Law no. 31/2024 was published in the Portuguese Official Gazette on June 28th, approving tax measures aimed to boost the capital markets, amending the Personal Income Tax (PIT) Code, the Stamp Duty Code and the Tax Benefits Code.

As to amendments made to PIT Code, gains from the transfer of real estate intended for permanent residence are now excluded from taxation whenever realization value is reinvested in Pan-European Individual Savings Products. The tax benefit set forth for retirement saving plans is extended to Pan-European Individual Savings Products. Also, the amounts invested in Pan-European Personal Savings Products shall not be subject to stamp tax.

Further, it was clarified that the imputation to taxpayers of profits or income obtained by entities residing in a territory with a more favorable tax regime, depends on the holding of a direct or indirect minimum percentage, of 25%, on voting rights or rights over the income or assets of these entities (and no longer 10%, as resulted from the elimination of paragraph 2 of article 66 of the Corporate Income Tax Code, by Law No. 32/2019, of 3 May).

Last, it is foreseen the exclusion from taxation of 10% to 30% of capital gains resulting from the sale of securities admitted to trading or to shares of open collective investment undertakings, in the following terms:

• Securities held for a period of more than 2 years and less than 5 years – exclusion of 10% of the income.

• Securities held for a period equal to or greater than 5 years and less than 8 years – exclusion of 20% of the income.

• Securities held for a period equal to or greater than 8 years – exclusion of 30% of income.

Regarding the Tax Benefits Code (EBF), the Law matched the nomenclature provided for in Chapter III (Tax Benefits to the financial system and capital market), with the Asset s Management Regime (RGA).

In this context, the tax regime that was applicable to Venture Capital Funds, provided for in article 23 of the EBF, now applies to Alternative Investment Companies of Venture Capital and Credit which operates according to Portuguese law. Under this regime, any income perceived by such entities, regardless of its nature, is exempt from Corporate Income Tax.

In addition to the above, it is now foreseen that, if certain requirements are met, the income of investors in Collective Investment Undertakings (CIU) which assets consists of at least 5% of properties intended for rental or sublease of affordable housing, benefit from an exclusion from PIT or CIT, between 2.5% and 10%. This measure covers CIU incorporated (or amended in their incorporation documents) until 31 December 2025.

Finally, an incentive to trade on a regulated market is introduced. According to the new regime, subject to certain legal requirements, expenses and losses borne by eligible taxpayers directly related to the admission on a regulated market or to the offering of securities to the public, that results in the distribution of at least 20% of their share capital, are increased by 100% of the respective amount. The regime is also applicable to the second listing on a regulated market, without minimum share capital distribution, with eligible expenses and losses being increased by 50% of the respective amount.

This new regime is intended to boost capital markets, through the creation of benefits for those who invest in shares and bonds of Portuguese companies.