Offshore Companies - What the lord giveth he taketh away
It is probably quite well known that an offshore "black list” was published in Portugal through the enactment of Ordinance number 150/2004 of February 23 thus creating a list of countries, territories and jurisdictions that would be considered as "tax havens".
The initial list was much longer, but the one approved in 2004 brought a two-page listing where, if companies were headquartered, or even if individuals were domiciled, in any of those territories they would suffer serious tax consequences.
The tax consequences were at various levels from the increase in the, then, newly created IMI (Municipal Tax) with an increased tax rate, to increased rates of IMT (Property Purchase Tax) as well as a presumption of a notional taxable rental income of 1/15 of the tax value.
The consequences are not limited solely to property either, but extend to tax legislation in general, from the Corporate Tax regime (IRC) where payments made by Portuguese companies to individuals or to other companies domiciled in such territories are not considered as legitimate costs and are taxed under autonomous taxation (see article 88, paragraph 8 CIRC) at increased rates, to the Personal Tax regime (IRS) where the relocation of the individual's domicile from Portugal to such territories is disregarded for tax purposes (article 16, n. 6 CIRS).
In 2011 there were some changes to the black list, plus some jurisdictions that were removed and finally in 2016, Ordinance number 345-A / 2016 removed from the notorious list the Isle of Man, Jersey and Uruguay.
The Ordinance justified the reasons why such jurisdictions were removed from the list of tax haven being that, since an ATI (Agreements on the Exchange of Information in Tax Matters) and a CDT (Convention to Avoid Double Taxation) had been signed with those territories the doubts and dangers that had arisen about them had ceased to exist and were no longer a reason for them to appear on the list.
That is what we thought! However, Article 290 of the State Budget of 2018 now revokes the aforementioned Ordinance 345-A / 2016, restoring the list previously approved by Ordinance 150/2004, in other words the Isle of Man, Jersey and Uruguay are now back on the list.
You may ask: well have the CDT and the ATI also been revoked to justify this turnaround?
No, those international agreements are still in force (see links below). We conclude that, the misquoted line from the Bible in the title of this article is exemplified if you substitute “The Taxman” for “The Lord”!