should, as of the end of the third year of trading, be dispersed between investors holding, individually, no more than 2% of voting rights, this increasing to 25% at the end of the fifth year. paid by these entities. • SIGIs: See 5.3 REITs . 5.3 REITs SIGIs must meet several statutory requirements, including maintaining a minimum debt limit of 60% of total assets and holding real estate- related rights for at least three years.
SIGIs’ profits are exempt from CIT, including real estate income, capital gains, interest and dividends. Foreign investors may benefit from a special 10% withholding tax on income paid by SIGIs. 5.4 Minimum Capital Requirement • Lda.: Minimum share capital of EUR1. • S.A.: Minimum share capital of EUR50,000. • Real estate investment funds/companies: For funds there is no minimum capital requirement. Real estate investment com - panies must have a minimum share capital of EUR50,000 if they are managed by an external manager, or EUR300,000 if they are self-managed. • SIGIs: Minimum share capital of EUR5 million, which must be fully subscribed and paid up • Lda.: A sole director or a board is required. A chartered accountant is needed if the com - pany for two consecutive years exceeds two of the following: EUR1.5 million in assets, EUR30 million in turnover or 50 employees. • S.A.: Sole director or board (if share capi - tal exceeds EUR200,000) and chartered accountant. Exceeding two of the following limits for two consecutive years – EUR20 million in assets, EUR40 million in turnover or 250 employees – triggers the requirement for a three-member supervisory board. • Real estate investment funds/companies: Typically externally managed, under the over - sight of the Portuguese Securities Commis - sion (CMVM), with prudential and reporting requirements. If in company form, the S.A. governance structure must also be adopted. A depositary is required, unless certain condi - tions are met. at the date of their incorporation. 5.5 Applicable Governance Requirements
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