Resident investors

Interest on bonds paid to corporate investors triggers withholding tax at a 25% rate, which shall be considered as an advance tax payment (being deducted from the final tax to be paid by Portuguese resident entities).

Pension Funds and similar Funds, Saving Funds (retirement, education and retirement/education) and Organizations of Public and Social Interest (duly recognized by the Portuguese State) are exempt of withholding tax. Investment Funds are taxable as individual shareholders.

Interests on bonds paid to individual investors are liable to withholding tax at a 28% rate. However, resident investors may opt to include these interests in their total taxable income being liable to the progressive tax rates set forth in the Personal Income Tax Code. If such option is made, any withholding shall be deemed as an advance tax payment.

Non-resident investors

Interests on bonds paid to corporate investors and to individual investors are exempt of taxation when paid to:

a) central banks, governmental agencies or international organizations recognized by the Portuguese State;

b) residents of a country with which Portugal has signed a tax treaty with exchange of information mechanism, or

c) entities that cannot be deemed as resident in a territory listed as a tax haven.

From July 1^st, 2013 onwards, the payment of interest (including interest on bonds) by Portuguese companies to EU and Swiss resident companies are exempted from withholding tax, according to requirements predicted under the Directive 2003/49/CE.

***All this content shall not be used as fiscal advisory recommendations and for further information, please consult either your financial intermediary or the Portuguese Tax Authorities through http://www.portaldasfinancas.gov.pt.