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Authorizes The Government To Change The Tax Benefits Statute, Approved By Decree-Law No. 215/89, Of 1 July, The Code Of Value Added Tax, Approved By Decree-Law No. 394-B/84 Of 26 December, And The Vat System In The Transacçõ

Original Language Title: Autoriza o Governo a alterar o Estatuto dos Benefícios Fiscais, aprovado pelo Decreto-Lei n.º 215/89, de 1 de Julho, o Código do Imposto sobre o Valor Acrescentado, aprovado pelo Decreto-Lei n.º 394-B/84, de 26 de Dezembro, e o Regime do IVA nas Transacçõ

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PROPOSED LAW NO. 158 /X

Exhibition of Motives

The Government has taken over, in the respective Programme, that the tax policy should be a

active tool around the process of economic growth, oriented in

simultaneous to the achievement of the objectives of fiscal consolidation and for the

improvement of global equity.

This proposed law thus reports to essential governing priorities, to

which is intended to ensure a legislative opportunity of its own, autonomous of the already

normal appreciative and case-by-case appreciations in the context of the discussion of the articulate of the

successive Budgets of the state.

It is to submit to the assessment of the Assembly of the Republic adjustments that if

consider it indispensable and urgent, on the one hand, in the framework of the creation of a new

special tax regime applicable to entities licensed to operate in the French Zone of the

Wood from January 1, 2007, considering the prolongation of the regime of

state aid, identified under n. N 421/2006, recently authorized by the

European Commission and, on the other hand, to proceed with the alignment of legal planning

national on VAT with certain community legal acts governing

this tax.

The strategic orientations underlying the proposal of the new regime of the French Zone of the

Wood settlers, essentially, on the assumption-acknowledged, incidentally, by the instances

Community-that the tax incentives to be enshrined have by recipient a region

outermost and are intended to compensate for the constraints on development

existing in the Autonomous Region of Madeira, with " this measure does not confer, in

principle, any excessive compensation and that the envisaged aid is proportional and

is focused on the specific disadvantages it intends to mitigate ".

The decrease in the differential vis-à-vis the normal rate of the tax arising from the increase

progressive of IRC rates to be fixed, the limitation of individual tax benefit upon

the submission to maximum limits on permissible collectible matter, the compulsory

creation of jobs, are essential factors that balize and, at the same time,

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legitimize the granting of the incentives in question.

In essence, the scheme, which sets out to come to invigorate from January 1, 2007,

maintains the structuring lines of the previous regime: the exclusion of the activities of

financial intermediation, insurance and intermediation ancillary institutions

financial and insurance, as well as of the activities type "intra-group services", well

how the taxation at reduced rates of IRC.

In these terms, in respect of duly licensed entities from 1 of

January 2007 and until December 31, 2013 for the exercise of activities

industrial, commercial, maritime transport and services of a non-financial nature,

devotes itself to a general degressive scheme of the benefits granted, by passing tax-

if income in IRC at rates of 3% in the years 2007 a to 2009, 4% in the years 2010 a

2012 and 5% in the 2013 and following.

Taking into consideration the experience gained from the previous regime, it is conditional on

admission to the scheme, with greater suitability for economic realities and markets,

depending on the contribution of the said entities to the creation of jobs and

for the diversification and modernization of the Region's economy and is limited to the granting of the

benefit through the application of plafonds maximum for the collected subject matter of the

tax benefit at IRC headquarters.

Regarding duly licensed entities to operate in the free zone

industrial, remains the 50% deduction to the IRC collection, as long as it filled

certain conditions related to the contribution of the respective activity to the

modernization and diversification of the regional economy, for the setting of resources

humans, for the improvement of environmental conditions and for the creation of posts of

work.

To the entities already installed in the Wood Franca Zone will be applicable, from 1 am

January 2012, this new regime.

In turn, in the framework of the legislative authorisation in the VAT office, the granting of

Government asks the Assembly of the Republic, are in question aspects of character more

punctual, but still, of undeniable relevance.

It is intended, in this framework, to proceed to the transposition of Directives n. 2006 /69/CE and

2006 /112/CE, both of the Council, respectively, of July 24, 2006 and 11 of

December 2006, review the list of the goods and services of the wastage sector, waste

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and recyclable scrap, bringing the respective contents of Annex VI to Directive n.

2006 /112/CE of the Council of November 28, 2006, and ensure compliance of the

Article 26 of the VAT Regime in Intra-Community Transactions with the Regulation

(EC) No 1777/2005, of the Council, of October 17, 2005.

The self-governing bodies of the Autonomous Region of Madeira were heard.

Thus:

Under the terms of the paragraph d) of Article 197 (1) of the Constitution, the Government presents to the

Assembly of the Republic the following proposal for a law:

Article 1.

Subject

1-It is granted permission to the Government to amend the Status of Tax Benefits,

approved by Decree-Law No. 215/89 of July 1, abridgingly designated by

EBF, so as to create a special tax regime with the aim of promoting the

regional development, applicable to entities that are licensed to operate in the

Wood Free Zone, in the period between January 1, 2007 and up to 31 of

December 2013, in accordance with the provisions of the Commission Decision

European C (2007) 3037 final, of June 27, 2007.

2-It is also granted permission to the Government to amend the Tax Code

on Value Added, approved by the Decree-Law No. 394-B/84, of 26 of

December, abbreviately designated by VAT Code, as well as the Regime of the

VAT in Intra-Community Transactions, approved by the Decree-Law No. 290/92, of

December 28, abbreviately designated by RITI, with a view to transpose the

Directives n. 2006 /69/CE and 2006 /112/CE, both of the Council, respectively,

of July 24, 2006 and of November 28, 2006, review the list of the goods and

services of the waste sector, waste and recyclable scrap, bringing the

respective contents of Annex VI to Council Directive No 2006 /112/CE of the Council of 28

of November 2006, and ensure the compliance of Article 26 of the RITI with the

Regulation (EC) No 1777/2005, of the Council, of October 17, 2005.

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Article 2.

Sense and extent of legislative authorization in the framework of the EBF

The sense and extent of the legislative authorization, with respect to the changes to the EBF,

are as follows:

a) The new special tax regime to be enshrined is applicable to the incomes of the

licenced entities from January 1, 2007 and until December 31 of

2013 for the exercise of industrial, commercial, transport activities

seafarers and other services not excluded from the present regime, which

observe the respective constraints provided for in Article 33 (1) of the

Status of Tax Benefits;

b) The income referred to in the preceding subparagraph shall be the subject of taxation to

reduced rates of IRC, from 3%, in the years 2007 a to 2009, from 4% in the years of

2010 a to 2012 and from 5%, in the years 2013 a to 2020;

c) The incidence basis of the reduced IRC rates of which the entities referred

in the preceding paragraph may benefit shall be subject to a maximum limit of matter

collectable, which depends on the number of jobs created, according to

with the following scale:

i) 2 million euros for the creation of 1 a to 2 jobs;

ii) 2.6 million euros for the creation of 3 a to 5 jobs;

iii) 16 million euros for the creation of 6 a to 30 jobs;

iv) 26 million euros for the creation of 31 a to 50 jobs;

v) 40 million euros for the creation of more than 51 a to 100 jobs;

vi) 150 million euros for the creation of more than 100 jobs.

d) The entities referred to in paragraph a) that pursue industrial activities

can further benefit from a deduction of 50% to the IRC collection, provided that

they fulfil at least two of the following conditions:

i) Contribute to the modernization of the regional economy, notably

through technological innovation of products and manufacturing processes or

of business models;

ii) Contribute to the diversification of the regional economy, notably

through the exercise of new activities of added value added;

iii) Promote the hiring of highly qualified human resources;

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iv) Contribute to the improvement of environmental conditions;

v) Create at least 15 jobs, which must be maintained

over a minimum period of five years.

e) Beneficiary entities may not engage in intermediation activities

financial and insurance (section J codes 65-67 of the General Nomenclature of the

Economic Activities in the European Communities-NACE Rev. 1.1),

as well as qualifying activities as "intragroup services",

specifically coordination, treasury and distribution centres,

covered by section K, code 74 (services provided mainly to

companies);

f) To benefit from the special scheme the entities must observe one of the

following eligibility requirements:

i) Creation of 1 a to 5 jobs in the first six months of

activity and realization of a minimum investment of 75000 in the

acquisition of fixed assets, tangible or intangible, in the first two

years of activity;

ii) Creation of 6 or more jobs in the first six months of

activity;

g) They shall apply to the entities referred to in the above points, as well as to their

partners or shareholders, for the unspecified situations, the remaining

tax benefits and conditions provided for the French Zone of the

Wood;

h) The benefit of taxation at reduced rates provided for in the a) is applicable

to the income of social participations holding companies licensed to

departure from January 1, 2007 and to December 31, 2013, save the obtained

in the Portuguese territory, excepted the free zones, or in other states

members of the European Union, who are taxed in the general terms;

i) The entities that are licensed under the schemes provided for in the

articles 33 and 34 of the Statute of Tax Benefits may benefit from the

new regime, as of January 1, 2012.

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Article 3.

Sense and extension of the legislative authorisation in the VAT

The sense and extent of the legislative authorization, with regard to the VAT Code and

to RITI, are as follows:

a) Transpose Council Directive No. 2006 /112/CE of the Council of November 28

2006, concerning the common system of value added tax

(VAT Directive), which came to the reformulation of Directive n.

77 /388/CEE, of the Council, of May 17, 1977 (Sixth Directive), on the part

referred to in Article 412 (1), which introduces modifications to the subject matter of

location of certain services provided by intermediaries and the

concept of goods subject to excise duty, upon amendment

of Article 6 (17) of the VAT Code and of the a) of Article 6 (1)

of the RITI;

b) Transpose Council Directive No 2006 /69/CE of the Council of July 24, 2006 on

part concerning the amendments made in paragraph 7 of point A of Article 11 para.

of the Sixth Directive, which introduces modifications to the determination of the

taxable value of the transactions, to be accommodated in Article 16 of the VAT Code;

c) Review the list of the goods and services of the waste sector, waste and scrap

recyclables referred to in point (s) i) of Article 2 (1), by the Annex, by the Annex

And to the VAT Code, bringing the respective contents of Annex VI to the

Council Directive No 2006 /112/CE of November 28, 2006;

d) Ensuring compliance with the Regulation (EC) No 1777/2005 of the

Council, of October 17, 2005, amending Article 26 of the RITI.

Article 4.

Duration

The legislative authorisations granted by this Law shall have the duration of 90 days.

Seen and approved in Council of Ministers of August 9, 2007

The Prime Minister

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The Minister of the Presidency

The Minister of Parliamentary Affairs

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Having present the new Guidelines on State aid for transport

seafarers, published on January 17, 2004, and the new guidelines in respect of the

state aid with a regional purpose for 2007-2013, the map of which was adopted in

February 7, 2007, as well as a new model of development for the Region

Autonomous of Madeira, introduce themselves with the present decree-law, the appropriate

changes to the tax regime of the Madeira free zone for the period from 2007 a to 2013,

it is predicated that this will produce its effects by 2020, by adjoining to effect a

new Article 34-A to the Status of Tax Benefits.

The new regime has been notified to the European Commission under Article 88 (3) of the

EC Treaty and was authorised to be implemented by Decision C (2007) 3037 of June 28 of

2006 on State aid n. N 421/2006.

The new regime maintains the structuring lines of the previous regime, which expired in 31 of

December 2006, to the extent that intermediation activities are excluded

financial, insurance and ancillary institutions of financial intermediation and of

insurance, as well as the activities of the type "intragroup services" (centres of

coordination, of treasury and distribution) and is expected to be the target entities

benefit from a reduction of the Income Tax rate of the People

Collective (IRC) arising from actual and materially carried out activities in the

region applicable up to a maximum amount of taxable amount that depends on the number

of jobs created.

In comparison with the previous regime, a general degressive general regime is devoting

benefits granted, passing the duly licensed entities from 1 of

January 2007 and until December 31, 2013, for the exercise of activities

industrial, commercial, maritime transport and services of a non-financial nature, the

be taxed at IRC, at the rates of 3%, in the years 2007 a to 2009, 4%, in the years 2010 a to 2012

and 5%, in the years 2013 and following.

On the other hand, properly licensed entities to operate in the free zone

industrial, maintains the 50% deduction to the collection the IRC, as long as it filled

certain conditions related to the contribution of the respective activity to the

modernization and diversification of the regional economy, for the setting of resources

humans, for the improvement of environmental conditions and for the creation of posts of

work.

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To entities already registered under the previous schemes will continue to benefit from the

tax reduction, as of January 1, 2012, under the new scheme now

instituted.

Thus:

In the use of the legislative authorization granted by the n.. of the Article ... of the Law n.., and in the

terms of the points a) and b) of Article 198 (1) of the Constitution, the Government decrees the

next:

Article 1.

Is added to the Status of Tax Benefits approved by the Decree-Law No. 215/89, 1

of July, a new Article 34.-To the following:

" Article 34.

1-The income of the licenced entities, as of January 1 of

2007 and until December 31, 2013, for the exercise of activities

industrial, commercial, shipping and other services not

excluded from this scheme, which observe the respective

conditionals provided for in Article 33 (1) of this Statute,

are taxed at IRC, until December 31, 2020, in the following

terms:

a) in the years from 2007 a to 2009, at the rate of 3%;

b) in the years from 2010 a to 2012, at the rate of 4%;

c) in the years from 2013 a to 2020, at the rate of 5%.

2-The entities referred to in the preceding paragraph who wish to benefit from the

present regime shall start its activities within six

months, in the case of international and one-year services in the case of

industrial or maritime registration activities, counted from the date of

licensing and must still observe one of the following requirements of

eligibility:

a) Creation of 1 a to 5 jobs, in the first six months of

activity and realization of a minimum investment of 75000

euro in the acquisition of tangible or intangible fixed assets, in the

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two first years of activity;

b) Creation of 6ou more jobs, in the first six months

of activity.

3-The entities referred to in the preceding paragraphs shall be subject to limitation

of the benefit to be granted, through the application of plafonds maximum at

taxable amount to which the intended reduced rate is applicable, in the terms

following:

a) EUR 2 million for the creation of 1 up to 2 jobs;

b) EUR 2.6 million for the creation of 3 up to 5 jobs;

c) EUR 16 million for the creation of 6 up to 30 jobs;

d) EUR 26 million for the creation of 31 up to 50 jobs;

e) 40 million euros, by the creation of 51 up to 100 jobs;

f) 150 million euros for the creation of more than 100 jobs.

4-The maximum limits of the taxable amount provided for in the preceding n.

determined in function of the number of jobs that the

beneficiary entities maintain in each exercise.

5-The entities referred to in paragraph 1 that pursue industrial activities

benefit still from a deduction of 50% to the IRC collection since

they fulfil at least two of the following conditions:

a) Contribute to the modernization of the regional economy,

notably through technological innovation of products and of

manufacturing processes or business models;

b) Contribute to the diversification of the regional economy,

notably through the exercise of new activities of

high value added;

c) Promote the hiring of human resources highly

qualified;

d) Contribute to the improvement of environmental conditions;

e) Create at least 15 jobs, which must be maintained

over a minimum period of five years.

6-The licensed entities in the Madeira free zone, as of 1 of

January 2007 and until December 31, 2013, may, in particular,

exercise the following economic activities related to:

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a) Agriculture and with animal production, (NACE Rev. 1.1, section A,

codes 01.4 and 02.02);

b) Fisheries, aquaculture and related services (NACE Rev. 1.1, section

B, code 05);

c) Manufacturing industries (NACE Rev. 1.1, Section D);

d) Production and distribution of electricity, gas and water (NACE

Rev. 1.1, section E, code 40);

e) Wholesale trade (NACE Rev. 1.1, section G, codes 50 and 51);

f) Transport and communications (NACE Rev. 1.1, section I, codes 60,

61, 62, 63 and 64);

g) Real estate activities, rentals and services provided to the

companies (NACE Rev. 1.1, section K, codes 70, 71, 72, 73 and 74);

h) Higher education, teaching for adults and other activities

educative (NACE Rev. 1.1, section M, codes 80.3 and 80.4);

i) Other collective service activities (NACE Rev. .1.1, section

O, codes 90, 92 and 93.01).

7-From the list of activities provided for in the preceding paragraph are

excluded the activities of financial intermediation, insurance, and the

financial and insurance intermediation auxiliary institutions (NACE

Rev. .1.1, section J, 65, 66 and 67) as well as the activities of the type

"intragroup services", specifically coordination centres, of

treasury and distribution (NACE Rev. 1.1, section K, code 74).

8-The income of social shareholding companies

graduates from January 1, 2007 and until December 31 of

2013, are taxed at IRC under the terms referred to in paragraph 1, save the

obtained in the Portuguese territory, excepted the free zones, or in

other Member States of the European Union, which are taxed in the

general terms.

9-In the remaining situations not referred to in the preceding paragraphs are

applicable, in the terms of the respective legislation and in respect of

industrial, commercial, shipping and other activities

services not excluded from this scheme, the remaining tax benefits and

constraints currently behollable in the Madeira free zone.

12

10-The entities that are licensed under the schemes

provided for in Articles 33 and 34 of this Statute may benefit

of the new regime, as of January 1, 2012. "

Article 2.

The tax relief scheme approved by this decree-law produces effects to be

of January 1, 2007.

13

Council Directive No. 2006 /69/CE of July 24, 2006, came to amend the

Directive No 77 /388/CEE (Sixth Directive), as regards certain measures

intended to simplify the tax collection procedure on value

added and to fight against fraud or tax evasion by repealing certain decisions that

grant waivers.

Although a significant number of the changes entered into the Community legislation of the

VAT vise confers various options to member states that by their very nature

do not lack transposition, certain provisions have also been introduced with

mandatory character that need to be hosted in national legislations up to 1 of

January 2008. They are in this case the changes made to paragraph 7 of point A of the

article 11 and in the paragraphs a) and b) of Art. 17 (4), both of the Sixth Directive (cf. 2.

paragraph of Article 3 of the Directive). The new wording of paragraph 7 of point A of Article 11.

of the Sixth Directive, which introduces modifications to the determination of value

taxable of the operations, it lacks, in return, to be accommodated in Article 16 of the

Code of VAT.

For its part, the Council Directive No 2006 /112/CE of December 11, 2006,

on the common system of value added tax (VAT Directive), came

proceed to the reformulation of Council Directive No 77 /388/CEE of May 17

1977 (Sixth Directive), so as to meet the numerous substantial changes that

in this have been inserted over the years, to be introduced in the respective larger legal text

clarity and rationality. The amendments mainly abated the structure and the wording of the

legal normatives, with the aim of facilitating their understanding, not targeting, in

principle, to introduce any substantive change in the current legal framework in respect of

VAT. However, in one-off situations, certain accuracies introduced and certain options

interpretative on the content of the precepts of the Directive are likely to imply

changes of the respective content. They are in that situation the precepts referenced in the n.

1 of Article 412 of the Directive, the transposition of which for internal planning of

Member States, in so far as the respective content is not already contemplated

in those legislations, it should occur until January 1, 2008.

In that situation Article 16 (17) of the CIVA and Article 6 (1) (a)

of the RITI.

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Thus:

In the use of the legislative authorization granted by the Article No. of the Law No. .../..., of ..., of ...,

and under the terms of the point b) of Article 198 (1) of the Constitution, the Government decrees the

next:

Article 1.

Subject

The present decree-law introduces amendments to the Tax Code on Value

Added, approved by the Decree-Law No. 394-B/84 of December 26, with the

your successive amendments, and VAT Regime in the Intra-Community Transactions,

approved by Decree-Law No. 290/92 of December 28.

Article 2.

Amendment to the Value Added Tax Code

Articles 6 and 16 of the Value Added Tax Code, approved by the

Decree-Law No 394-B/84 of December 26, as well as Annex E to the Code of

VAT, referred to in para. i) of paragraph 1 of the respective Article 2, go on to have the following

wording:

" Article 6.

[...]

1-[...].

2-[...].

3-[...].

4-[...].

5-[...].

6-[...]

7-[...].

8-[...].

9-[...].

15

10-[...].

11-[...].

12-[...].

13-[...].

14-[...].

15-[...].

16-[...].

17-Notwithstanding the provisions of paragraph 4 of this article, the benefits of

services carried out by intermediaries that intervene, in the name and by

account of outrain, in any operation other than those referred to in the n.

8, 9, 15 and 16 of this article are taxable:

a) When to locate in national territory the operation to which if

refers the intermediation and the acquirer of the services of

intermediation is not a registered passive subject, for purposes

of value added tax, in another member state and

which has used the respective identification number for

carry out the acquisition;

b) When the operation to which the intermediation is concerned is located

in another member state and the purchaser of the services of

intermediation is a taxable person of those referred to in points a) and

d) of Article 2 (1), registered in tax on value

added and that it has used the respective number of

identification to carry out the acquisition.

18-[...].

19-[...].

20-[...].

21-[...].

22-[...].

23-[...].

Article 16.

[...]

16

1-[...].

2-[...].

3-[...].

4-For the purposes of the value added tax, it is understood by value

normal of a good or service:

a) The price, increased from the elements referred to in paragraph 5 of this article,

to the extent that in it are not included, that an acquirer

or recipient, at the stage of marketing where it is carried out

operation and under normal conditions of competition, it would have to pay the

a provider or independent provider, in time and place in

which is carried out the operation or in the closest time and place,

to get the good or the service or a similar good or service;

b) In the lack of similar good, the normal value may not be lower than the

purchase price of the good or, failing that, at the cost price,

reported at the time when the transmission of goods takes place;

c) In the lack of similar service, the normal value may not be lower than the

cost borne by the taxable person in the execution of the provision of

services.

5-[...].

6-[...].

7-[...].

8-[...].

9-[...].

10-[...]. "

17

" ANNEX E

List of the goods and services of the waste sector, waste and recyclable scrap to which

refers to point ( i ) of Article 2 (1)

a) Transmissions of ferrous and non-ferrous waste, scrap and

materials used, particularly of semi-finished products

resulting from the processing, manufacturing or melting of metals

ferrous and non-ferrous ferrous and its alloys;

b) Transmissions of ferrous and non-ferrous ferrous products semi-

transformed and benefits of certain processing services

associates;

c) Transmissions of waste and other recyclable materials

consisting of ferrous and non-ferrous metals, their alloys, slag,

ash, scales and industrial waste containing metals or the

your leagues, as well as service installments consisting of the

screening, cutting, fragmentation or pressing of these products;

d) Transmissions, as well as benefits from certain services of

related processing, ferrous and non-ferrous waste, well

how of trims, scrap, waste and materials used and recyclable

consisting of glass powder, glass, paper, cardboard, rags, bones,

leather, artificial leather, parchment, raw hides, tendons and

nerves, cordéis, ropes, cables, rubber and plastic;

e) Transmissions of the materials referred to in this Annex after

processing in the form of cleaning, polishing, triage, cutting,

fragmentation, pressing, or smelting in lingotes;

f) Scrap transmissions and waste resulting from the processing of

base materials. "

Article 3.

Amendment to the VAT Regime in Intra-Community Transactions

Articles 6 and 26 of the VAT Regime in Intra-Community Transactions, approved

by Decree-Law No. 290/92 of December 28, they shall be replaced by the following:

18

" Article 6.

[...]

1-[...]:

a) "Goods subject to excise duties", alcohol and the

alcoholic beverages, tobacco and petroleum products and

energy, with the exception of gas supplied by the system of

distribution of natural gas and electricity;

b) [...].

2-[...].

3-[...].

Article 26.

[...]

1-[...].

2-A The statement referred to in the preceding paragraph shall be submitted in

any finance service by the end of the month following that in which

the amount provided for in the paragraph has been exceeded. c) of the Article 1 (1)

11., to which it produces effects from the date, inclusive, of the transmission of

goods in which that amount has been exceeded.

3-[...].

4-[...].

5-[...].

6-[...].

7-[...].

8-[...]. "