Having distinguished himself in major Portuguese law firms, then appointed Secretary of State for Tax Affairs in 2001, Rogério Fernandes Ferreira founded his own firm, RFF & Associates, in 2012, which is now recognized as a benchmark in tax law and business. He comments for us regarding the latest news in his field.
How do you evaluate the attractiveness of Portugal?
Portugal has adopted a set of fiscal measures to increase its competitiveness. The Non-Habitual Resident Scheme (RNH) provides for the application of a 20% tax rate on “high value-added” labor income from Portuguese sources and a tax exemption in Portugal on foreign source income. This is very attractive for investors, retirees, and professionals with a high value-added activity.
Portugal has also improved corporate taxation. The corporate tax rate was reduced to 21%, compared to 33% applied in France. In addition, the “exemption participation” scheme allows, under certain conditions, to be exempt from tax profits and reserves distributed by a subsidiary to a parent company in Portuguese territory, and to transform Portugal into a platform for tax purposes and investment in Europe and third countries.
In Portugal, there is also a single tax regime applicable in the Madeira International Business Center, which allows companies that establish themselves there until December 2020 to benefit from tax advantages. For example, it is possible to benefit, under certain conditions, from a reduced corporate tax rate of 5% and exemption from withholding tax on dividends paid to shareholders who are resident in the company.
What future do you foresee for RNH status?
The scheme will reach its tenth year in 2019, and the first statutes granted – valid for 10 years – will end. This will make it possible to observe in practice the transition from Non-Habitual Resident to regular tax resident although the Finance Act for 2019 does not provide for any modification, it will be, perhaps, the opportunity that the legislator will take to mitigate certain criticisms that are heard outside. But the RNH status will be maintained and will certainly grow.
Is real estate investment in Portugal still competitive from a tax point of view?
The real estate market in Portugal is booming and the growing attraction it allows, thanks to tourism and short-term rental, to easily exploit a property acquired in Portugal. There is a so-called “local housing” scheme under which, under certain conditions, only 35% of the income collected as a result of the lease is taxable, which leads to the application of effective tax rates on rents, approximately 10% of the total rental income.
What makes the singularity of your firm?
RFF was conceived as a tax law “shop” and is recognized as a market leader in Portugal. We are ranked among the best (Tier 1) by professional directories such as Chambers & Partners Europe, Legal 500 or International Tax Review. This year I was also the only Portuguese lawyer recognized by Legal Week’s Private Global Elite professional directory, as a consulting specialist for Private Clients. This success is based on a team of 21 lawyers, integrated into 10 teams, each specializing in a particular area of tax and business law. I have brought together some of the lawyers I have worked with for the last 25 years, and after those years spent as a partner in the large firms, this Cabinet-Boutique scheme seemed to me the best suited to provide customers a tailor-made advice.
Lisbon is a city in turmoil and changing, what will it look like in 5 years?
Lisbon is a dynamic European capital, with professional, commercial, artistic and technological opportunities flowing into it. This leads to the arrival of new concepts, especially for shops and restaurants, which are subject to permanent innovation to maintain their attractiveness. The city is also the scene of many international events. That’s why, I think Lisbon will tend to compete with major European capitals, while maintaining the benefits of a smaller city.