Eternity Law International — News — Secure Your Trust License in Portugal

Secure Your Trust License in Portugal

Published:
July 5, 2024

Trusts are quite complex organizations in terms of legal features of their formation, establishment and licensing. Portugal’s tax regime, particularly for non-resident or non-resident investors, has been praised by businesses for its ability to engage investments from non-residents and by capital owners seeking an efficient tax haven. However, behind the favorable tax treatment lies a more complex and potentially legally fraught tax system for foreign trusts that merits closer examination. Below we will consider peculiarities of the launching and functioning of trust structures in this jurisdiction, as well as key aspects of getting a trust license in Portugal.

Our team is first-class experts in field of Portugal trust services and business-registration, and obtaining licenses for any type of commercial activity. We offer comprehensive consulting and practical support at every stage. In addition, we have many options for ready-made trusts for sale.

Trusts in Portugal: nuances of official launching, licensing and operation

Separately, taxation issues for such a business-project in Portugal should be borne in mind, since for this jurisdiction this is a rather complex and complex issue. Portuguese Tax Code defines the specific circumstances when income from trusts and “trust structures” is subject to tax. This includes payments made from such firms, as well as amounts received by individuals upon the liquidation, revocation or termination of these trusts. The financial implications are profound and multifaceted, affecting both the owners of the property held by the trust and the beneficiaries.

Founders of such a business-project need to note that amounts received as a result of the dissolution and trust termination are taxed as capital increases. This tax-rate is 28% or even 35% if the trust is registered in a jurisdiction blacklisted by Portuguese authoritative bodies. Tax-rate underscores a growing trend among countries to clamp down on what they perceive as tax avoidance strategies, especially for those businesses registered in so-called tax havens.

For many years, trusts have been and continue to be a convenient and most beneficial means of managing other peoples’ funds. There are many options available for assets transferring into trust or use within framework of Portugal trust law, and regulations of controlling and supervising private monetary means and property.

Key feature of trusts in Portugal is that decisions regarding underlying funds and their disposal are made only by the directors in arrangement and cooperation with the owners of these funds or estate. However, it’s worth considering that the transfer of excessive powers to dispose of assets may have consequences in the form of an increased tax burden. The most common solution to this problem is to own the client’s assets through a trust, which creates additional layers of control. Our lawyers will select for you the most favorable conditions for creating and opening a trust in Luxembourg, Denmark, Germany, Austria and others.

Creating a trust doesn’t need any special procedures beyond normal firm launching locally. The last-mentioned itself takes about several working days. After establishing a commercial structure, it is necessary to get officially-approved permission. Trust license cost in Portugal, granted in our services range, depends on many third-party factors and is calculated individually for each client before cooperation starts.

To obtain a trust license in Portugal, a firm must meet a number of norms, incl. those listed below.

  1. Submitting a request to IBCM for prior authorization to license a firm in Portuguese Exclusive Economic Zone.
  2. Launching a Portuguese organization.
  3. Filling out a trust license application in Portugal from National Banking establishment.
  4. Appointment of a specialist in the prevention of illegal circulation of funds and a local director.
  5. Opening a corporate account in a Portuguese bank.

Generally-set national AML-rules make trust institutions to meet several obligations listed below:

  • complete identification of clients;
  • storage of documents connected with clients and deals;
  • conduct fact checks and make reports suspicious operations;
  • adoption and application of internal controls that address AML risks specific to each organization.

As part of trust license requirements in Portugal, next-mentioned must be completed.

  1. Provide certified/legalized copies of passports of all participants.
  2. Provide an apostille/legalized power of attorney for firm launching from its participants.
  3. Designate and confirm directors powers and hire workers (at least one of the directors needs to reside locally).
  4. Provide a list of all organization members.
  5. Establish a physically-registered presence locally.

In addition to registration documentation, businesspersons must provide 3 firm names. In this country, duplicate firm names are prohibited, as in most jurisdictions. It is also necessary to set the size of minimum initial capital. The law sets a limit of 1 euro.

So, how to get trust license in Portugal? General process is as follows.

  1. Determining the range of future business-activities and developing a business plan.
  2. Selection, verification and reservation of a name for a company.
  3. Collection of data about firm’s beneficiaries, founders and directors.
  4. Local address registration.
  5. Formation and collection of registration and constituent documents.
  6. Registration as a taxpayer.

Trust license fees in Portugal needed to pay are about 1.5-2 thousand euros.

Privileges of obtaining trust license in Portugal

  1. A progressive, open and digital economy. World Bank places Portugal 30th in its list of the world’s richest countries by GDP. The country has recently experienced an economic evolution with rising exports, indicating sustainable and long-term progress will only strengthen.
  2. Portuguese governmental apparatus has simplified and facilitated the processes for setting up firms locally, which is attracting a great number of foreign capital-holders.
  3. Portugal sets the lowest taxes for companies operating in Europe.
  4. Direct access to the EU single market, free movement of goods, services, capital and individuals, meaning Portuguese firms may offer their products and services throughout the EU without having to pay additional fees or overcome trade barriers.

Our firm offers comprehensive professional trust services in Portugal. We also have an extensive range of ready-made trusts licensed in Hong Kong, China, Malta and other countries. Contact us right now.

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