Last week saw the publication, in Portugal, of several new laws intended to bolster the fight against money laundering and the financing of terrorism, and to enable access and greater transparency in the exchange of information for tax purposes. Here are details of some of the most significant changes:
Creation of a Central Register of Beneficial Owners
Law 89/2017, published on 21 August, approves the legal framework for the Central Register of Beneficial Owners (CRBO), consisting of a database with sufficient, exact and up-to-date information about the individual person or persons who, directly or through a third party, own or effectively control entities subject to the framework.
Entities subject to the CRBO are: associations, cooperatives, civil societies and commercial companies, and any other collective entities with legal personality that are subject to Portuguese or foreign law, and which conduct activities, or carry out acts or legal business dealings in Portugal that require them to obtain a taxpayer number in Portugal. Representatives of international legal persons or legal persons constituted under foreign law and which conduct activities in Portugal are also subject to the CRBO.
Within the scope of this CRBO, a website will be created for the purpose where details relating to the beneficial owners will be made available publicly, i.e. name, month and year of birth, nationality, country of residence and the economic interest owned.
Transposition into domestic law of the fourth anti-money laundering (AML) directive
Law 89/2017, of 21 August, also transposes into Portuguese domestic law chapter III of EU Directive 2015/849, aimed at preventing the use of the financial system for the purposes of money laundering or the financing of terrorism, and alters various codes and other legal diplomas. Below are some of the most important changes:
- Documents formalising the incorporation of commercial companies must contain the identification of the individuals who own the shareholdings or any other means of holding effective control over the company, whether directly or through a third party;
- Commercial companies must keep an up-to-date register identifying their partners and their respective shareholdings, and the individuals who own the shareholdings or hold effective control over the company, whether directly or through a third party;
- The partners are obliged to inform the company of any change in the identification details mentioned in the previous paragraph, within 15 days of the change occurring.
- The corporate income tax exemption on the distribution of profits to non-resident partners, provided for in Article 8, paragraphs 3, 6 and 8, of the Corporate Income Tax Code, will cease to apply whenever the resident entity that distributed them fails to comply with the declarative obligations provided for in the CRBO, or in cases where the beneficial owner resides in a territory that is on the list of “tax havens”, except where the taxable person can prove that the beneficiary company is not part of a construction or series of constructions covered under paragraphs 17 and 18 of the same article.
This law will come into force 90 days after publication, i.e. on 19 November 2017. In the meantime, additional regulations are expected to be published.
Cash payments of 3,000 euros or more prohibited
Under Law 92/2017, published on 22 August, specific payment means are now required for transactions involving sums of 3,000 euros or more. In practice, it will now be forbidden to pay or receive cash for transactions of any nature involving sums of 3,000 euros or more (or the equivalent amount in other currencies) or 10,000 euros if the payment is made by individuals who are not resident in Portugal and as long as they are not acting in the capacity of entrepreneurs or traders.
In the specific case of taxable persons liable for corporate or individual income tax and who have organised accounts, the rule still applies that the payment of invoices to the value of 1,000 euros and over (or the equivalent amount in other currencies) must be made by means of a method that makes it possible to identify the recipient of the payment, i.e. bank transfer, a cheque made out to the recipient or direct debit.
As NEWCO has been informing its clients, these changes are part of the effort to bring Portugal into line with European and international regulations to prevent and combat money laundering and the financing of terrorism. Please feel free to contact us if you require any further information on this matter.