Portugal: Certification requirements for EU/EEA pension funds

Following our Announcement A12005 of 3 January 2012 informing amongst other things about the tax exemption available on dividends for Portuguese equities paid to pension funds domiciled in other European Union (EU) Member States or in European Economic Area (EEA) countries, we have obtained clarification from our local custodian on the tax certification to be provided by such beneficial owners in order to be exempt from tax.

Background

Following the judgment of the European Court of Justice in the case of the Commission versus Portugal dated 6 October 2011 (C-493/09), the Portuguese State Budget Law 2012 grants tax exemption on Portuguese securities income paid to pension funds domiciled in other EU/EEA countries (to the extent that the respective EEA country is in a relationship of administrative cooperation with Portugal as regards tax matters, equivalent to that established between the EU Member States) provided that the following conditions are met:

1. The pension fund grants exclusively the payment of retirement benefits (including pre-retirement or anticipated retirement), post-employment health benefits and, when provided on an ancillary basis, payment on death.

2. The pension fund is managed by institutions performing Pension Plan Schemes under Directive 2003/41/EC of the European Parliament and the Council of 3 June 2003.

3. The pension fund is the final beneficiary of the income.

4. In the case of dividends, the shares were previously held uninterruptedly for a period of at least 12 months.

Conditions 1, 2 and 3 must be confirmed to the Withholding Tax Agent / Portuguese Tax Authorities through a declaration issued by the relevant supervisory authority of the EU/EEA Member-State. We attach the list of Supervisory Authorities as provided by our local custodian (see below).

The State Budget Law does not specify in which way the holding period (condition 4) must be confirmed. Subject to any further confirmation or interpretation from the Portuguese Tax Authorities, it is admitted by our local custodian acting as Withholding Tax Agent that the Condition 4 can be confirmed by a self declaration of the pension fund.

Impact on customers

Since 1 January 2012 EU/EEA pension funds may apply for tax exemption on Portuguese dividends at source or via the quick refund by providing the following certification:

Declaration for EU/EEA Pension Funds

This declaration duly completed and signed by the relevant supervisory authority (as described above) is valid for a period of one year counting from the respective date of issue and must be received by Clearstream Banking in original. We attach an example of the template to be used (see below), according to the confirmation received from our local custodian. However we emphasise that this template is provided for information purpose only and shall neither be considered as an official document nor a legal advice from Clearstream Banking as no official template has been published by the Portuguese Tax Authorities.

Deadlines

Relief at source: Two business days before the record date of the first dividend payment made in the respective year by 10:00 CET. To be renewed annually.

Quick refund: At the latest by 10:00 CET on the 10th of the month (or the last business day before that, if the 10th is not a business day) following the month in which the first dividend payment was made in the respective year.

Self Declaration of holding period

Declaration duly completed and signed by the pension fund being the final beneficial owner must be sent in original per dividend payment. It must confirm since when the pension fund holds the Portuguese equities uninterruptedly.

Deadlines

Relief at source: Two business days before the record date of each relevant dividend payment by 10:00 CET.

Quick refund: At the latest by 10:00 CET on the 10th of the month (or the last business day before that, if the 10th is not a business day) following the month in which the respective dividend payment was made.

Position Breakdown Report (PBR)

Customers must provide Clearstream Banking with a Position Breakdown Report (PBR), that indicates the position held per respective beneficial owner on the record date of each income payment, in the following format:

• Electronic form (CD-ROM, floppy disk) available in xls format from the Clearstream website and
• As duly signed hard copy via registered mail.

Customers that hold the securities for eligible beneficial owners but do not provide Clearstream Banking with the relevant reporting will not be able to benefit from tax exemption and will be recorded as "undisclosed".

Important note: The first breakdown report will only include the name and address of the final beneficial owners. As from the moment that the Portuguese Tax Authorities have provided each of the beneficial owners with a Tax Identification Number (TIN), this number will need to be used as identification.

Deadlines

Relief at source: Two business days before the record date of each relevant dividend payment by 10:00 CET.

Quick refund: At the latest by 10:00 CET on the 10th of the month (or the last business day before that, if the 10th is not a business day) following the month in which the respective dividend payment was made.

Standard refund

Full standard refund on Portuguese equities is not available through Clearstream Banking.

Further information

For further information, please contact the Clearstream Banking Tax Help Desk on:

or Clearstream Banking Customer Service or your Relationship Officer.

CBL does not warrant, expressly or implicitly, the veracity, accuracy or completeness of the attached declaration (the "Declaration") that is provided for information only and should not be considered an official document. CBL accepts no liability whatsoever for any use of the Declaration that should not be interpreted as investment, tax or legal advice by CBL or any of its affiliates, officers, directors, employees or agents, for which customers should consult with appropriate professional advisers.

The Declaration should not be further distributed or duplicated in whole or in part by any means, without the prior written consent of CBL.