Income of any nature obtained by Venture Capital Funds (FCR) is exempt from Corporate Income Tax (IRC), as long as they’re established and operating in accordance with national legislation.
Additionally, income distributed by a Venture Capital Fund, paid or put at the disposal of the unit holders – whether by distribution or redemption –, is subject to a Personal Income Tax (IRS) or Corporate Income Tax withholding rate of 10%, except when the income owners are tax-exempt in regard to income from capital or are non-resident entities without a permanent establishment in Portugal. Entities resident in countries, territories or regions that are subject to a more favourable tax regime and non-resident entities that are held – directly or indirectly and in more than 25% – by resident entities do not benefit either from the above exclusion, nor the 10% reduced rate.
If the individuals that receive income from investment units in Venture Capital Funds opt to include it in their general IRS income, they are entitled to deduct 50% of the underlying dividend income (ie. income distributed to the Venture Capital Fund), under the terms and conditions set forth in the IRS Code.
In addition, capital gains resulting from the disposal of investment units in Venture Capital Funds are taxed at a 10% rate when received by non-resident beneficiaries to which the exemption under article 27 of the EBF (Estatuto dos Benefícios Fiscais) doesn’t apply, or individuals resident in Portuguese territory whose income isn’t associated to a commercial, industrial or agricultural activity.