Portuguese Government Publishes Changes to Regulatory Framework Covering SIGIs

5 September 2019

The Portuguese government published alterations to the regulatory framework covering Portugal’s version of Spain’s socimis and the US’s REITs this week. The changes were meant to help stem the fall in the supply of rental housing and to rein in housing prices.

Tax regime – Resident investors are subject to Portugal’s general tax rates. Non-residents now pay 10% (subject to double taxation agreements).

Share capital – Similarly to Spain’s socimis, SIGIs must have a minimum share capital of €5,000,000.

Capital dispersion – SIGIs must have at least 20% of their capital, representing 2% of the voting rights, listed on the stock exchange within three years. That percentage must increase to 25% within five years of the initial listing.

Debt – SIGI’s financial exposure to third parties must not exceed 60% of their total assets.

Assets – To qualify for tax benefits, SIGIs must have at least 75% of their portfolio allocated to rental housing or “other atypical contractual obligations that include property services.” At least 80% of the SIGI’s assets must be composed of real estate rights and interests, including homes, offices or shopping centres.

Minimum holding period – SIGIs must hold onto either rental properties or other holdings a minimum of three years.

Periodic asset valuation – SIGI are required to hire an independent external auditor registered with the CMVM to perform a valuation of their asset portfolio at least once every seven years.

Dividend Distribution – 90% of dividends and income (which may constitute up to 25% of assets) must be distributed to investors annually. 75% of the remaining profits must also be distributed.

Original Story: Idealista

Adaptation/Translation: Richard D. K. Turner