Beneficial owners eligible for tax relief - Portuguese equities (securities held in BNP Paribas Securities Services)

03.10.2022

The following types of beneficial owner are recognised in Portugal as eligible for standard refund through BNP:

Residents of Double Taxation Treaty (DTT) countries

Partial standard refund of withholding tax on dividends from Portuguese equities is available to a beneficial owner that qualifies for the benefit of a reduced tax rate in accordance with the DTT concluded between its country of residence and Portugal.

The customer can apply for partial standard refund on behalf of the beneficial owner through Clearstream Banking by submitting the appropriate documentation.

Additional eligibility criteria for special categories of DTT residents

1. Funds / Trusts:

Following Circular Letter 6/2009 and in order to benefit from the reduced tax rates granted by the applicable DTT, non-resident Collective Investment Vehicles (that is funds and trusts) must comply with the following eligibility criteria:

  • Non-resident trusts can benefit from the application of the regime established in the DT signed between their country of residence and Portugal only if such application is expressly mentioned in the respective DT (e.g. the treaty concluded by Portugal with the U.S.A. and Canada). In such cases, proof must be provided of the fulfilment of the requirements and conditions set out in the respective treaty, including proof that the trust is the beneficial owner of the income.
  • For non-resident investment funds and pension funds, the application of the DTT depends on the fulfilment of all the following requirements:
    • The fund is considered a “person” for the purpose of the respective DTT, and
    • The fund is subject to tax imposed on a personal and unlimited basis and is not treated as fiscally transparent (that is, it must be subject to tax in its country of residence, independently of the taxation that may occur at the level of the fund participants); and
    • The fund is the beneficial owner of the income received.

Trusts and funds applying for standard refund must provide additional Declarations to prove their eligibility to obtain the DTT rates.

2. Luxembourg SICAVs and SICAFs:

In the technical note Process 1588/2010, the PTA clarified that Luxembourg SICAVs are not covered by the limitation on benefits clause of article 29 of the Portugal – Luxembourg DTT, nor by the references to such limitation on benefits clause foreseen in the Protocol. As a consequence, a SICAV shall be considered covered by article 1 (personal scope of the DTT), provided that it fulfils the requirements to be considered resident in Luxembourg for tax purposes as provided in article 4 of the same DTT.  This technical position should be extended also to Luxembourg entities operating as SICAFs.
The documentation requirements for standard refund are similar to the ones for DTT residents.

The exclusion of fiscally transparent funds from treaty benefits remains applicable to Luxembourg Fonds Commun de Placement (FCPs).