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Newsletter October 2020

Legal Updates

Prevention of the use of the financial system for the purposes of money laundering and terrorist financing

Portugal took a further step in the prevention of money laundering and terrorist financing with the transposition of the Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, with the adoption of Law No. 58/2020, of August 31st.

This law came into force on 1 September 2020, introducing numerous amendments to a number of laws, such as the Criminal Code, the Commercial and Notary Registry, the Legal Regime of the Central Register of Beneficial Ownership and the General Framework for Credit Institutions and Financial Companies.

In the criminal sphere, the broadening of the framework of typical underlying offences and typical criminal conduct is particularly noteworthy, there is also an aggravation of the criminal framework when the offender is an obligated entity.

It should also be noted that said Law extended the scope of application of Law No. 83/2017, of August 18th, to the entities carrying out “activities with virtual assets”, among which bitcoins stand out, introducing new definitions and adding a specific registration regime for these entities with the Bank of Portugal, that will be responsible for the supervision of these entities.

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Delay in the payment of pensions - Is it possible to impute those incomes to previous years?

The problem of the delayed payment of pensions had been for several years affecting many pensioners, at a tax level, , as when these amounts were made available to the pensioners, their value, divided by the number of years/fraction to which they corresponded, was added to the income generated in that same year, being applicable an increased tax  to the overall income, due to the advancement to a higher step in the scale.

Therefore, in 2019, the allocation of those incomes to previous years was allowed, through the submission of replacement declarations for the years in question.

However, since the Tax Authority considered that this rule would only apply to income obtained from 2019 onwards, previous requests for correction were systematically rejected, thus, not being the referred change reflected in pensioners.

As such, we shall alert for the  Law No. 48/2020, of 24 August 2020 which came to clarify  the above mentioned strong-arm, establishing the possibility of correcting delayed pensions before October 2019, as long as the correction is made within the applicable legal deadlines.

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Business Updates

Incentives for More Sustainable Buildings

The Government has launched the “Support Programme for More Sustainable Buildings”, which aims to improve buildings’ energy efficiency.

The rehabilitation and energy efficiency of buildings enhance the achievement of multiple objectives, such as reducing the country’s energy bill and dependency, reducing greenhouse gas emissions, improving comfort levels and indoor air quality, and extending the useful life of buildings.

This Programme includes six types of intervention, namely efficient windows, thermal insulation, space heating and/or cooling systems, installation of photovoltaic panels and other renewable energy production equipment for self-consumption, interventions that promote water efficiency, as well as the incorporation of biomaterials, recycled materials, façades and green roofs.

The entire national territory is covered by the Programme and applications may be submitted by natural persons who own existing and occupied residential buildings, built until the end of 2006.

The application deadline is 31 December 2021, or until the planned allocation is exhausted, and each applicant, regardless of the type of building he or she owns, may receive an incentive of up to 15,000 euros.

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Portuguese real estate market has not slowed down with the Covid-19 pandemic

The Covid-19 pandemic has caused a sudden change in the world. With several immediate impacts on different sectors and expected long-lasting effects, an abrupt decline in the Portuguese real estate market was expected which some said was generating a bubble effect. However, that did not happen.

According to data released in September by the National Statistics Institute, the Portuguese market is showing a curious effect – in parallel with the fall in the number of transactions by 21%, there was a 7.8% increase in the average price of houses in the last quarter.

Said phenomenon leads many investors to maintain their interest in the Portuguese real estate market and some wait for the turning point in order to obtain a higher return on their investment, although it is not yet known when this turning point will occur.

There are additional advantages in choosing the Portuguese real estate market: in addition to the competitive return, foreigners from third countries investing in Portugal can also enjoy access to the ARI programme (Golden Visa), which gives them access to residence in Portugal, being able after 5 years to apply for the Portuguese nationality and obtain a European passport.

In times of pandemic, new opportunities are emerging in the Portuguese real estate market, as well as new risks in the realisation and return of investments, being important a negotiation that is comprehensive and that protects the immediate and future interests of the investor.

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