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25 March 2013

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Budget Law for 2013 – Corporate income tax

On 31 December 2012, the president signed the 2013 Budget bill into law. The most significant corporate income tax measures are as follows:

(a) State surtax

-   Increase of the State Surtax by means of the reduction (from EUR 10 million to EUR 7.5 million) of the lower taxable profit threshold to which the 5% rate applies.

(b) Limitation on net financial expenses

-   Introduction of a limitation to the deductibility of net financial costs, which may only be deductible up to the higher of (i) EUR 3 million or (ii) 30% of the profit obtained before depreciation, net financing expenses and taxes; this limitation shall apply to all types of financing (banks, intra-group, domestic and foreign financing); a transitional period is foreseen, under which the limitation on profit will gradually increase – in 2013, it will be 70%, finally reaching 30% in 2017.
-   Thin capitalization regime that established a 2:1 debt-to-equity safe harbour ratio is revoked.

(c) Expenses with the acquisition or modification of electronic invoicing software and hardware equipment

-   Expenses incurred in 2013 with the acquisition or modification of electronic invoicing software and hardware equipment, as a result of the communication obligations foreseen in Decree-Law 198/2012, are fully deductible for tax purposes in 2013.

(d) Payments on account

-   Increase to 80% (currently, 70%) and 95% (currently, 90%) of the rate for the computation of payments on account due by taxpayers with a turnover respectively of EUR 500,000 or higher than EUR 500,000 (reference to previous tax year).
-   When the amount of the payments on account made is equal to or higher than the amount of tax that will be due at the end of the tax year, the taxpayer may only limit the third payment on account (currently, it is possible to limit the second payment).

(e) Special payments on account – groups of companies

-   The amount of payments on account to be deducted to the special payment on account due by the dominant companies of a group of companies to which the special tax regime for groups of companies applies, shall be the amount that would be due by each entity of the group if such regime was not applicable.

(f) Withholding taxes

-   Increase from 15% to 25% of the tax rates applicable to royalties, commissions, service fees and property income earned by non-residents.

(g) Securities Investment Funds and Real Estate Investment Funds

-   Increase to 25% (previously, 21.5%) of the tax rate applicable on the positive balance between capital gains and capital losses obtained by securities investment funds.

(h) Real Estate Investment Funds

-   Increase to 25% (previously, 20%) of the tax rate applicable to property income obtained by real estate investment funds.

(i) Financial sector contribution – bank levy

-   The financial sector contribution is extended to 2013.

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