Law no. 31/2024, of June 28^th – New tax measures for the revitalization of capital markets in Portugal

As published in the Official Gazette, Law no. 31/2024, of June 28th , approved a set of tax measures that aim the revitalization and boosting the capital market, thus amending the Personal Income Tax Code (IRS), the Stamp Duty Code, and the Tax Benefits Statute (EBF). The most relevant measures within the scope of these legislative changes are as follows:

1. 1.  Exclusion from capital gains taxation of 10% to 30% of the income, when related to securities admitted to trading or shares of open-ended collective investment schemes, under the following conditions:

o         Assets held for more than 2 years and less than 5 years – Exclusion from taxation of 10% of income;

o         Assets held for 5 years or more and less than 8 years – Exclusion from taxation of 20% of income;

o         Assets held for 8 years or more – Exclusion from taxation of 30% of income;

2. 2. Update of the list of Collective Investment Schemes (OIC) in the Tax Benefits Statute (EBF), ensuring the much-needed harmonization with the Asset Management Regime (RGA).
   Furthermore, it clarifies the inclusion of Alternative Investment Funds for Venture Capital and Credits, which are established and operate in accordance with national legislation, within the scope of Article 23 of the EBF, and their income, regardless of its nature, is exempt from Corporate Income Tax (IRC).
3. Collective Investment Schemes that support affordable rental housing

The income earned by participants or shareholders from units of participation in Collective Investment Schemes (OIC) may benefit from a progressive tax exclusion for IRS or IRC purposes, upon meeting the following requirements:

o The Collective Investment Schemes must be established (or amended in their constitutive documents) by December 31^st , 2025;

o  The assets of the said Collective Investment Schemes must be comprised  of 5% or more of properties intended for rental or sub-rental for affordable housing;

o  The assets of the Collective Investment Schemes must be subject to rental or sub-rental contracts for affordable housing in the same proportion of 5%.

Regarding the progressive exclusion of taxation, and upon meeting the above requirements, the amount of income earned by participants or shareholders is, for IRS or IRC purposes, equal to the difference between the amount obtained and the amount corresponding to the following percentage of exclusion:

o  OIC that allocate between 5% and 10% of their assets to affordable rental – Exclusion from taxation of 2,5% of the earned income;

o  OIC that allocate between 10% and 15% of their assets to affordable rental – Exclusion from taxation of 5% of the earned income;

o  OIC that allocate between 15% and 25% of their assets to affordable rental – Exclusion from taxation of 7,5% of the earned income;

o  OIC that allocate more than 25% of their assets to affordable rental – Exclusion from taxation of 10% of the earned income.

For more information, please contact us at jcg@ccsllegal.com

[Photo by: Lukas Blazek, available at unsplash.com]