Key Benefits:
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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.
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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.
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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-[...].
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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-[...]. "
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" 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:
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" 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-[...]. "