CHAIR OF THE COUNCIL OF MINISTERS

1

Proposal for Law No 235 /XII

Exhibition of Motives

As of the year 2005, and by virtue of the mandatory adoption of the International Standards of

Financial Reporting and Adjusted Accounting Standards, the amount of assets per

deferred deferred taxes has increased significantly.

On the other hand, with the entry into force of the Regulation (EU) No 575/2013, of the

European Parliament and of the Council of June 26, 2013 on the requirements

prudential for credit institutions and investment firms, and which alters

o Regulation (EU) No 648/2012, of the European Parliament and of the Council of July 4,

this matter went on to assume special importance once, as of January 1 from

2014, those assets by deferred tax passed, by rule, to be liable to deduction

to the main own funds of level 1 of credit institutions with special

negative implications on the solvency levels of credit institutions.

With a view, in particular, to obviate the negative implications on the solvency of the

credit institutions, several Member States of the European Union have already proceeded to

adjustments of the internal legislations ' respective laws. In this sense, and in such a way as to ensure that

national credit institutions can operate under conditions of competitiveness

similar to their European counterparts, it matters to proceed, too, to the adaptation of the

Portuguese legislation.

In such a way as to ensure the strengthening of the capital structure of the societies that opt for the

recourse to the now approved scheme, provision is expected for compulsory adoption, by these

entities, of capitalization measures by way of the issuance of conversion rights

transactionable in market.

CHAIR OF THE COUNCIL OF MINISTERS

2

It was heard the Bank of Portugal.

Attentive to matter, at the headquarters of the legislative process taking place in the Assembly of the Republic,

are to be heard the own governing bodies of the Autonomous Regions and the Commission

of the Securities Market.

Thus:

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

next:

Article 1.

Object

This Act approves the special scheme applicable to assets by deferred tax which

have resulted from the non-deduction of expense and negative equity variances with losses

by impairation in credits and with post-employment or long-term benefits of

employees.

Article 2.

Approval

It is hereby approved in annex to this Law, which of it forms an integral part, the special scheme

applicable to deferred tax assets that have resulted from the non-deduction of spending

and negative patrimonial variations with impairments losses in credits and with

post-employment or long-term benefits of employees

CHAIR OF THE COUNCIL OF MINISTERS

3

Article 3.

Adherence to the scheme

1-The taxable persons of Income Tax on Collective Persons (IRC), which

wish to accede to the special scheme annexed to this Law shall express that

intention through communication addressed to the member of the Government responsible for the area

of the finances, to be submitted to the Tax and Customs Authority (AT) until the 10 th

subsequent to the publication of this Law.

2-A adherence to the scheme depends on the manifestation of intention referred to in the preceding paragraph,

as well as of the respect for approval by the general meeting, which shall also approve the

compliance with the remaining legal requirements of the special scheme.

3-The legal requirements of adherence to the special scheme must check throughout the

period of taxation of the taxable person in which the scheme applies.

4-After adherence to the scheme, taxable persons may waive the application of the same until

at the end of the taxation period immediately preceding that in which it is intended to

such renunciation shall produce effects, by means of communication addressed to the member of the Government

responsible for the area of finance, to be submitted to the AT.

5-In the case of credit institutions and financial companies, the waiver provided for in

previous number depends on prior authorization of the competent authority, on the terms

of Regulation (EU) No 575/2013 of the Parliament and of the Council of June 26 of

2013.

6-The application for waiver provided for in paragraph 4 shall be accompanied by the permission granted

under the terms of the previous number.

CHAIR OF THE COUNCIL OF MINISTERS

4

Article 4.

Temporal scope

The scheme approved by this Law shall apply to the spending and changes in patrimonial

negative accounted for in the periods of taxation beginning on or after January 1

of 2015, as well as to assets by deferred tax that are found to be registered in the

annual accounts of the taxable person relating to the last period of taxation prior to that

date and part of the spending and negative heritage changes that are associated with them.

Article 5.

Entry into force

This Law shall come into force on the day following that of its publication.

Seen and approved in Council of Ministers of June 5, 2014

The Prime Minister

The Minister of the Presidency and Parliamentary Affairs

CHAIR OF THE COUNCIL OF MINISTERS

5

ANNEX

(referred to in Article 2)

Article 1.

Object

This special scheme shall apply to assets by deferred tax which they have

result of the non-deduction of expense and negative heritage changes with losses by

impairance in credits and with post-employment or long-term benefits of employees.

Article 2.

Subjective scope

1-Can accede to the present special scheme any commercial companies and companies

public, as well as economic boxes, mutual agricultural credit boxes and the Box

Mutual Agricultural Credit Power Plant, with headquarters or effective direction in Portuguese territory

that they exercise, in the main title, an activity of a commercial, industrial or

agricultural, or still stable establishments located in Portuguese territory of

entities of an identical nature or similar to those, residing in another Member State of the

European Union or in a Member State of the European Economic Area that is

linked the exchange of information for tax purposes equivalent to the one established in the

scope of the European Union.

2-A adherence to the special scheme by the economic boxes implies the prior adoption of the form

of anonymous society, not by applying the provisions of Article 4 of the Decree-Law

n. 136/79 of May 18, as amended by Decrees-Laws 49/86 of March 14,

212/86, of August 1, 182/90, of June 6, 319/97, of November 25, and

188/2007, of May 11.

CHAIR OF THE COUNCIL OF MINISTERS

6

3-In the case of the Central Fund for Mutual Agricultural Credit and agricultural credit boxes

mutual, the conversion rights to which the present regime is given right, in the

same terms as the shares, to the free allocation of representative capital securities

of the social capital of those institutions and thereby of the quality of associate.

4-In the event of an exercise by the State of the rights of conversion in the situations provided for in the

previous Article No. 16 and paragraphs 2 and 4 of Article 53 of the Conditions of Employment are not applicable

Legal of the Mutual Agricultural Credit and the Agricultural Credit Cooperatives, approved

by Decree-Law No. 24/91 of January 11, depending on the cases, and the State may

exonerate yourself of the quality of associate by alienation to the remaining associates or others

third parties.

Article 3.

Approval by the general meeting

1-A accession to the special scheme shall be approved by deliberation of the general assembly of the

taxable person, taken by the majority required for amendment of the contract of society, which

should include specifically:

a) The decision to accede to this special scheme;

b) The constitution of the special reserve, to be carried out by the body of administration, in the

amount that results from the provisions of Article 8, and the manner of constituting it, with

resource, if strictly necessary, the prior reduction of capital;

c) The unique purpose of the special reserve for incorporation, under the present

regime, in the social capital of society and, when it is the case, in reserve

consisting of the atoms to which there is place.

CHAIR OF THE COUNCIL OF MINISTERS

7

2-The administration body of the taxable person shall draw up a report on the accession

to the special scheme and the possible financial consequences for the shareholders, which must

be placed at the disposal of the same in the framework of the preparatory information of the

general assembly.

3-A The deliberation of constitution of the special reserve, provided for in Article 8, implies the

approval of the issuance and allocation to the State of the conversion rights to which the

article 9, as well as the approval of the rise of the social capital of society by

incorporation of the special reserve, in the amount and in the conditions that come into being

necessary to meet the exercise of the conversion rights.

Article 4.

Impairance losses in credits and post-employment or long-term benefits of

employees

1-The expense and negative equity changes with impairments losses in credits

provided for in Article 28 (1) and (2) of the Income Code on the Income of the

Collective People (IRC Code), approved by the Decree -Law No. 442-B/88, of 30 of

november, as well as with post-employment or long-term benefits of employees,

of whose non-deduction for the purposes of finding the taxable profit in the period in which

have been incurred or recorded has resulted in the recognition of assets by

deferred tax in the financial statements, are deductible in the period of

taxation in which the conditions for the effect provided for in the IRC Code are checked,

in Article 9 of the Decree-Law No. 127/2011 of December 31, as amended by the Laws

n. paragraphs 20/2012, of May 14, and 66-B/2012, of December 31, or in Article 183 of the Law

n 64-B/2011 of December 30, as amended by the Laws No 20/2012 of May 14,

64/2012, of December 20, and 83/2013, of December 9, with the limit of the amount

of taxable profit from that period of taxation calculated before the deduction of these expenditions

and negative patrimonial variations.

CHAIR OF THE COUNCIL OF MINISTERS

8

2-The spending and negative heritage changes that are not deducted in the

determination of taxable profit as a result of the application of the number

previous are deductible in the determination of taxable profit from the taxation periods

subsequent, with the limit on it predicted.

3-Excludes from the provisions of the preceding figures the losses by impairity and variations

negative equity provided for in paragraph c ) of Article 28 (1)-B of the IRC Code,

or relating to credits on natural or collective persons who detain, direct or

indirectly, pursuant to Art. 69 (6) of the said Code, more than 2% of the

capital of the taxable person or on members of his / her social bodies, as well as those who

they do not arise from the exercise, the professional title, of the normal activity of the taxable person.

4-Excluded still from the provisions of paragraphs 1 and 2 the losses by impairity and variations

negative equity relating to credits on participating companies, direct or

indirectly, in accordance with Article 69 (6) of the IRC Code, by more than 10%

of the capital or entities with which the taxable person finds himself in a situation of

special relations in the terms of the ( a ) a g ) of Article 63 (4) of the said

Code, when from those losses by impairments or negative heritage variations

has resulted in the recognition of deferred tax assets at present

subsequent to that of the acquisition of the participation or verification of the condition from which it results

special relation situation.

5-For the purposes of the provisions of paragraph 2 are deducted in the first place the expenditured expendities

or the negative heritage variations recorded longer.

6-The expenses incurred and the patrimonial variations recorded by the merged companies, and

by these not yet deducted in the determination of taxable profit as a result of the

application of the provisions of paragraph 1, may be deducted, on the same terms and conditions,

in the determination of the taxable profit of the beneficiary society in a merger to

that the special scheme set out in Article 74 of the IRC Code be applied.

CHAIR OF THE COUNCIL OF MINISTERS

9

7-taxable persons must integrate into the tax documentation process to which they are referred

o Article 130 of the IRC Code the information and documentation relating to,

specifically, to the methods used in determining the impairance losses in

credits and responsibilities with post-employment or long-term benefits of

employees, as well as the accounting policies adopted in tax matters

deferred.

8-The policies and accounting methods referred to in the preceding paragraph are certified

by official reviewer of accounts.

Article 5.

Rules applicable under the special scheme for taxation of groups of

societies

1-In the periods of taxation in which the taxable person is covered by the special scheme

of taxation of groups of companies provided for in Articles 69 and following of the Code

of the IRC, the deduction of the spending and the negative patrimonial changes to which the

n. 1 of the preceding Article shall not exceed the smallest of the following amounts:

a) Taxable profit of the taxable person calculated prior to deduction of those expenses and

negative patrimonial variations; or

b) Sum algebraic of taxable profits and tax damage to which the

article 70 of the IRC Code calculated before the deduction of those spent and

negative patrimonial variations.

CHAIR OF THE COUNCIL OF MINISTERS

10

2-The expense and negative equity changes not deducted in the determination of profit

taxable as a result of the application of the provisions of the preceding paragraph are deductible in the

determination of taxable profit from subsequent taxation periods, with the limit

predicted in the same number.

3-For the purposes of the provisions of the preceding paragraph, the spending shall be deducted in the first place

or the patrimonial variations incurred or recorded longer or, when they have

have been incurred or registered in the same period of taxation, in the proportion between the

amount of these expendities and negative equity variations of each society and the total

of the relevant negative spending and variances of all the group's societies

incurred or registered in that period.

4-Terminated the implementation of the scheme with respect to a group society, spending and the

negative equity variations by it incurred or registered and which do not yet have

been fully deducted, are deductible in the determination of taxable profit of the

society to which they respect, under the terms and conditions laid down in the previous article.

5-When, during the implementation of the scheme, there will be place for merging operations between societies

of the group or a corporation incorporates one or more societies not belonging to the

group, the spending and negative heritage changes not yet deducted in the

determination of taxable profit as a result of the application of the provisions of paragraph 1 are

deductible, on the same terms and conditions, in the determination of the taxable profit of the

group up to the limit of the taxable profit of the new society or of the incorporated company,

provided that such operations are applied to the special scheme set out in Article 74.

of the IRC Code.

CHAIR OF THE COUNCIL OF MINISTERS

11

Article 6.

Conversion of assets by deferred tax credit into tax credit

1-The deferred tax assets that have resulted from the non-deduction of spending and

negative equity variances with impairments losses in credits and with

post-employment or long-term benefits of employees, referred to in paragraph 1 of the

article 4, are converted into tax credits when the taxable person:

a) Registe a negative net result of the period in your annual accounts, then

of approved by the social bodies, pursuant to the applicable law;

b) Enter into liquidation for voluntary dissolution, insolvency decreed by sentence

judicial or, where applicable, revocation of respect for permission by authority

of competent supervision.

2-In cases provided for in paragraph a ) of the previous number, the amount of assets per

deferred taxes to be converted into tax credit is the corresponding to the ratio

between the amount of negative net result of the period and the total capital

own from the passive subject.

3-When the total of the own capitals referred to in the preceding paragraph is negative or

lower than the negative net result of the period, as well as in the situations provided for in the

point ( b ) of paragraph 1, is converted into tax credit the totality of the amount of the assets

by deferred taxes referred to in paragraph 1.

4-In cases provided for in paragraph b ) of paragraph 1, the taxable person may not resume his

activity.

CHAIR OF THE COUNCIL OF MINISTERS

12

5-For the purposes of the provisions of paragraph 2, in total own capitals excludes the result

negative net of the period, and include social capital and emission premiums

associates, the reserves, the transient results and, where applicable, the instruments

referred to in Article 26 of Regulation (EU) No 575/2013 of Parliament and of the

Council, of June 26, 2013, and the instruments the inclusion of which is permitted for the

calculation of the main own funds of level 1 in accordance with the provisions of the Party

X of Title I of Chapter 2 of the same Regulation.

6-A conversion into tax credit provided for in the previous figures covers assets

by deferred taxes referred to in Article 4 (1) and Article 5 (1) that

are found to be registered in the financial statements of the taxable person concerning the

period in which the situation provided for in the paragraph is found. a ) of paragraph 1 or on the date of

entry into liquidation provided for in paragraph b ) of paragraph 1, depending on the cases.

7-The taxable person shall enrol in the periodic declaration of income provided for in the

article 120 of the IRC Code relating to the period of taxation in which it is established

any of the situations provided for in paragraph 1, the amount of the tax credit ascertained in the

terms of the previous numbers.

8-The spending and negative equity changes not yet deducted in the determination of the

taxable profit for not if they have verified the conditions for the effect provided for in the

Code of the IRC, in Article 9 of the Decree-Law No. 127/2011 of December 31, amended

by the Laws n. ºs 20/2012, of May 14, and 66-B/2012, of December 31, in the article

183 of Law No. 64-B/2011 of December 30, as amended by Laws No 20/2012, of 14

of May, 64/2012, of December 20, and 83/2013, of December 9, in Article 2 (2)

4 or in Article 5 (2), do not compete for deduction for taxable profit, on the part

associated with the corresponding deferred tax assets that have been the object of

conversion under the terms of this article.

CHAIR OF THE COUNCIL OF MINISTERS

13

9-Income and positive patrimonial changes resulting from reversal of losses

by impairance in credits, in the part associated with the corresponding active by tax

deferred that have been the subject of conversion under the terms of this article,

are considered to be positive components of the taxable profit of the respective respect period

taxation.

Article 7.

Use of the tax credit

1-The tax credit resulting from the conversion of assets by deferred taxes into the

terms of the previous article may be used, on the initiative of the taxable person, in the

compensation with debts of this or any entity based in Portugal

integrated into the same group of societies to which the special arrangements provided for

in Article 69 of the IRC Code or, where applicable, on the same perimeter of

prudential consolidation for the purposes of Regulation (EU) No 575/2013, of the

European Parliament and of the Council of June 26, 2013.

2-The provisions of the preceding paragraph shall cover debts relating to state taxes on the

income and the heritage that constitute its charge and whose generator fact does not occur

subsequent to the date of that conversion, provided that the term of the payment term

volunteer to occur until the last day of the taxation period following the one in which if

check the fact provided for in the paragraph a ) of paragraph 1 of the previous article.

3-The amount that is not compensated with tax debts within the period specified in the

previous number is immediately reimbursed to the taxable person.

Article 8.

Special reservation

1-In cases provided for in paragraph a ) of Article 6 (1), the taxable person constitutes a

special booking in the amount of the tax credit ascertained in the terms of that article,

majored from 10%, without prejudice to the adjustment provided for in Article 11 (3)

CHAIR OF THE COUNCIL OF MINISTERS

14

2-A Special reservation is intended exclusively to be incorporated into the social capital and, if it is

in the case of this, in reserve consisting of the atoms to which there is place and subject to the scheme of

legal reserve, by raising the social capital of the taxable person in the modality

special provided for in this regime.

Article 9.

Rights of conversion

1-A The constitution of the special reservation implies the simultaneous constitution of rights of

conversion attributed to the State.

2-The conversion rights referred to in the preceding paragraph are securities that

confers to the titular respect the right to demand the taxable person the increased respect

of the capital through the incorporation of the amount of the special and consequential reserve

issuance and free delivery of ordinary shares representative of the social capital of the subject

passive.

3-The number of rights to be issued and ascribe to the State corresponds to the result of the

quotient between the amount of the special reserve and the reference value of the rights of

conversion calculated in the terms of the following numbers.

4-In the case of taxable persons issuers of shares admitted to trading on market

regulated, the reference value of the conversion rights corresponds to the price

medium weighted by the volume of the ordinary shares representative of the social capital of the

taxable person ascertained during the period of negotiation between the date of the submission of the

proposal for deliberation of application of results and the deliberation of the general assembly

that approve the annual accounts.

CHAIR OF THE COUNCIL OF MINISTERS

15

5-In the case of taxable persons not covered by the preceding paragraph, the value of

reference of the conversion rights corresponds to the adjusted book value of the

common shares representative of the social capital of the taxable person, understood as the

quotient among own capitals deducted from the amount of the tax credit

ascertained in the terms of Article 6 majord of 10% and the number of representative shares

of the social capital deducted from own shares, at the date and in accordance with the latest accounts

annual approved by the relevant social bodies under the applicable law.

Article 10.

Regime of conversion rights

1-The State, or other public servants to whom the State has passed the rights of

conversion, can freely dispose of them.

2-Shareholders at the date of the constitution of the conversion rights assigned to the State have

the potent right to acquire the conversion rights to the State in the proportion of the

respects holdings in the capital of the taxable person under the procedure conditions

defined by porterie of the member of the Government responsible for the area of finance.

3-It is not considered public supply of distribution the exercise or divestance by the State

of the rights of conversion, specifically by exercise of the potent right of

acquisition referred to in the preceding paragraph or by sale to third parties.

4-In the case of an issuer of common shares admitted to trading on a market

regulated, the admission to the trading of the new shares issued by exercise of the

conversion rights does not lack, regardless of the number of shares of the same

category already admitted to trading on the same regulated market, from the approval of

prospeto.

CHAIR OF THE COUNCIL OF MINISTERS

16

Article 11.

Exercise of conversion rights

1-The exercise of the conversion rights implies the increase of the social capital of the subject

liability in the special modality provided for in this Law, the one which corresponds to the issuance of

new ordinary shares representative of the respected social capital.

2-The exercise of each right of conversion assigns free of charge to its holder an action

ordinary representative of the social capital of the taxable person issued at the price of

subscribed equivalent to the reference value of the conversion rights ascertained in the

terms of paragraphs 4 and 5 of Article 9.

3-Should the subscription price referred to in the preceding paragraph be lower than the nominal value

of the ordinary shares representative of the social capital of the taxable person, the price of

subscription is adjusted to match that nominal value, in that case the

amount of the special reservation referred to in Article 8 shall be proportionally adjusted

through the multiplication of the amount of the tax credit ascertained in the terms of the

article 6 by the quotient between the nominal value and the values referred to in paragraphs 4 and 5 of the

article 9 para.

4-In case the subscription price referred to in paragraph 2 is higher than the nominal value of the shares

ordinary representative of the social capital of the taxable person, the difference to more between

the underwriting price and the nominal value of each share consists of the age that is

incorporated into a special reserve subject to the legal reserve regime pursuant to the

article 295 of the Code of Commercial Societies, approved by the Decree-Law

n. 262/86, of September 2.

5-The administration body of the taxable person is obliged to immediately promote the

record of the increase in the capital of the society by the amount that result from the exercise of the

conversion rights after the course of the term for exercise of the right provided for in paragraph 2

of Article 10 para.

CHAIR OF THE COUNCIL OF MINISTERS

17

6-The application for the registration of the increase in capital is instructed, among others required by law,

with the following documents:

a) Minutes of the deliberation of the general assembly of constitution of the special reserve and which,

consequently, in accordance with Rule 3 (3), approved the issuance of the

conversion rights and the increase in capital arising from the exercise of the

same;

b) Should this not be already deposited in the conservatory, balance sheet of the subject

passive, approved by the respected governing body, the date of reference

diss less than six months from the date of the application for registration, in which figure the reservation

special to be incorporated;

c) Written statement issued by the administrative body of the taxable person, in the

which one indicates the number of conversion rights exercised, the number of new

common shares representative of the social capital of the taxable person to be issued in

consequence of the exercise of the rights of conversion, its nominal value or

emission value, the amount of the increase in the social capital and the amount of the

social capital of the taxable person after the increase;

d) Company contract of the taxable person in which figure the new amount of the

social capital after the increase and the new number of shares that represent it.

Article 12.

Certification by official reviewer of accounts

The amount of deferred tax assets converted into tax credit in the

terms of Article 6 must be certified by official reviewer of accounts, and this

certify still the constitution of the special reserve and the issuance and allocation to the State of the

conversion rights, in accordance with Articles 8 to 11, as well as the remaining requirements

legal rules relating to the accession to the special scheme provided for in this Law.

CHAIR OF THE COUNCIL OF MINISTERS

18

Article 13.

Regulation

The procedures for the offsetting of the tax credit with tax debts and for

the respect for reimbursement, as well as the conditions and procedures for the application of the

provisions of Article 6 (7), Article 5 (4), and Article 10 (2)

are established by portaria of the member of the Government responsible for the area of finance.