Much has been said and written about the question if it wise and advisable to bring an off-shore company on-shore. The leading companies in the Algarve dealing with this have/had different opinions on this matter.
But I have the impression that some views are influenced by economic motives.
Below you will find info as published by Eurofinesco and Sovereign in local press releases.
Furthermore I have done my own research and have come to the conclusion after meetings with my lawyers band accountants that there is nothing illegal in following the off-shore to on-shore route.
However if it is worthwhile doing this depends strongly on an individual situations. Not one case is the same!
What does Eurofinesco say?
Nominee Companies have existed in Portuguese Law since the 19th century and have been embraced in legislative reforms over the years. They are fully compliant and are not subject to the harsh laws that have made Offshore Property Companies a pariah: no deemed income tax, no 5% Punitive Rates bill.
REDUCED CGT RATES
Capital Gains Tax on the sale of a Nominee Company is only 10%, as compared to 25% for non-resident companies and individuals or up to 21% for residents if ineligible for rollover relief.
POTENTIAL TRANSFER TAX EXEMPTION
The sale of the shares is normally exempt from “IMT” (Property Transfer Tax). Buyers can save thousands of euros, making Nominee Company acquisition more attractive than direct purchase.
EASE OF TRANSFER
When the Company is eventually sold, only a simple deed of sale is required. The property remains securely within the company with nothing to trigger the bureaucratic problems of property transfers.
NO TAXATION ON REDOMICILIATION
When a non-resident company moves to Portugal, there is normally no taxation. This is because it is the Company Headquarters that moves, not the property, avoiding any transfer of assets.
UPLIFTED BASIS FOR CGT
In the redomiciliation process, there is usually a significant uplift in the basis for eventual CGT assessment. A major tax problem can be transformed into a manageable inconvenience.
There are two forms of nominee companies. While they share many of the same benefits, they differ on several aspects that make them adaptable to your needs and requirements.
CAPITAL IMPROVEMENTS NEVER EXPIRE
Unlike direct ownership where expenses can no longer be offset against Capital Gains after five years, any capital invested into your Nominee Company is always reflected in the Company value.
At Eurofinesco, we recognise that each Portuguese Property Holding Company owner has individual requirements; no two situations are identical. As Company Administrators, our basic services include:
- Resourcing accurate and current information in Portugal to Beneficial Owners regarding Company obligations as well as relevant legislation;
- Clarification of pertinent procedures and interpretations with Finanças;
- Communications liaison between Finanças and the Property Company;
- Reporting to Beneficial Owners regarding Company status in Portugal;
- Acting as Administration: qualified & prepared to meet compulsory company compliance commitments;
What does Sovereign say?
Questions and answers re company ownership in Portugal or off-shore
|1||What is the annual cost to maintain this structure?|
|P.C.||Approx. € 2.600|
|O-S||Malta € 2.600 -Delaware USD 1750|
|2||Is the beneficial ownership revealed?|
|3||What are the accounting requirements?|
|P.C.||Organised accounts are required and covered by fees in 1.1|
|O-S||Organised accounts are necessary in Malta and included in fees under 1. Organised accounts are not required in Delaware and in Portugal.|
|4||Does C.G.T. 2 apply on transfer of shares?|
|P.C.||Yes at a rate of 28% applied on half of the gain|
|O-S||Yes the sale of the beneficial interest is subject to C.G.T. in PT at 28% of the gain|
|5||Does C.G.T. Apply on a sale of the assets held?|
|P.C.||Yes at a rate of up to 21%. In addition C.G.T. would apply to the shareholders on the Distribution of the assets to them follows termination of the company.|
|O-S||Yes at a rate of 25% of gain to be paid within 30 days after the sale.|
|6||Does increasing the value of the asset on the balance sheet of the company before it moves to Portugal helps with a later C.G.T.?|
|O-S||No the Finanças will always only consider the Escritura value or V.T.|
|7||What annual taxes are payable?|
|P.C.||I.M.I. at normal rates and A.I.M.I.|
|O-S||I.M.I. at normal rates and A.I.M.I.|
|8||Is IMT applicable on transfer of shares? 4|
|P.C.||Yes, except in some cases|
|9||Are any other taxes applicable on transfer of shares?|
|P.C.||I.S. (Stamp duty)|
|10||Are Social-Security contributions required?|
|P.C.||Yes for the Director.|
Just like other company structures there are share-holders and administrators/directors, Most of the time you as an individual will be the shareholder(s), but companies like Eurofinesco and Sovereign most likely want to provide Directors and charge you for that. ↩︎
C.G.T- = Capital Gains Tax ↩︎
N.A. = Not Applicable ↩︎
Re 8 and 9. IMT could only be avoided on the acquisition of shares if made by 2 independent persons 50%50%. A single holder, a holder of » 75% , married couples or permanent partners would all pay IMT and IS /Stamp Duty) at a rate of up to 6,8% ↩︎