14 March 2011
The Budget Bill for 2011 was enacted on 30 December 2010 as Law 55-A/2010. Details of the Budget regarding corporate taxation, which unless otherwise indicated will apply from 1 January 2011, are summarized below.
|-||Dividends distributed by resident companies to EU and EEA parent companies are no longer exempt from withholding tax in Portugal in situations where the participation held is below 10%, even if the acquisition value exceeds EUR 20 million.|
|-||Regarding the participation exemption rules:
|-||Holding companies (“SGPS") can no longer deduct profits received when such profits have not been subject to effective taxation in the hands of the distributing company.|
|-||Capital losses and other losses related to shareholdings are no longer tax deductible to the extent that the reduction in value results from a tax-free dividend distribution made in the previous 4 years.|
|-||The reduction of capital gains taxation under the relief mechanism in case of reinvestment will depend exclusively on a participation of at least 10% of the share capital, even if the acquisition value exceeds EUR 20 million.|
|-||The withholding tax rate applicable to capital income earned by non-residents companies is increased to 21.5% (currently 20%).|
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