Approves The Law Of Local Finances, Revoking Law No 42/98 Of August 6

Original Language Title: Aprova a Lei das Finanças Locais, revogando a Lei n.º 42/98, de 6 de Agosto

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Read the untranslated law here: http://app.parlamento.pt/webutils/docs/doc.pdf?path=6148523063446f764c3246795a5868774d546f334e7a67774c336470626d6c7561574e7059585270646d467a4c316776644756346447397a4c33427762446b794c5667755a47396a&fich=ppl92-X.doc&Inline=false

1 PROPOSAL of law No. 92/X explanatory memorandum to the law No 42/98 of 6 August, proceeded to the fourth review of the local government finance system. However, such a system has kept the current funding structure since 1977, based on annual transfers from the State budget, keeping stable the criteria for distribution of financial funds intended for the financing of municipalities and parishes. This law comes at a time when the country is living a difficult financial situation, which calls for the adoption of measures of accuracy and fiscal consolidation. But it is also a moment of public administration reform with a strong penchant descentralizador, which calls for a financial framework for dynamic local authorities and appropriate for your current tasks and the transfer. The Local finance law review, provided for in the programme of the XVII constitutional Government, within the framework of budgetary consolidation and financial solidarity between the various sub-sectors of the General Government sector, in conjunction with the deepening of decentralization and local autonomy. The process of transferring powers to the municipalities and parishes, establishing the principle of decentralisation, is an important instrument for reducing public spending, with important implications for the financial plan arising from the operation of the principle of subsidiarity. Thus, the reform of local government financing system focuses especially on the model of allocation of public resources between the State and local authorities, about the criteria for the allocation of the annual transfer from the State budget, on the own resources and on the use of the credit scheme on the part of local authorities. Wanted, too, make the municipalities less dependent on revenue from construction. Made sure, however, the maintenance of the current overall levels of funding or public revenue, consecrating the principle of financial neutrality for 2007, then the revenues of local authorities to the economic cycle, in full accordance with the principle of mutual solidarity. 2 in the field of distribution of resources between the State and the municipalities, the system of State budget transfers know important changes. Opts for the reduction of the weight of the financial stability Fund (ETF) in the total amount of municipal revenues and assigns a significant weight to the promotion of territorial cohesion by strengthening the funds to be distributed through the Cohesion Fund (FCM). In this way, the new law assigns 50% of ETF to FCM. The distribution of the remaining 50% of the ETF carried out through General Municipal Fund (FGM), to the extent that the criteria for distribution of this Fund are changed: discriminate positively the municipalities in which a portion of the territory is classified classified as Natura 2000 or non-integrated protected area that network; the significant weight of the distribution is based on the population, to the detriment of the criterion on number of parishes, reducing to 5% the share of FGM to be distributed equally for all municipalities. Such changes in distribution criteria of FGM foster rationalisation, penalizing the municipal fragmentation. These changes, together with a maximum variations and compensation scheme-which leads to the municipalities of 1.25 per capita than the national average of tax revenues contribute 22% of the difference to those who have income below the national average – reflects a significant strengthening of territorial cohesion component in the system of transfers. The allocation of resources through financial transfers joins now the direct involvement of the municipalities in the recipe of the personal income tax (IRS) generated in the municipality. Municipal participation in the IRS consists of a fixed portion of 2% and a variable portion up to 3%, while the municipalities define what percentage of IRS revenue intended to make threats about the constituents. There is a difference between the percentage set and the 3% maximum ceiling of this variable portion, such amount shall be considered as a deduction to the final tax liability "of the taxpayer. This IRS sharing mechanism is an essential instrument for the promotion of local financial autonomy, promoting intermunicipal tax competition, increasing the range of own resources of municipalities and blaming local elected representatives for their financial decisions. Aware of the changes in backup of tax powers of the municipalities, is consecrated the possibility of collection of municipal taxes for 3 Metropolitan Areas of Lisbon and Porto and the associations of municipalities whose territory corresponds to the NUTS III. The creation of a Municipal Social Fund (WSF) to finance specific items of expenditure needs in the sectors of education, health and social work, promoting positive discrimination in order to ensure effective equality of opportunities. This is an instrument of decentralization and transfer of skills, which funds eligible expenditure, legally defined, in social areas – education, health and social action. Chooses, here, for the consecration of the principle of allocation of revenue, to the extent that these costs are associated with this Fund relate closely with the equal opportunities and for which should apply the principle of universality: all citizens should have access to those services in any point of the national territory and irrespective of the preferences and political programmes of the municipalities. With regard to recourse to credit, dedicates the concept of liquid municipal debt compatible with the European system of national and regional Accounts 1995 (ESA 95) of, henceforth the municipal debt while stock for which are established limits. Abandon, then, the definition of limits on indebtedness in terms of flows (interest and amortization). In this way, two established limits on municipal debt: a limit the net debt, corresponding to a stock of 125% of the most important own resources (transfers from the State budget, participation in IRS and municipal tax revenues); a limit on borrowing, corresponding to 100% of those resources. In accordance with the principle of local sustainability promotion, loans and amortization for the financing of urban renewal programs are excepcionados of the debt limit through loans. Assuming the need to provide this law of flexibility, so that this legal framework suits different situations that we live in, is consecrated, in the State budget to set maximum limits to municipal debt other than those which are established in this Decree. In return, and in accordance with the principle of mutual solidarity and participation, is enhanced the participation of the municipalities in the Coordinating Council of Public Sector Financial management. 4 in respect of indebtedness, is provided for the reduction of financial transfers to the municipalities that violate debt limits, in amount equal, and that reverts to the Municipal stabilisation fund, whose operation will be regulated by legislative act, associated with the new rules of sanitation and financial balance. Finally, and in terms of provision and statutory audit, this law establishes the obligation of consolidation of municipalities having local authority services or the entire capital of municipal companies, as well as the placing of accounts of municipalities and associations of municipalities with capital participation to external audit and also advertising and reporting duties in accordance with the principle of transparency. As for the parishes, the criteria for the distribution of the Fund are changed, thus discouraging the territorial fragmentation and benefiting the parishes integrated into rural areas, using as a criterion the classifier typology of urban areas, established by the Board of Governors of statistics, through Resolution No. 158/98, of 11 September.

So: under d) of paragraph 1 of article 197 of the Constitution, the Government presents to the Assembly of the Republic the following Bill: Title I objective and principles Article 1 subject-matter this law 1-lays down the financial regime of municipalities and parishes. 2-the principles provided for in this title shall apply to the metropolitan areas of Lisbon and Porto, in so far as they are compatible with the nature of these, being his specific financial rules established in own diploma.

Article 2 5 principle of consistency the financial regime of municipalities and parishes respects the principle of consistency with the framework of attributions and powers legally is committed in particular to provide for rules to ensure the proper financing of new duties and responsibilities.

Article 3 principle of financial autonomy of municipalities and parishes


1-the cities and the villages have heritage and finance themselves, whose management it is the responsibility of the respective agencies. 2-the financial autonomy of municipalities and parishes is based, inter alia, in the following powers of its organs: a) develop, approve and modify the options plan, estimates and other forward-looking documents; b) drafting and approving the documents of account; c) exercise the powers legally tax you are committed; d) Raise and have recipes that by law they are intended; and sorting and processing expenses) legally authorised; f) manage their own heritage, as well as that their affection. 3-are null the deliberations of any organ of the municipalities and parishes that involve the exercise of tax powers or determine the release of rates not foreseen in the law. 4-Are also void the deliberations of any organ of the municipalities and parishes that determine or authorize the making of expenses not allowed by law.

Article 4 1 budget principles and rules-the municipalities and parishes are subject to the rules laid down in the Law of Budgetary Framework and the budgetary principles and rules and budgetary stability. 6 2-the principle of non-consignment shall not apply to revenue from Community funds and the social fund, provided for in articles 24 and 28 to the revenue of the prices referred to in paragraph 4 of article 16, as well as from the technical and financial cooperation and other provided for by law. 3-the principle of intergenerational equity, on the distribution of costs and benefits between generations, implies the assessment on this plan of budgetary implications: a) of the measures and actions included in the multi-annual investment plan; b) investment in human qualification co-funded by the local authority; (c)) of the costs of the financial liabilities of local authority; (d)) of the financing needs of the local business sector, as well as municipalities or intermunicipal associations; and accrued and not charges) paid to suppliers; f) explicit and implicit costs in public-private partnerships, concessions and other multi-year financial commitments. 4-the municipalities and parishes are also subject, in the adoption and implementation of their budgets, the principles of budgetary stability of mutual solidarity between levels of administration and budget transparency. 5-the principle of budgetary transparency is reflected in the existence of a duty of mutual information between the State and local authorities, as a guarantee of stability and mutual solidarity, as well as the duty of these provide to citizens, accessible and rigorous form, information about your financial situation. 6-the principle of transparency in the adoption and implementation of the budgets of municipalities and parishes also applies to the financial information concerning the associations of municipalities or parishes, as well as the entities that make up the local business sector, municipal concessions and public-private partnerships.

Article 5 finance local Coordination with State finances-1 coordination of the municipalities and parishes with the finances of the State has particularly into account the balanced development of the whole country and the need to achieve the budgetary objectives and targets outlined under the convergence policies 7 that Portugal has thanks within the European Union. 2-the coordination referred to in paragraph 1 shall be carried out through the Council of Government Financial Coordination, being local authorities heard before the preparation of the stability and growth program and the State budget, particularly with regard to the participation of local authorities in public resources and the total amount of municipal debt. 3-in order to ensure effective coordination between the State's finances and the finances of local authorities, the State budget can set ceilings to municipal debt other than those which are set out in this law. 4-violation of net debt limit laid down for each municipality under paragraph 1 of article 37 gives rise to a reduction in the same amount of budgetary transfers payable in the subsequent year by the State sub-sector, which is the Municipal stabilisation fund, pursuant to article 42 of this law.

Article 6 local sustainability promotion 1-the financial regime of municipalities and parishes should contribute to the promotion of economic development, the preservation of the environment, regional planning and social welfare. 2-promote local sustainability is ensured, inter alia: a) The positive discrimination of the municipalities with the Natura 2000 area and protected area, under the General Municipal Fund; (b)) by the exclusion of any debts arising out of urban renewal activities of the limits on municipal indebtedness; c) For granting exemptions and tax benefits on taxes to which municipalities have the right recipe, the taxpayers who pursue their activities in accordance with standards of environmental and urban quality; d) by the use of tax instruments geared to the promotion of social purposes and urban, territorial and environmental quality, including rates. 8 article 7 Participation of municipalities in public resources 1-the participation of each local authority in public resources is determined in accordance with the terms and in accordance with the criteria laid down in this law, aimed at vertical and horizontal financial balance. 2-the financial vertical balance aims to adapt the resources of each level of Administration to the respective duties and responsibilities. 3-the horizontal financial balance intends to promote the correction of inequalities between municipalities in the same degree as a result in particular of different capacities in collection of revenue or expense different needs.

Article 8 financial and technical cooperation 1-are not allowed any form of subsidy or financial assistance to municipalities and parishes by the State, public institutes or autonomous funds. 2-Can, exceptionally, be entered in the State budget an overall allocation affects the various ministries, for financing projects of national interest to develop local authorities, of great importance for regional and local development, corresponding to identified priority policies in that Law, in accordance with the principles of equality, fairness and justice. 3-the Government and the regional governments can still take action necessary budgetary financial aid grant to local authorities, in the following situations: a) public Calamity; b) negatively affected Municipalities for investments by the central administration; c) severe circumstances drastically affecting the operation of infrastructure and municipal services of civil protection; d) conversion of urban areas of illegal Genesis or urban rehabilitation programs when your relative importance transcends the capacity and municipal responsibility under the law. 9 4-granting financial aid to local authorities in situations of public calamity is regulated in own diploma. 5-the granting of any financial assistance and conclusion of contract or agreement with the local authorities must be previously authorized by order of the Ministers of finance and published in the second Series of the Diário da República. 6-are null the instruments of financial and technical cooperation and financial assistance entered into or executed without being subject to the provisions of the preceding paragraph. 7-the Government publishes on a quarterly basis in the second Series of the Diário da República a listing of which are set out in the instruments of financial and technical cooperation and financial assistance, awarded by each Ministry, as well as the respective amounts and deadlines. 8-the system of technical and financial cooperation, as well as the system of financial aid to local authorities, are regulated by their own diploma.

Article 9 inspection Supervision the supervision on the financial management of local authorities covers the direct and indirect administration and the local business sector entities, is merely and inspection can only be exercised in accordance with the forms and in the cases provided for in the law, safeguarding always the democracy and local autonomy.

Title II revenue from local municipal Revenues chapter I article 10 municipal Revenues


Constitute income of municipalities: a) the product of the recovery of municipal taxes whose revenue is entitled, including the municipal property tax (IMI), the municipal property transfer tax (IMT) and 10 municipal tax on vehicles (IMV), without prejudice to the provisions of subparagraph (a)) of article 17 of this law; b) the product of the collection of shed released pursuant to article 14; c) proceeds from the collection of fees and prices as a result of the granting of licences and the provision of services by the municipality, in accordance with the provisions of articles 15 and 16; d) the product of participation in public resources as determined in accordance with the provisions of article 19 and following; and) the product of the recovery of cost of capital gains intended by law to the municipality; f) the proceeds from fines and penalties laid down by law, regulation or posture that fit to the municipality; g) the return of assets, movable or immovable, they administered data in grant or ceded to exploitation; h) profit-sharing in companies and on the results of other entities in the municipality take part; I) the product of inheritances, legacies, grants and other donations in favour of the municipality; j) proceeds from the disposal of assets, movable or immovable; l) the loan product, including those resulting from the issuance of municipal bonds; m) other income established by law or regulation in favour of municipalities.

Article 11 tax Powers the municipalities offer tax powers for taxes and other taxes to which they are entitled, including recipe: a) access to information of municipal taxes and surcharge, liquidated and charged, when the liquidation and recovery is ensured by the services of the State, in accordance with paragraph 4 of article 13; b) Possibility of liquidation and collection of taxes and other taxes whose revenue are entitled, in accordance with the set by diploma. 11 c) Possibility of enforcing payment of taxes and other taxes whose revenue are entitled, in accordance with the set by diploma. d) granting exemptions and tax benefits, in accordance with paragraph 2 of article 12; and the granting of Compensation) tax benefits on taxes and other taxes whose revenue are entitled, by the Government, in accordance with paragraph 4 of article 12; f) Other powers provided for in tax legislation.

Article 12 exemptions and tax benefits 1-the State, the autonomous regions and any of its services, institutions and organisations, yet customized, including public institutes, which are not business, as well as the municipalities and civil parishes and their associations are exempted from payment of all taxes due under this law with the exception of exemption from property tax for buildings not engaged public interest activities. 2-the Council may, on a proposal from the City Council, by means of reasoned deliberation, grant total or partial exemptions in respect of taxes and other taxes. 3-The tax incentives referred to in the preceding paragraph may not be granted for more than five years, with possible renewal for a time with the same time limit. 4-in the case of tax benefits relating to municipal taxes which constitute contractual counterpart of large investment projects of interest to the national economy, the recognition of the same it is for the Government, listen to the municipality or municipalities concerned, which shall give an opinion within a maximum of 45 days in accordance with the law, with compensation in the case of place disagreement expressed their municipality notified within that period through funding to enroll in the State budget. 5-for the purposes of the preceding paragraph, large investment projects those that are defined in the terms and within the limits of paragraph 1 of article 39 of the Tax benefits Statute. 12 6-the municipalities must be heard before the concession, by the State, subjective tax exemptions relating to municipal taxes, as regards the grounds for the decision to grant an exemption, and are informed about the tax expenditure involved, having place the compensation in the event of disagreement expressed their municipality. 7-are excluded from the provisions of the preceding paragraph the automatic exemptions and the obligations arising from International law to which the Portuguese State is bound. 8-the municipalities should have access to aggregated information concerning the tax expenditure adveniente granting tax benefits relating to municipal taxes referred to in subparagraph (a)) of article 10 of this law.

Article 13 Settlement and collection of taxes 1-municipal taxes referred to in subparagraph (a)) of article 10, are settled and charged pursuant to the relevant legislation. 2-The municipalities can decide to proceed to the recovery of municipal taxes, by its own services or by the services of the Association in the municipality that integrate, since corresponds to the territory of the NUTS III, in accordance with the set by diploma itself. 3-the municipalities that make up the metropolitan areas of Lisbon and Porto can transfer the competence of collection of municipal taxes to the competent service of those Metropolitan entities, in accordance with the set by diploma itself. 4-When the settlement or recovery of municipal taxes is ensured by the services of the State, their charges cannot exceed 1.5% or 2.5% of the amount paid or levied, respectively. 5-the net revenue of the charges referred to in the preceding paragraph shall be transferred by the State to the municipality prescription holder up to the last working day of the month following the payment. 6-the Directorate-General of taxes shall provide the National Association of Portuguese municipalities (ANMP) aggregate information concerning the financial relations between the State and the municipalities and provides each municipality information 13 concerning the liquidation and collection of municipal taxes and revenue transfers to the municipality. 7-the information referred to in the preceding paragraph is made available through the Internet and updated monthly, each municipality access only to information relating to their financial status. 8-due interest on the part of the central administration, in the cases of delays in transfers to the municipalities of tax revenues that they own.

Article 14 Pours 1-the municipalities can decide to launch an annual spill, up to a maximum of 1.5% on taxable profit subject and not exempt from corporate income tax (IRC), which corresponds to the proportion of revenue generated in your geographical area by taxpayers resident in Portuguese territory engaged in, primarily, an activity of a commercial nature industrial or agricultural, and non-residents with a permanent establishment in that territory. 2-for the purposes of the preceding paragraph, where taxpayers have permanent establishments or local representations in more than one municipality and taxable income exceeding 50,000 euros, the taxable profit attributable to the constituency of each municipality is determined by the ratio of the wage mass corresponding to establishments that the taxable person it has and the corresponding to all of its establishments located in national territory. 3-In cases not covered by paragraph 1, it is considered that the income is generated in the city in which the headquarters or the place of effective management of the taxpayer or, in the case of taxable persons not resident in the municipality in which is situated the permanent establishment where, pursuant to article 117 of the IRC code, is centered. 4-term wage bill the amount of expenditure incurred on staff and recorded in the financial year in respect of salaries, wages or salaries. 14 5-taxable persons covered by paragraph 2 indicate the periodic Declaration of income the wages corresponding to each municipality and the establishment of the spill that is due. 6-the decision referred to in paragraph 1 shall be communicated electronically by the City Council to the Directorate-General of taxes until 31 December of the year preceding the recovery on the part of the competent departments of the State. 7-If the communication referred to in the preceding paragraph is received beyond the deadline established therein, there is no place to settlement and collection of spills. 8-the product of pours paid is transferred to the municipalities by the last working day of the month following the month of their establishment by the Directorate-General of taxes.

Article 15-1 rates of municipalities the municipalities can raise rates in accordance with the general scheme of the rates of local authorities. 2-the creation of rates by municipalities shall be subject to the principles of legal equivalence of fair burden-sharing and public advertising, focusing on utilities provided to individuals, generated by the activity of municipalities or resulting from the implementation of municipal investments.

Article 16 Prices


1-prices and other instruments of remuneration to be fixed by the municipalities concerning services rendered and goods supplied in direct management by municipal organic units or by the local authority services should not be lower than the costs directly and indirectly supported with the provision of such services and to the provision of these goods. 2-for the purposes of the preceding paragraph, the costs incurred are measured in situation of productive efficiency and, where applicable, in accordance with the rules of the tariff in force regulation. 3-the prices and other instruments of remuneration to be charged by the municipalities relate, in particular, to the activities of municipal or inter-municipal systems: 15 a) public water supply; b) wastewater Sanitation; c) solid waste management; d) transport of people and goods; and) distribution of electricity in low voltage. 4-for the activities mentioned in (a)) and (b)) of the preceding paragraph, the municipalities must collect prices in terms of tariff regulation to be approved. 5-Unless contractual provisions to the contrary, in cases where there are municipal or local authority services revenue from rates and other contractual instruments associated with any of the activities referred to in the preceding paragraph which are conducted through concessionary companies, should such prescriptions be transferred to these companies until the 30th day of the month following the registration of the respective recipe companies should be provided quarterly information updated and broken down the amounts charged. 6-the regulatory authority of the sectors of public water supply, wastewater sanitation and solid waste management to check the provisions of paragraphs 1, 4 and 5 and, in the case of direct municipal management, municipalizado service, municipal or inter-municipal company, inform the municipal Assembly and the competent authority of the inspection supervision in case of violation of any of these precepts without damage of the sanctioning powers of possession.

Chapter II revenue from parishes article 17 of the Recipes Are recipes of parishes: a) 50% of the revenue of the IMI product on farm buildings; b) the collection of fees, particularly from the provision of services the parishes; c) the return of markets and cemeteries of parishes; 16 d) the proceeds from fines and penalties laid down by law, regulation or posture that fit to the parishes; and the performance of its own), movable or immovable, administered by them, data on grant or ceded to exploitation; f) the product of inheritances, legacies, grants and other donations to the parishes; g) proceeds from the disposal of assets, movable or immovable; h) the product of short-term loans; I) other income established by law or regulation in favour of the parishes.

Article 18 parishes fees 1-the parishes can raise rates in accordance with the general scheme of the rates of local authorities. 2-the creation of rates the parishes shall be subject to the principles of legal equivalence of fair burden-sharing and public advertising, focusing on utilities provided to individuals or generated by the activity of parishes.

Title III public resource Distribution between the State and local authorities article 19 sharing of public resources between the State and the municipalities 1-the allocation of public resources between the State and the municipalities, with a view to achieving the objectives of horizontal and vertical financial equilibrium is obtained through the following forms of participation: a) A general subsidy determined from the financial stability Fund (ETF) whose value is equal to 25.3% of the simple arithmetic average the tax revenue on income (IRS), on corporate income (IRC) and the value added tax (VAT); 17 (b)) A specific subsidy determined from the Municipal Social Fund (WSF) whose value corresponds to the expenditure relating to duties and responsibilities transferred from central Government to the municipalities; c) A 2% stake in IRS taxpayers with tax domicile in its territorial circumscription, calculated on their net collection of deductions provided for in paragraph 1 of article 78 of the IRS code, ascertained in the penultimate year in respect of which the State budget relates; d) A variable participation up to 3% in the IRS, defined under article 20 2-tax revenue referred to in (a)) and (b)) of the preceding paragraph is that which corresponds to the net revenues from these taxes in the penultimate year for that to which the State budget, excluding: a) the participation referred to in point (c)) of the preceding paragraph; b) with regard to VAT, the recorded revenue of exceptional or temporary, the other General Government sub-sectors. 3-for the purposes of the preceding paragraph, the value shown in the net revenue map of budgetary implementation, according to economic classification, concerning integrated services. 4-for the purposes of subparagraph (c)) of paragraph 1, the fiscal domicile of the taxpayer identified first in its income statement.

Article 20 Participation variable in IRS 1-the municipalities shall be entitled each year to a variable until 3% participation in IRS taxpayers with tax domicile in its territorial circumscription, relative to income for the year immediately preceding, calculated on their net collection of deductions provided for in paragraph 1 of article 78 of the IRS code. 2-the participation referred to in the preceding paragraph depends on deliberation on the IRS sought by the municipality, which shall be communicated electronically by the respective Town Hall to the Directorate-General of taxes, by 31 December of the preceding year to which they relate for income. 18 3-the absence of communication referred to in the preceding paragraph or the receipt of communication beyond the period laid down therein amounts to lack of deliberation. 4-If the deliberate percentage by the municipality is less than the maximum rate set in paragraph 1, the difference in fees and the liquid collection is considered as deduction to the final tax liability with the IRS, in favour of the taxpayer, in respect of the income of the year immediately preceding the one for variable participation referred to in paragraph 1, provided that their settlement was made on the basis of declaration made within the legal deadline and the elements in it. 5-the absence of the deduction to the final tax liability referred to in the preceding paragraph does not determine, in any case, an increase to the amount of participation established variable based on deliberate percentage by the municipality. 6-for the purposes of this article, the fiscal domicile of the taxpayer identified first in its income statement. 7-the product of participation variable in IRS is transferred to the municipalities by the last working day of the month following the month of their establishment by the Directorate-General of taxes.

Article 21 financial stability Fund 1-the financial stability Fund (ETF) is distributed as follows: 50%) as General Fund Municipal (FGM); b) 50% as cohesion fund (FCM). 2-the General participation of each municipality in the ETF is the result of the sum of the portions regarding FGM and the FCM. 3-the municipalities with the highest per capita municipal revenue, pursuant to paragraphs 1, 2 and 3 of article 28, are net contributors of the WCF.

19 article 22 General Municipal Fund the FGM corresponds to a financial transfer of the State aimed at providing the appropriate financial conditions the municipalities performance of their duties, in accordance with the respective operating and investment levels.

Article 23 the Cohesion Fund Hall 1-the FCM aims to strengthen municipal cohesion, promoting asymmetry correction, for the benefit of the less developed municipalities, where there are situations of inequality with respect to the corresponding national averages, and corresponds to the sum of the tax (CF) compensation and the compensation of inequality of opportunities (CDO) based on the index of inequality of opportunities (IDO). 2-compensation for unequal opportunities aims to compensate for certain cities, the difference in opportunities arising from inequality of access to necessary conditions in order to have a longer life, with better levels of health, basic sanitation, and the acquisition of knowledge.

Article 24 Municipal Social Fund


1-the FSM is a financial transfer from the State budget earmarked to finance certain expenditure on the tasks and competencies of the municipalities associated with social functions, notably in education, health or social action. 2-the expenditure eligible for funding through the FSM are, inter alia: a) The current expenditure of the public, including the preschool remuneration of non-teaching staff, food services, the costs of prolongation of time and school transport; b) the running costs with the three cycles of basic public education, in particular the salaries of non-teaching staff, food services, curricular enrichment activities and transportation school 20, excluding only the staff assigned to the curriculum required; c) expenditure on teachers, monitors and other technicians with educational curriculum enrichment functions, in particular in the areas of initiation to sports and the arts, as well as school guidance, school health support and socio-educational tracking of basic education; d) operating costs with health centres, in particular remuneration of staff, maintenance of facilities and equipment and assistance in transportation costs of patients; and) the running costs of the municipal programs of continuing health care and support at home, including the remuneration of auxiliary and administrative personnel assigned to these programmes, transport and interface with other municipal services of health and social action; f) the running costs of health promotion programs developed in health centres and in schools; g) the running costs of daycares, kindergartens and nursing homes or day centres for the elderly, including the salaries of staff, food services and cultural, scientific and sporting activities carried out within the framework of assistance to users of those services; h) the running costs of social action programs of municipal scope in the area of combating drug addiction and social inclusion. 3-operating expenses provided for in the preceding paragraph may, in part apply, integrate the implementation of municipal programmes for the promotion of gender equality, in particular in the integrated perspective of promoting reconciliation of work and family life, social inclusion and the protection of victims of violence.

Article 25 financial transfers to the municipalities 1-Are annually enrolled in the State budget the amounts of financial transfers corresponding to the municipal revenue referred to in (a)), b) and (c)) of paragraph 1 of article 19 21 2-the amounts corresponding to the participation of the municipalities in the revenue referred to in the preceding paragraph, other than on the FEF, municipal budgets are entered as income streams and transferred by twelfths until day 15 of the month. 3-Each municipality can decide the allocation of the amounts referred to in point (a)) of paragraph 1 of article 19 between current and capital revenue and current revenue exceed 65% of the ETF. 4-the municipalities shall inform annually, until 30 June of the year preceding the year in respect of the budget, what percentage of the ETF which should be considered as a current transfer, in the absence of what is considered the percentage of 60%. 5-in exceptional cases, where the degree of implementation of the budget of the State, may be authorized by the Minister of finance in anticipation of the transfer of the calculation referred to in paragraph 2 of this article. 6-the indices to be used in the calculation of the ETF (FGM and FCM) and of the WSF must be known in advance, so that they can, at the appropriate time, request their eventual correction. 7-due interest on the part of the central administration, in the cases of delays in financial transfers to the municipalities.

Article 26 distribution of FGM 1-distribution of FGM by the municipalities obey the following criteria: a) 5% also for all municipalities; b) 65% in direct ratio of the population (weighted) and resident of the daily average of overnight stays in hotels and campsites, and a resident population of weighted by a factor of 1.3 autonomous regions; (c)) 25% in direct ratio of the weighted area by a factor concerning the breadth of altimetric municipality; d) 5% in direct ratio of the Natura 2000 area and protected area. 2-for the purposes of point (b)) of the preceding paragraph the population of each municipality is weighted according to the following marginal weights: a) the first 5,000 inhabitants-3 22 b 5,001 to 10,000 inhabitants)-1 c) Of 10,001 to 20,000 inhabitants – 0.25 d) Of 20,001 to 40,000 inhabitants – 0.5 e) Of the 80,000 inhabitants 40,001-0.75 f) more than 80,000 inhabitants-1 3-elements and indicators for implementation of the criteria referred to in the preceding paragraphs should be reported, so broken down, the Assembly of the Republic, together with the proposed State budget.

Article 27 Compensation associated with the Cohesion Fund-1 Municipal tax compensation (CF) of each municipality is different depending on is above or below 1.25 times the national average per capita (CMN) the sum of the collections of the municipal taxes referred to in subparagraph (a)) of article 10 and of participation in the IRS referred to in subparagraph (a)) of paragraph 2 of article 19 2-term per capita national average (CMN) the quotient of the sum of municipal taxes referred to in subparagraph (a)) Article 10 the resident population over the daily average of overnight stays in hotels and campsites. 3-When the per capita average for the municipality (CMMi) is less than 0.75 times the national average per capita fiscal compensation takes a positive value equal to the difference between both multiplied by the resident population according to the following formula: CFi = (1.25 * CMN-CMMi) * Ni in which CMN is the per capita national average; CMMI is the per capita average for the municipality; and Ni is the resident population in the municipality i. 4-When the average municipal per capita (CMMi) exceed 1.25 times the national average per capita fiscal compensation takes a negative value equal to 22% of the difference between both multiplied by the resident population according to the following formula: CFi = 0.22 (1.25 CMN-CMMi) * Ni 5-the total value of the WCF less tax compensation to be allocated to municipalities more tax offsets of the net contributors to the municipalities FCM is designed for the CDO. 23 6-the amount defined in the preceding paragraph is distributed by each municipality in direct ratio of the result of the following formula: ii * ii IDSIDSIDO IDON   where: Ni is the resident population in the municipality i; IDOi's municipal index of inequality of opportunities of the municipality; IDs is the national social development index; IDSi and is the social development index of municipality i. 7-the application of the criteria referred to in the preceding paragraphs always guarantees every 50% of financial transfers, which amount corresponds to FGM. 8-the transfers referred to in the preceding paragraph correspond to the sum of the shares provided for in (a)), b) and (c)) of paragraph 1 of article 19 9-compliance with the provisions of paragraph 7 shall be provided in the manner provided for in paragraph 3 of the article 29 Working Party 10-the methodology for construction of national and social development index of each municipality shall be as set out in the annex to this law , which is an integral part. 11-the values of the national and social development index for each municipality are nature and census listed in order of the Minister governing local authorities. 12-for the purposes of calculating the Tax per capita index (ICF), the collection of IMI to consider is what would result if the settlement had been based on the rates equal to the average values of the ranges provided for in the code of the IMI.

Article 28 of the Municipal Social Fund Distribution


1-the distribution of the WSF is fixed annually on State budget, being distributed proportionally by each municipality, according to the following indicators: a) 35% according to the following indicators relating to the registration of children and youth in the establishments of pre-school education and basic education of each municipality: i) 4% in direct ratio of the number of children attending pre-school education; 24 ii) 12% in direct ratio of the number of young people attending the first cycle of basic education; III) 19% in direct ratio of the number of young people attending the 2 and 3 public basic education cycles. b) 32.5% according to the following indicators for the number of users enrolled in the municipal health network: i) 10.5% in direct ratio of the number of beneficiaries of municipal programs of continuing health care; II) 22% in the number of users enrolled in the sub county health centers. c) 32.5% according to the following indicators for the number of users and beneficiaries of municipal networks of crèches, kindergartens, retirement homes, day centres and social action programmes of each municipality: i) 5% in direct ratio of the number of enrolled in drug addiction and support programmes of social inclusion; II) 12.5% in direct ratio of the number of children up to three years of age, that attend nurseries and kindergartens; III) 15% in the number of adults over 65 years residents in nursing homes or enrolled in day-care centres and home support programs. 2-in the case of a financial transfer earmarked for a particular purpose, if the municipality not eligible expenditure of an amount at least equal to the amount that was affecting subsequent year is deducted the amount that would have been entitled under the FSM the difference between revenue and expense FSM. 3-for the purposes of the preceding paragraph, the analytical accounting by cost centre should make it possible to identify the costs pertaining to the education.

Article 29 maximum Variations 1-the participation of each municipality in State taxes, including the amounts of the ETF, WSF and participation in IRS referred to in point (c)) of paragraph 1 of article 19, cannot suffer a decrease of more than 5% of the previous year's financial transfers to the municipalities with capitation of 25 local taxes exceeding the national average 1.25 , or a decrease exceeding 2.5% of that participation, for municipalities with per capita less than 1.25 times that average. 2-participation of each municipality in State taxes, including the amounts of the ETF, WSF and participation in IRS referred to in point (c)) of paragraph 1 of article 19, cannot be an increase of more than 5% of the participation on the financial transfers from the previous year. 3-the compensation required to provide the minimum amounts provided for in paragraph 1 shall be carried out by the surpluses arising from the application of paragraph 1, as well as, if necessary, by deduction in proportion to the difference between the transfers provided for and guaranteed minimum amounts for municipalities that have higher transfers to minimum amounts that would get.

Article 30 of the Fund the parishes are entitled to a share in State taxes equivalent to 2.5% of the simple arithmetic average of the recipe from the IRS, IRC and VAT, in accordance with the procedure referred to in paragraph 2 of article 19, which is the Funding of the Fund (FFF).

Article 31 financial transfers to the parishes Are annually registered 1-State budget the amounts of financial transfers corresponding to the revenue of the parishes provided for in previous article. 2-the amounts of the FFF are transferred quarterly to the 15 day of the first month of the corresponding quarter. 3-the indices to be used in the calculation of the FFF must be known in advance, so that they can, at the appropriate time, request its correction.

26 article 32 1-FFF distribution distribution the parishes of the amounts calculated in accordance with the preceding paragraph conforms to the following criteria: 50%) to distribute according to their typology: i) 14% to be distributed equally for all the parishes integrated in Predominantly Urban Areas; II) 11% to be distributed equally for all the parishes integrated into medium-sized Urban Areas; III) 25% to be distributed equally for all the parishes integrated in Predominantly Rural Areas. b) 5% also for all the parishes; c) 30% in direct ratio of the number of inhabitants; d) 15% in direct ratio of the area. -2 kinds of parishes are defined according to the typology of urban areas, defined by Resolution No. 158/98, of 11 September, the Superior Council of statistics. 3-elements and indicators for implementation of the criteria referred to in the preceding paragraphs shall be reported, so broken down, the Assembly of the Republic, together with the proposed State budget. 4-the distribution resulting from paragraphs 1 and 2 may not result in a decrease of more than 5% of the previous year's transfers to the parishes of municipalities with local taxes per capita exceeding the national average 1.25, or a decrease exceeding 2.5% of transfers for the parishes of municipalities with per capita less than 1.25 times that average. 5-the distribution resulting from the previous paragraphs must ensure the transfer of funds necessary for the payment of expenses relating to compensation for costs of the members of the executive body of the parish, as well as the passwords of presence of members of the deliberative body for the number of meetings required, in accordance with the law. 6-the participation of every parish in the FFF cannot suffer an increase of more than 5% of the participation on the financial transfers from the previous year. 27 7-the compensation necessary to ensure the minimum amount provided for in paragraph 4 shall be subject to deduction in proportion to the difference between the transfers provided for and guaranteed minimum amounts for the parishes that have higher transfers to minimum amounts that would get.

Article 33 Bonus of the FFF for the merger of parishes 1-When the merger of parishes, its participation in the FFF is increased from 10% in appropriations entered in the budget of the State, by the end of the mandate following the merger, in accordance with the legal regime of creation, revocation and modification of local authorities. 2-the budget for the parishes merged, provided for in the preceding paragraph is entered annually in the State budget.

Article 34 Deduction transfers When the municipalities have debts defined by court judgment which has become final or not covered by the contested with the creditors within 60 days after its expiration date, can be deducted a portion to transfers resulting from the application of this law, within a limit of 20% of the total amount.

Article 35, title IV Debt local guiding principles without prejudice to the principles of budgetary stability of mutual solidarity and intergenerational equity, municipal indebtedness must be guided by principles of accuracy and efficiency, pursuing the following objectives: a) minimization of direct and indirect costs on a long-term basis; 28 b) ensuring a balanced distribution of costs by several annual budgets; c) preventing excessive concentration of amortization; d) exposure to excessive risk taking.

Article 36 net debt concept Hall 1-the amount of liquid municipal debt, compatible with the concept of the need for funding of the European system of national and regional accounts (Esa95), is equivalent to the difference between the sum of the liabilities, in whatever form, including borrowings, leasing contracts and debts to suppliers , and the sum of the assets, including the cash balance, deposits in financial institutions, the Treasury applications and credit claims. 2-for the purposes of calculating the net debt limit and the limit of borrowings, the concept of total net indebtedness of each municipality includes: a) net debt and loans associations of municipalities, proportional to the participation of the municipality in its capital stock; b) net debt and loans of entities that are part of the local business sector, in proportion to the participation of the municipality in its share capital, in case of non-compliance with the rules of balance of accounts provided for in the legal framework for the local business sector. 3-for the purposes of paragraph 1, are not considered credit claims the credits that are not recognized by both parties and the claims on local authority services and entities that integrate the local business sector. 4-the amount of loans from the associations of parishes also relates to the limits laid down in this law for the loans of their parishes.

Article 37 municipal net debt limit


1-the amount of total net indebtedness of each municipality, on December 31 each year, cannot exceed 125% of the amount of revenues from 29 municipal taxes, the County's holdings in the ETF, fixed portion of participation in IRS, the spills and the profit sharing of the local business sector entities, relative to the previous year. 2-When a municipality does not comply with the provisions of the preceding paragraph, must reduce in each subsequent year, at least 10% of the amount that exceeds your net debt limit, until the line is completed.

Article 38 credit scheme of municipalities 1-the municipalities can borrow and use openings with any credit institutions authorized by law to grant credit, as well as issue bonds and financial lease contracts, in accordance with the law. 2-loans and using credit openings, for the purposes of this Act are designated by loans, must be denominated in euro and can be in the short term, with maturity up to one year, in the medium term, with maturity from one to 10 years and long term with maturity of more than 10 years. 3-short-term loans are contracted only to cash difficulties occur, and must be written off within a maximum period of one year after its contraction. 4-The medium-and long-term loans can be contracted for application in investments, which must be duly identified in the contract, or for the improvement or financial rebalancing of the municipalities. 5-The medium or long-term loans have a maturity appropriate to the nature of the operations aimed at finance and may not, under any circumstances, exceed the useful life of their investment. 6-application for authorization to the municipal Assembly for arranging loans of medium and long term must be accompanied by information on the policies applied in at least three credit institutions, as well as map statement of the debt capacity of the municipality. 7-approval of short-term borrowing can be deliberate by the municipal Assembly, on its annual session for approval of the budget, for all 30 loans that the municipality will incur during the period covered by the budget. 8-where the effects of the conclusion of a loan agreement remain over two terms, should that be approved by an absolute majority of members of the municipal Assembly in effectiveness of functions. 9-in the case of amounts owed to third parties which exceed, by creditor or supplier, on December 31 each year, a third of the total amount of the credits of the same nature and that there is more than six months, must submit to the City Council, along with the annual accounts, a reasoned information and a plan of resolution of that credit in the period of a year, never going beyond the end of the mandate of the said offices in local authorities. 10-it is forbidden to the municipalities want to accept either the sack of bills of Exchange, the exchange guarantees, promissory notes, subscription to personal and real guarantees, except in the cases expressly provided for by law. 11-is sealed to the municipalities, associations of municipalities and local business sector entities the granting of loans to public and private entities, except where expressly permitted by law. 12-the municipalities is forbidden to conclude contracts with financial institutions for the purpose of consolidating short-term debt, as well as the transfer of accrued credits.

Article 39 general limit of loans of municipalities 1-the value of the contracts of short-term borrowing and granting of credit may not exceed, at any time of the year, 10% of the sum of the amount of revenues from municipal taxes, the County's holdings in the ETF and the participation in IRS referred to in point (c)) of paragraph 1 of article 19 from spills and participation in the results of the local business sector entities, relative to the previous year. 2-the amount of the debt of each municipality for medium and long-term loans cannot exceed 31 December of each year, the sum of the amount of revenues from municipal taxes, the County's holdings in the ETF, fixed in IRS participation referred to in point (c)) of paragraph 1 of article 19, of the 31 participating in the results of the local business sector entities and spills on the previous year. 3-When a municipality does not comply with the provisions of the preceding paragraph, should reduce, in each subsequent year, at least 10% of the amount that exceeds their limit of loans, until the line is completed. 4-for the purposes of determining the limits of the medium and long-term loans, the debenture loans, as well as short-term loans and granting of credit in the amount not repaid until 31 December of the year concerned. 5-this provision does not encompass-if the limit laid down in paragraph 2 loans and repayments for the financing of urban rehabilitation programmes, which must be previously authorized by joint decree of the Minister governing local authorities, the Minister of finance and the Minister for governing land use planning. 6-May-excepcionar if the provisions of paragraph 2 loans and repayments intended exclusively for financing of projects with reimbursement of Community funds, since the maximum amount of the credit does not exceed 75% of the amount of the national public contribution required for the implementation of projects co-financed by the European Regional Development Fund (ERDF) or Cohesion Fund, which must be previously authorized by joint decree of the Minister governing local authorities , the Minister of finance and the Minister governing the regional development and should be taken into account the existing level of global indebtedness of municipalities.

Article 40 financial municipal Sanitation 1-The municipalities that are cyclical financial imbalance must borrow for improvement of the financial situation, with a view to rescheduling of debt and consolidation of financial liabilities, since the result of the operation does not increase the net indebtedness of municipalities. 2-applications for loans for improvement of the financial situation of municipalities are instructed with a study based on the financial situation of the municipality and a plan of improvement of the financial situation for the period to which the loan. 32 3-the study and improvement of the financial situation referred to in the preceding paragraph shall be drawn up by the City Council and proposed to the City Council for approval. 4-the executive bodies, during the period of the loan, are required to: a) Fulfill the financial sanitation plan mentioned in the preceding paragraph; b) celebrate new loans of financial sanitation; c) semi-annual reports on the implementation of the financial plan mentioned in the preceding paragraph and refer them for consideration, to the deliberative bodies; d) Remit to the Minister of finance and the Minister governing the local copy of the loan agreement, within 15 days from the date of its conclusion. 5-the failure of financial sanitation plan, referred to in paragraph 2, is communicated by the municipal Assembly, to the Minister of finance and to the Minister that the local tutelage and, until the correction of the causes that gave origin, determines: a) the impossibility of arranging new loans for a period of five years; b) the impossibility of access to financial and technical cooperation with the central administration. 6-loans to financial sanitation cannot have a term of more than 12 years and a maximum period of deferment of three years. 7-During the period of the contract, the annual presentation of accounts to the municipal assembly includes, in annex to the balance sheet, the statement of compliance with the plan of improvement of the financial situation.

Article 41 municipal financial Rebalancing


1-The municipalities that are structural or financial imbalance of financial disruption are subject to a financial restructuring plan. 2-the financial or structural imbalance of financial disruption is declared by the City Council, on a proposal from the City Council. 33 3-the financial or structural imbalance of financial disruption can be, Alternatively, declared by joint decree of the Minister of finance and the Minister governing local authorities, following the communication of the Directorate-General of local authorities, whenever one of the following situations: a) the existence of debts to suppliers of more than 50% of the total revenue of the previous year; b) failure in the last three months, of any of the following types of debts, without the availabilities are sufficient for the satisfaction of these debts within two months: i) contributions and social security contributions; II) Debts to the Social security system for employees and agents of the public administration (GYM); III) Claims arising from an employment contract; IV) Rents of any kind. 4-Declared the situation of financial imbalance, the municipality shall submit to the approval of the Minister of finance and the Minister for local authorities governing a financial recovery plan, which defines specific measures: a) necessary to achieve a balanced financial situation, in particular with regard to the release of funds and the expenditure restraint; b) recovery measures of the financial situation and debt sustainability Council, during the period of validity of the contract, namely the amount of the loan contract; (c)) the objectives to be achieved in the period of readjustment and its impact in the first annual period. 5-the approval of the financial recovery plan by joint decree of the Minister of finance and the Minister governing local authorities, authorizing the conclusion of the contract of financial balance between the municipality and a credit institution, since it is essential for the objectives set out in the preceding paragraph. 6-loans to financial rebalancing may not have a term in excess of 20 years, including a period of deferral of up to five years. 7-In the contract of rebalancing, the implementation of the plan for rebalancing is accompanied on a quarterly basis by the Minister governing local authorities and municipalities report previously: 34 a) hiring personnel; b) purchases of goods and services or contracts of value above the legally required for conducting tenders. 8-non-compliance with the reporting obligations laid down in this article, as well as the deviations with respect to the objectives defined in the rebalancing plan, determines the retention of 20% of the twelfth of the ETF transfers to the regularization of the situation. 9-conjoined order referred to in paragraph 4 and the financial recovery plan are published in the second Series of the Diário da República.

Article 42 Municipal stabilisation fund the Municipal Stabilisation Fund (FRM) aims to tackle situations of structural financial imbalance or disruption of the municipalities, being composed of the budgetary transfers amounts deducted from the municipalities in accordance with the provisions of paragraph 4 of article 5, being prorated in accordance with the set by diploma itself.

Article 43 commitments ban of municipalities and parishes by the State Without prejudice to the legally provided for situations, the State cannot assume responsibility for the obligations of municipalities and parishes, or assume the commitments arising from these obligations.

Article 44 of the credit scheme 1-the parishes can get short-term loans and using credit openings, along with any institutions authorized by law to grant credit, provided they are written off in full within one year after its contraction. 2-the parishes can leasing contracts for the acquisition of vehicles, for a maximum period of five years. 35 3-contracting of loans and leasing contracts the Parish Council, upon prior authorization of the Assembly of parish or the plenary of voters. 4-loans are contracted to cash difficulties occur, the amount may not exceed, at any time, 10% of the FFF. 5-loans guarantee Constitute the revenue from the FFF. 6-it is forbidden to parishes want to accept either the sack of bills of Exchange, the exchange guarantees, as well as the subscription of promissory notes, the personal and real guarantees and arranging loans of medium and long term, except for the provisions of paragraph 3 of this article. 7-the amount of debt of the parishes the suppliers may not exceed 50% of their total revenue collected in the previous year. 8-When the debt to suppliers does not comply with the provisions of the preceding paragraph, the amount of the debt should be reduced, in each subsequent year, at 10%, until the threshold is met. 9-in the case referred to in the preceding paragraph, it is for the Executive Body to prepare debt reduction plan up to the limit of indebtedness referred to in paragraph 6 and to present it to the House of the parish for the approval.

Title VI accounting, delivery and external audit of accounts article 45 1-Accounting system to the accounts of local authorities aimed at their harmonization, standardization and simplification, in order to be an instrument of economic and financial management, enable the thorough knowledge of the accounting value their assets and liabilities, as well as the assessment and judgement of the respective annual accounts. 2-the accounts of local authorities respect the official chart of accounts of local authorities (POCAL), and may also have other instruments necessary for the proper management and control of public monies and other assets, as provided for in the law. 36 Article 46 consolidation 1-without prejudice to the documents of account referred to in the law, the accounts of municipalities having local authority services or the entire capital of local business sector entities should include the consolidated accounts, showing the consolidation of balance sheet and profit and loss account with the respective explanatory annexes, including, in particular, the balances and financial flows between the target entities of consolidation and the consolidated debt map of medium and long term. 2-The accounting procedures for the consolidation of the balance sheets of the municipalities and municipal companies or are defined in POCAL Intercity.

Article 47 Assessment 1 accounts-the accounts of municipalities and parishes, and their associations, are appreciated by its deliberative body, meeting in regular session, no later than the 15th day of the month of April of the year following that to which they relate. 2-the accounts of municipalities and associations of municipalities that hold shareholdings of local business entities are committed to deliberative body for consideration together with the certificate of the Auditors and the legal opinion on the bills presented by the statutory auditor or audit firm.

Article 48 external audit of the accounts of municipalities and associations of municipalities with shareholdings 1-annual accounts of municipalities and associations of municipalities to take capital in foundations or in local business sector entities must be verified by external auditors. 37 2-the external auditor is appointed by resolution of the City Council, on a proposal from the Board of statutory auditors or audit firms. 3-it is the external auditor who shall carry out annually to statutory audit: a) verify the correctness of the books, records and documents that support them; b) Participate to the competent municipal bodies irregularities, as well as the facts that consider developers of serious difficulties in pursuing the multi-year plan for investments in the municipality; c) examine the heritage values of the municipality, or he received in guarantee, deposit or other title; d) Mail every six months to the deliberative body of the municipality or of the associative entity, as appropriate, information on their economic and financial situation; and) issue an opinion on the accounts for the financial year, in particular, on the implementation of the budget, the balance sheet and the consolidated income statement and annex to the financial statements required by law or determined by the municipal Assembly.

Article 49 Advertising


1-the municipalities must make available, either in paper format in visible place in the buildings of the Town Hall and the municipal assembly or at their website: the expenditure summary maps) according to economic and functional ratings and revenues according to economic classification; (b)) the values in force relating to the IMI rates and spills on IRC; c) the percentage of participation variable in the IRS, under article 20; d) tariffs of water, sanitation and waste wants the service provider is the municipality, a service municipalizado, a municipal company, intermunicipal concessionaire or a private partner within the framework of a public-private partnership; and) municipal taxes regulations. 38 2-local authorities, their associations and the local business sector entities shall make available on its Internet site the forward-looking documents and presentation of the accounts referred to in this law, in particular: a) The business plans and the activity reports of the last two years; b) multiannual investment plans and budgets, as well as the management report, the balance sheets and the profit and loss account, consolidated, including the maps of budgetary implementation and annexes to the financial statements, the last two years; (c)) the data regarding implementation of multiannual plans.

Article 50 1-information duties for the purpose of providing information of general government accounts, the municipalities shall remit to the Minister of finance and the Minister governing local authorities their budgets and quarterly accounts in 30 days respectively for its approval and the period to which they relate, as well as its annual account once approved. 2-the municipalities with more than 100,000 voters are still obliged to refer, on a monthly basis, to the Minister of finance the respective accounts in 30 days subsequent to the period to which they relate. 3-for the purposes of the reporting of data on public debt, the municipalities should also refer to the Ministers of finance and the Minister governing local authorities information on loans contracted by them and on the assets in debt securities issued in the 30 days following the end of each quarter and after the examination of the accounts of the municipality. 4-the parishes are required to remit to the Minister, local authorities governing the respective accounts in 30 days of the date of the session of the deliberative body in which those accounts were subject to assessment. 5-for the purposes of monitoring the evolution of expenditure on personnel, local authorities refer quarterly to the Directorate-General of local authorities the following elements: 39 a) staff costs, including retainer contracts, and to purchase services with individuals, comparing with those in the same period of the previous year; b) number of staff, admissions to any type, and retirements, terminations and other forms of termination of employment; c) Grounds of possible increases in personnel expenditure, which do not result from wage updates, compliance with legal obligations or transfer of powers from the Central Government. 6-the information to be provided pursuant to the preceding paragraphs must be shipped per file in the application defined and provided by the Directorate-General for budget and Directorate-General of local authorities. 7-in the event of non-compliance, on the part of the municipalities of information duties provided for in this article, as well as the respective time limits, are retained 10% of the twelfth of current transfers of FGM.

Article 51 Trial 1 accounts-the accounts of municipalities, parishes and their associations are forwarded by the Executive Body, pursuant to law, the Court of Auditors, until April 30, regardless of their appreciation for deliberative body. 2-the Court of Auditors refers to its decision to the relevant local bodies, with a copy to the Minister of finance and to the Minister with the responsibility of local authorities.

Title VI transfer of duties and responsibilities article 52 transfer of tasks and competencies 1-the transfer of duties and responsibilities to local authorities ensure the implementation of the principles of decentralisation and subsidiarity, with the purpose to ensure the strengthening of national cohesion and interregional solidarity and promote efficiency of public administration. 40 2-the transfer of tasks and competencies shall be for the local authority which, according to its nature, is more suited to the exercise of the jurisdiction concerned. 3-the transfer of tasks and competencies is accompanied by financial resources and appropriate heritage for the performance of the transferred function.

Article 53 new financing 1 skills-skills transfer, identifying their nature and the form of the allocation of their resources are defined in multiannual programmes, in accordance with the law. 2-the financing of new municipal competencies associated with social functions is carried out through the WSF and the State budget to the adjustment of the amount and criteria for allocation of the WSF to the nature and value of the costs of the powers transferred to the municipalities. 3-the financing of municipal powers in other areas is by increasing the participation in the ETF, accompanied by an increase in redistributive character of the WCF. 4-the financing of new competences of the parishes shall be made by increasing the participation in FFF. 5-in the framework of multi-annual management of the transfer process, the set programming can be the subject of a mid-term review, in accordance with the law. 6-the mid-term review of the multiannual programme for the transfer of powers cannot determine an increase in overall public expenditure foreseen in the initial programming for the year of the review. 7-without prejudice to the preceding paragraphs, can be transferred skills by diploma loose, with transitory, provided they are accompanied by the appropriate financial resources and integrated into the multiannual programme for the transfer of powers in the next mid-term review.

41 article 54 public partnership programs 1-the central administration and local Administration Act in a coordinated manner in the pursuit of the public interest, without prejudice to their own powers, establishing among themselves public affiliate programs. 2-The public affiliate programs can have as object the coordinated exercise of powers of the central Government or local authorities. 3-public partnership programmes define the competencies to engage in partnership, the obligations of the parties, the duration and distribution of costs and allocation of financial resources. 4-the revenue generated by equipment management or provision of public services pursued in partnership are applied in public public partnership program, and any surplus distributed by public partners because of their participation in the program.

Title VIII transitional and final provisions article 55 1 Fines-infringement of postures and generic nature rules and permanent implementation of local authorities is a misdemeanour sanctioned with fines. 2-the fines to predict in postures and municipal regulations cannot be more than 10 times the minimum monthly wage for natural persons and 100 times that value to legal persons, nor exceed the amount of that are imposed by the State for alleged infringement of the same type. 3-the fines to predict in the postures and the regulations of the parishes cannot be higher than the highest national minimum wage, nor exceed the amount of that are imposed by the State or by the municipality for alleged infringement of the same type. 42 4-the postures and regulations referred to in the preceding paragraphs may not come into force earlier than 15 days after its publication, in legal terms. 5-the competence to determine the alleged infringement procedures and instruction for the application of fines belong to the President of the executive bodies of municipalities and parishes, and may be delegated to any of the other members.

Article 56 1-tax Guarantees the administrative claim or judicial review of the assessment of fees, capital gains taxes and other revenue from tax nature apply the standards of the code of tax proceedings and processes, with the necessary adaptations. 2-To infringements of the rules governing fees, capital gains taxes and other revenue from tax nature which constitute administrative offences apply to them the rules of the General Regime of Tax Offences, with the necessary adaptations. 3-it is the responsibility of the executive bodies forced collection of local government debts from fees, cost of capital gains and other income tax nature that those should charge, applying the code of tax proceedings and processes, with the necessary adaptations.

Article 57 transitional Regime of allocation of resources between the State and the municipalities


1-In 2007, the total amount of the participation of municipalities in the ETF, in the WSF and the IRS, as provided for in article 19 of this law, corresponds to the provided for in paragraph 1 of article 22 of law No. 60/2005 of 30 December. 2-Until 2009, the application of the criteria of allocation of ETF referred to in article 21 may not result in a reduction in the total amount of transfers to the municipalities with a capitation tax of less than 0.75 times the national average per capita municipal taxes referred to in subparagraph (a)) of article 10 and of participation in the IRS referred to in subparagraph (a)) of paragraph 2 of article 19 3-Until 2009 the application of the criteria for allocation of ETF referred to in article 21 may not result in a reduction in the total amount of transfers to the 43 municipalities with more than 50% of the Natura 2000 area and the protected area.

Article 58 transitional Regime for the allocation of the FSM 1-In 2007, the amount of the WSF to be distributed proportionally by each municipality corresponds to 2% of the simple arithmetic average of the revenue coming from the IRS, IRC and VAT, which is currently exercised by municipalities competence in the field of education, to be distributed in accordance with the criteria set out in point (a)) of paragraph 1 of article 28 of this law. 2-Are excluded from the provisions of the preceding paragraph the amounts for the financing of skills with specific funding through the State budget or exercised pursuant to protocols and other forms of contratualizadas cooperation between the central Government and the municipalities. 3-from 2008, is fixed annually on State budget the value corresponding to expenditure on competencies transferred from central Government to the municipalities, within the framework of the WSF.

Article 59 participation in IRS in 2007 and 2008 In 2007 and 2008, the holding referred to in point (c)) of paragraph 1 of article 19 is 5%.

Article 60 the transitional arrangements for the allocation of the FFF 1-In 2007, the amount of global participation of parishes in the FFF is corresponding to the provided for in paragraph 2 of article 22 of law No. 60/2005 of 30 December. 2-Until 2009, the application of the criteria of distribution of FFF provided for in article 32 may not result in a reduction in the total amount of transfers for the parishes of municipalities with a capitation tax of less than 0.75 times the national average of 44 per capita municipal taxes referred to in subparagraph (a)) of article 10 and of participation in the IRS referred to in subparagraph (a)) of paragraph 2 of article 19 article 61 transitional provisions 1-debt reduction of financial transfers provided for in paragraph 4 of article 5 shall apply in 2007 to municipalities whose account of show management have been violated the limit to net debt set out in article 33 of law No. 60/2005 of 30 December. 2-excluded indebtedness limits laid down in paragraph 2 of article 39 loans and loan charges previously incurred under legal provisions that the excepcionavam municipal debt limits.

Article 62 personnel costs Until 2009, the State budget may set annual limits for personal expenses, including retainer contracts, task and acquiring services to individuals.

Article 63 adaptation to autonomous regions 1-this law is directly applicable to municipalities and parishes of the autonomous regions, with the adjustments provided for in the following paragraphs. 2-the transfer of powers to the municipalities of the autonomous regions and their financing, in particular by the adjustment of the amount and criteria for allocation of the WSF, in accordance to predict in Legislative Decree of the regional legislative assemblies. 3-taking into account the specificities of the autonomous regions, the regional legislative assemblies can define the forms of financial and technical cooperation between the regions and their municipalities. 45 article 64 1-set Standard is revoked the law No 42/98 of 6 August. 2-remain in force, until their replacement, the current legislation published in previous finance laws execution locations on the part not contradicted by this law.

Article 65 entry into force this law shall enter into force on 1 January 2007.

Seen and approved by the Council of Ministers of 27 July 2006.

The Prime Minister, the Minister of Parliamentary Affairs Minister Presidency 46 ANNEX (referred to in paragraph 10 of article 27) Social development index (IDS) Methodology for building 1 — are components of the following indexes: IDS) life expectancy at birth; B) Educational Level; C) Comfort and sanitation.

With an identical weight, according to the following formula: = IDS (and (0) + (e) + I (cs))/3 being: and (0) = index of life expectancy at birth; I (e) = index of the educational level; I (cs) = index of comfort and sanitation.

2 — the index of life expectancy at birth (e): and (0) = 0.5 + [2.511, +4.515, +5 (110 + 115 + 120 + ... + 1)]/10 being: 1 x = number of survivors of mortality.

3 — educational level index formula ((and)): I (e) = P and (15 + years)/P t (15 + years) × 100 where: P and (15 + years) = population of 15 and more years of age, knowing how to read and write; P t (15 + years) = total population 15 and more years of age.

4 — the index Formula of comfort and sanitation (I (cs)): I (cs) = (I + I OH2 + I)/3 × 100 where: I E = index of existence of electricity in accommodation units (AU), obtained in accordance with the following formula: I and E/P t = P × 100 47 being: P E = resident population in families that have electricity on UA; P t = resident population of both sexes; (I) OH2 = index of existence of piped water in AU, obtained in accordance with the following formula: I = P/P OH2 OH2 t × 100 where: P = OH2 resident population with piped water in AU from a public or private plumbing system; I SA = index of existence of sanitation in AU, obtained in accordance with the following formula: I SA SA/P t = P × 100 where: P = SA resident population with sanitary facilities with toilet (suite private or not) linked to some kind of public drainage, particular or other type of sanitation.