Like many other European countries, Portugal has implemented a special regime to tax the banking sector. The Budget Law for 2011 (Law No. 55-A/2010, of December 31 2010) established an Extraordinary Bank Tax (EBT) to be levied on financial and banking institutions. While the Law outlined the scope of the EBT and prescribed maximum and minimum rates that could be applied to the entities to which the EBT applies, the actual rates to be applied, rules for calculating said rates and conditions for collecting them were to be implemented through an Order (Portaria) issued by the Ministry of Finance, following consultation with the Bank of Portugal.
On March 30 2011, the Ministry of Finance issued Order No. 121/2011, which sets out the above rates, rules and conditions. This Order provides that the EBT is applicable to credit institutions established in and with headquarters in Portugal, as well as local affiliates of credit institutions not established in Portugal, and local branches of credit institutions established outside of the EU.
The Order provides that the EBT includes a charge of 0.05% on the entity's total liabilities and a charge of 0.00015% on the notional amounts of financial derivatives entered into by the entity. Both rates stipulated by the Order are within the limits authorised by the Budget Law, though the Ministry of Finance has opted to levy the maximum value allowed under said Law on an entity's total liabilities, namely 0.05%. Tier I and Tier II capital and deposits are exempted from the EBT as long as they are covered by the Portuguese Deposit Guarantee Fund (Fundo de Garantia de Depósitos). The EBT is calculated based on the annual mean of the entity's monthly balances, by reference to the annual accounts approved in the year for which the tax is due.
A copy of the declaration form for the EBT is attached to Order No. 121/2011, and must be filed electronically by all entities to which the EBT applies by the end of June. Sums due under the EBT must also be paid by the end of June.
Although the EBT has the word "extraordinary" in its name, no provision is made regarding its duration or limitation to the year of 2011. Consequently, it will be levied annually until this regime is amended or revoked.
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