4.- Participation exemption: all inbound and outbound dividends will be tax exempt provided that the following conditions are met:
For inbound dividends:
- A minimum participation of 5% is required;
- The participation must be held uninterruptedly for 24 months prior to distribution of dividends;
- The parent company must not be subject to tax transparency regime;
- The subsidiary must be subject to corporate tax as per Directive 2011/96/UE, of November 30, or to tax akin to Portuguese IRC* provided that the rate is at least 60% of the 23% rate;
- The subsidiary must not be domiciled in a tax haven or offshore territory as defined by the Portuguese Government.
For outbound dividends:
- The parent company must be domiciled in an EU/ EEA country or one that has a DTT with Portugal;
- The parent company must be subject to corporate tax akin to Portuguese IRC. When the parent company is domiciled in a territory with a DTT the local corporate tax rate should be at least 60% of the 23% rate;
- The parent company must hold at least a participation of 5%;
- The participation must be held uninterruptedly for a period of 24 months prior to distribution.
Dividends paid from resident entities to branches in the EU/ EEA will also benefit from this regime as long as conditions a) to c) are met.
*IRC or Imposto sobre o Rendimento das Pessoas Colectivas, Portuguese Corporate Tax.