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18 June 2010
Portugal has faced serious financial problems in recent months. Many experts have claimed that the country's grave economic position requires an immediate and far-reaching response, but the government has sought to downplay the situation. Nonetheless, on June 2 2010 Parliament discussed new measures on personal and corporate income tax, value-added tax (VAT) and stamp duty. The package is the third set of fiscal changes in the first six months of 2010, following the State Budget legislation in April and measures on capital gains tax treatment for securities, which remain under discussion.
The government plans to introduce a new corporate surcharge, which will be imposed in addition to standard corporate taxation and the municipal surcharge. The 2.5% state surcharge will be imposed on all tax-resident companies and permanent establishments operating in Portugal that generate a taxable profit of over €2 million. Corporate tax payments for 2010 - due in July, September and December - must incorporate the surcharge. These payments will entitle a taxpayer to reimbursement if its annual tax assessment shows that the surcharge was paid in excess. Payments on account will be due on 2% of the taxable profit exceeding €2 million with regard to the previous taxable exercise.
For non-resident corporate entities that have no permanent establishment in Portugal but obtain income from a Portuguese source, the existing 15% and 20% withholding tax rates will not change, despite the increases in personal income tax.
From July 1 2010 VAT rates will rise to 6%, 13% and 21%. In the Azores and Madeira regions, the rates will be 4%, 9% and 15%.
The government has stressed that the changes are intended as temporary measures for 2010 and 2011. However, it has also stated that they will remain in force for as long as necessary.
For further information on this topic please contact Ricardo Peão or João Espanha at Espanha e Associados sociedade de advogados RL by telephone (+351 21 353 8705), fax (+351 21 314 3704) or email (firstname.lastname@example.org or email@example.com).
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