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Newsletter April 2021

Legal Updates

Tax and Customs Authority Circular No. 2/2021: Wind and Solar Power Plants

The Portuguese Tax and Customs Authority (“AT”) has issued Circular No. 2/2021, regarding the taxation of wind and solar power plants, changing its interpretation on the tax framework of the Municipal Tax on Property (“IMI”), and revoking Circular no. 8/2013, of October 4.

In this regard, AT firstly clarifies the framework of wind and solar power plants as buildings for tax purposes, stating that these realities include a physical element (physical reality with a permanent nature, as it entails a non-transitory purpose), a legal element (a tangible thing, object of a property right) and also an economic element (it is a production support of an economic good tradable in the market: electricity).

The AT also establishes that, in the case of urban industrial buildings, their tax value is to be determined in accordance with article 38 of the CIMI, meaning that these buildings shall be evaluated using the method of the added cost of the land value.

Regarding the registration in the land registries, anticipating doubts related with situations of plants that are divided by several parishes, AT has also listed the rules for the said registration.

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Changes and new grants attributed to companies

On 11 march 2021, a Communication from the Council of Ministers was published, referred, among others, the approval of several support measures for companies in the context of the COVID-19 pandemic disease.

In this regard, an extension of the regime commonly known as “simplified lay-off” has been carried out. Now, companies whose activity, not suspended or closed, has been significantly affected by the disruption of global supply chains, of suspension or cancellation of orders, may request this support. This extension has also been offered to the respective managing partners.

An extension of the extraordinary support to the progressive resumption of activity was also established for an additional three month period, until 30 September 2021, instead of the initially foreseen date of 30 June 2021.

Under the Recovery and Resilience Plan, an exceptional and transitory “Sustainable Employment Commitment” measure was also created. The aim of this measure is to promote and create permanent employment, intending to encourage, in particular, the hiring of young people and people with disabilities, providing support for the long-term employment of these workers.

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Business Updates

Approved "pack" of measures for the promotion of agricultural activity

Resolution No. 21/2021, of March 22, of the Council of Ministers, approved measures applicable to vulnerable territories, in order to promote agricultural activity, the dynamism of rural territories and the creation of value in innovation and in food security.

Specifically, it was established the goal of increasing, until 2024, 25% of the annual global value of support financed by the European Agricultural Guarantee Fund and the European Agricultural Fund for Rural Development in vulnerable territories, prioritizing the support for interventions located in Integrated Landscape Management Areas, as well as to ensure, from 2022 onwards, the possibility of access to direct payments for agricultural areas that meet the eligibility criteria.

Therefore, a set of actions was created, namely the reconversion of abandoned areas into agricultural areas with the potential of creation of investment opportunities, associated with a greater organization of production, the strengthening of support for organic farming and funding to promote the circular economy.

These actions are especially relevant in low-density territories, allowing the investment in the potential of the Portuguese interior, as well as welcoming competitive business investments.

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ALICE: maintaining interest in cryptocurrencies

Cryptocurrencies continue to spark the interest of investors, while continuing to be subject to enormous volatility.

An example of this is ALICE, a cryptocurrency that experienced a 60,000% increase from $0.1 to $60 within a minute after being listed on the crypto exchange. This is a native cryptocurrency of the blockchain multiplayer game My Neighbour Alice, where players can buy and own virtual islands while being rewarded for contributing to the “Alice world.”

Crypto-assets (also referred to as tokens, coins, cryptocurrencies, or virtual currencies) are digital representations of assets based on blockchain technology, that are not issued by a central bank, credit institution, or electronic money institution. Their purpose serves a variety of ends, from serving as a form of payment in a community that accepts it, to obtaining a financial return or allowing the protection of assets.

Although not recognized by the Portuguese authorities as a means of payment and/or purchase of goods and services, cryptocurrencies continue to arouse the interest of several foreign and domestic investors. In Portugal, however, there are still major doubts about the tax framework applicable to income from investment in crypto-assets since current legislation has not yet incorporated this reality.

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