• WEALTH PRESERVATION
PORTUGAL
MY ADVICE...
The future of private wealth
Use transparent and simple strategies and structures to invest
Closely follow recent trends in international/European taxation matters, such as OECD and European Union policies When investing green beware of greenwashing and pick investments that follow reliable criteria, are transparent in the use of funds, disclose information and resort to independent reviewers or certification Seek assistance from a multidisciplinary team of financial and tax advisors, and lawyers to help understand the legal framework and anticipate changes in the financial, legal, and tax environment
is one of the most relevant conditions to attract (foreign) investment. Often the stability of the tax system is left behind due to political arrangements. In these situations of change, it is of utmost importance to anticipate any adverse impact at the level of private clients. When dealing with changes in compliance and in tax regimes/policies private clients can be more impacted than corporate clients, since to benefit from more favourable tax regimes private clients frequently redomicile abroad or make important investment decisions that impact their personal life. If these benefits are taken away or revoked, it is not only the financial impact, but also the personal impact that needs to be considered. Q2
Count on detailed KYC/Due Diligence procedures that may request documentation and your presence to proof identity and signature
Revise annually or bi-annually your investment structure to prevent the
impact of any amendments to local laws/ international laws, as well as changes in positions of the tax authorities and impact of court decisions
Q1 How are compliance and changing taxation impacting private clients? In terms of investments, we identify two major regulatory trends. The first is the strengthening of anti-money laundering and financing of terrorism (AML/FT) rules, both at the European Union (EU) and at national level. Investors shall expect to disclose their identity, residence, professional activity and of course the origin of funds used in investments. These rules impact in all transactions: from the opening of bank accounts to the acquisition of real estate or investing in funds. One of the key elements of the system is the mandatory registration of beneficial owners of legal entities. Non- European investors might be startled by the requests of financial intermediaries and fund managers (and sometimes the bureaucracy) but shall know that non-transparent and complex structures will delay investments and bear the risk of targeting the eyes of authorities. Another relevant trend is the investment in green activities, projects, or securities. The market has well understood the appetite of investors for anything labelled as green. This generated the risk of greenwashing and created difficulties of classification, comparability, transparency, and control. Again, at EU level major steps Florbela Pires Partner Vera Figueiredo Partner CLAREIRA
AML/FT compliance, investors shall expect tighter controls on opaque ownership structures or the ones resorting to tax heavens. In terms of green investments, clients shall look at activities, projects or securities that follow strict rules of transparency on the use of funds, that periodically disclose objective, clear and complete information, and that resort to reliable systems of technical and independent certification or review. Q3 How are inflation and rising costs of living affecting private clients in your jurisdiction? How can private clients seize the right opportunities, whether it’s through investment, real estate, etc?
As per official data published, inflation rate is decreasing (4.3% in 2023, 7.8 in 2022) but it is not likely that the costs of living will decrease in the next year(s). Such raise of inflation and costs of living are affecting local private clients more than foreigners. Portugal is currently less attractive for digital nomads, due to inflation and costs associated with rents, but it is still very attractive for other private clients. There are still good opportunities for foreign private clients, namely on real estate and investment funds. For example, investments for at least 5 years of € 500,000 in investment funds or private equity funds authorised in Portugal and which policy sets out that at least 60% of the fund will be invested in the capitalisation of Portuguese companies, will qualify for the Portuguese Golden Visa programme, among other investment possibilities.
were taken. First, the approval of the Taxonomy Regulation which establishes the background for the development of technical criteria for different sectors (through delegated regulations), in order to classify investments as sustainable, and more recently the approval of the Green Bond Regulation with the EU Green Bond standard. With the European Green Bond Standard, the EU is aiming to set a clear gold standard for green bonds. The labels EuGB or European Green Bond will be reserved for entities that comply with the provisions of the regulation, use of funds must be consistent with the taxonomy rules and projects and information will be verified by external reviewers registered with European Securities and Markets Authority (ESMA). This new standard is consistent with the green bond principles proposed by the International Capital Market Association (ICMA). Another entity working in this field is the Climate Bonds Initiative (CBI), which offers its own Climate Bonds Standard and Certification. Governments tend to increase tax compliance obligations to tackle tax avoidance and tax minimisation schemes. However, too burdensome tax compliance obligations can actually lead to non-compliance, with taxpayers willing to risk non-compliance, rather than provide too much information or commit to complex procedures or reports. A stable and reliable tax regime
Florbela Pires specialises in internal and cross border financial transactions and contracts. She advises credit institutions, financial companies and other clients on regulation and the structuring of securities. Florbela also advises private and public entities in re privatisation proceedings and clients in insurance matters.
What steps can they take to protect their investments for the long-term?
When structuring a long-term investment, private investors should consider all impacts of the three phases of investment: the investment phase, the exploitation phase, and the exit phase. Often, only the two first phases are considered by private clients. It is of utmost relevance to structure an exit route from the beginning of the investment. If the route is structured it will be easier to anticipate changes in the legal and tax environment ahead. More specifically, on what concerns
+35 1213 400 805 florbela@clareira.com irglobal.com/advisor/florbela-pires
About us...
Vera Figueiredo is tax advisor of several group of companies, domestic or multinational, financial institutions, and private equities. Vera has expertise in advising companies and groups in restructuring operations, domestic or cross-border, covering all phases from feasibility analysis to planning and implementing the operations. She also has expertise in advising clients in tax structuring its investments in Portugal, namely in real estate and other sectors.
clareira.com
CLAREIRA is a meeting point, debate, evolution and a vision of the future. Agility to get results: CLAREIRA combats complexity with knowledge and a pragmatic approach to advocacy. We intend to act on the most important current issues in business and public life. We know how organisations live and function, both in the private and public sectors. We are experienced and connected. Through our partnerships we are at the centre of the
largest transnational operations. We work in a variety of industries and
approach issues from a variety of angles. Our multidisciplinary understanding of law is an asset to our public and private clients. Dedicated to providing legal advice to public and private entities from various sectors, Clareira has the right scale. The one that allows us a close relationship with our clients, the focus and care that legal issues require.
+35 1213 400 814 vera@clareira.com irglobal.com/advisor/vera-figueiredo
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