Debt securities - rates, eligibility, availability of relief etc. - Portugal
Withholding Tax - Law 83/2013 clarified by Circular Letter 4/2014
Aggravated rate of withholding tax: | 35% | Holding requirements / restrictions: | No |
Note: For details regarding debt securities subject to DL 193/2005 refer to Debt Securities subject to DL 193/2005 - Portugal
Market specifics - main provisions
Legal obligations impacting LuxCSD tax services
LuxCSD accesses the Portuguese market via a direct link to Clearstream Europe AG (CEU).
In relation to debt securities within the scope of Decree-Law No 193/2005 of 7 November 2005, as amended (hereinafter “Special Debt Securities’ Regime”, CEU undertakes the role and responsibilities of a Direct Registrar Entity1, affiliated with Interbolsa.
CEU, as a T2S In-CSD, cannot benefit from the Article 17 regime granted only for the ICSDs. Full tax calculation and reporting requirements apply to CEU clients and therefore to LuxCSD clients, as described below.
LuxCSD account structure
By default, the accounts of LuxCSD clients are flagged as N (non-exempt = taxable).
To be exempt from Portuguese withholding tax on interest from debt securities, clients must segregate debt securities held for exempt and non-exempt investors into at least two separate securities accounts, one taxable and one exempt. Such segregation is mandatory as per the Portuguese law requirements. Clients can hold debt securities for:
- Exempt investors (for whom the certification procedure has been fulfilled):
- In a single “exempt” account (“S” account); or
- In an omnibus “exempt” account (“X” account). OR
- Non-exempt investors in another “non-exempt” account (“N” account) including undisclosed positions taxed at maximum tax rate (35%) or disclosed beneficiaries providing information to allow the application of the standard tax rates (25% or 28% tax applicable, respectively, to corporates and individuals).
Availability of relief
Debt securities subject to | Holding restriction | Withholding tax rate | Relief at source | Quick | Standard |
No | 35% | ||||
DTT/TIEA residents eligible for tax exemption | Yes | No | Yes | ||
Credit institutions, financial companies, pension funds, insurance companies domiciled in an OECD Member State or in a DTT country | Yes | No | Yes | ||
Collective Investment Vehicles (CIVs) domiciled in an OECD Member State or in a DTT country | Yes | No | Yes | ||
Central banks, public law agencies, public law entities or International/Supranational organisations recognised by the Republic of Portugal | Yes | No | Yes | ||
Portuguese residents eligible for tax exemption | Yes | No | No | ||
| Yes | No | No |
Relief at source of withholding tax is available only if the appropriate documentation is submitted to LuxCSD. A quick refund is not available. The standard refund is available to non-resident beneficial owners eligible to full exemption.