The income from the sale of subscription rights attributed in November,8th 2004, were eligible as capital gains (cfr. Art. 10º, n.º 1 b) of CIRS - Personal Income Tax Code).
   
For further information on EDP's 2004 capital increase  please visit  5th fase of reprivatisation - capital increase.

The balance found between capital gains and losses derived from the disposal of corporate rights and other marketable securities realised in the same year, as determined according to the corporate income tax code (excepting gains derived from the disposal of shares held at least for twelve months), earned by individual investors must be reported and is subject to a 10% corporate income tax rate.

An option for aggregating/including the gains received in the individual's investor total taxable income is also available.

Capital gains arising from the disposal of shares are subject to the standard corporate income tax rate of 25% plus municipal surcharge (up to a maximum of 2.5%), resulting in an aggregate corporate income tax rate of 27.5%.

Notwithstanding the above, capital gains arising from the disposal of shares, other securities, autonomous warrants issued by residents and financial derivatives issued in a regulated stock market, are exempt if earned by non-resident entities without a permanent establishment in Portugal, unless:
> the non-resident entity without a permanent establishment in Portuguese territory is owned by resident entities in more than 25% directly or indirectly;
> the non-resident beneficiary of the income is resident in a territory that is a listed tax haven;
capital gains relate to shares or interest in companies resident in Portugal if more than 50% of the company's assets consist of Portuguese real estate or relate to shares in a Portuguese holding company that controls such a Portuguese property company.


Companies or individuals resident in a country with which Portugal has signed a DTC may benefit from non taxation in Portugal of the above referred to capital gains depending on the provisions specifically agreed under the terms of the DTC.

www.dgci.min-financas.pt

Resident investors

Dividends paid to resident shareholders are subject to a 20% withholding tax rate which constitutes a final tax. Alternatively, the resident investor may opt to aggregate/include the dividends income received in its total taxable income. If such an option is made, any withholding shall be deemed to represent a payment on account of the final tax due.

 Dividends received by corporate entities which are subject to tax and not exempt, are included in the companies taxable profit. Any amounts of tax withheld on the dividends received represents a payment in advance of the tax due in final terms by Portuguese tax resident companies..

Dividends received by both companies and individuals, benefit (up until the end of 2007) from a 50% exclusion of corporate income taxe (IRC) and individual income tax, respectively (art.º 59 of the Statute of Tax Benefits).

Dividends received by corporate entities will further benefit from a 50% deduction rom their taxable base net of the benefit above referred to (art. 59º of the Statute of Tax Benefits) (art.º 46º, nº 8 of the CIRC).

Withholding is not mandatory for the following entities:i) Financial institutions subject to corporate income tax on the dividends received, even though exempt (artº 90, nº 1 a) of CIRC);
ii) Pension funds and similar funds, saving funds (retirement, education, retirement/education, equity, and domestic private equity (artº 14, artº 21º, artº 22º-A and artº 24º of the Statute of Tax Benefits, and;
iii) Organisations of public and social interest (under artº 10 of corporate income tax code).


 
Non-resident investors
 
Dividends paid to non-resident investors are subject to a domestic withholding tax rate of 20%. However, this domestic rate might be reduced pursuant to the application of a Double Tax Convention (DTC) entered into between Portugal and the country of residence of the non-resident shareholder.The application of the above reduced rates foreseen in the above mentioned DTC's is dependant of the compliance of strict formal procedures.
 
A list of the countries with which Portugal has signed a DTC is available at the following link:
 http://www.dgci.min-financas.pt/pt/informacao_fiscal/convencoes_evitar_dupla_tributacao/convencoes_tabelas_doclib/