Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

PORTUGAL

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
Share
  • ShareShare
Show Summary Details

(Position as of January 31, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: September 12, 1988.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)Exchange restrictions have been imposed in accordance with EU regulations.
Other security restrictionsIn accordance with EU regulations and the relevant UN Security Council resolutions, certain restrictions are maintained with respect to certain individuals associated with the government of Belarus, the Islamic Republic of Iran, the former government of Iraq, the Democratic People’s Republic of Korea, Myanmar, certain individuals associated with the government of the former Federal Republic of Yugoslavia, and Zimbabwe. Financing of and financial assistance related to military activities in Côte d’Ivoire, the Democratic Republic of the Congo, Somalia, Sudan, and Uzbekistan are prohibited. Restrictions also apply on transfers with respect to persons and entities associated with Osama bin Laden, Al-Qaida, the Taliban, and the former Liberian president, Charles Taylor, and his allies and associates. In addition, certain restrictive measures are directed against certain persons and entities in view of the situation in Côte d’Ivoire. Special caution is recommended in transactions with countries and with counterparties located in countries or territories not cooperating in efforts to prevent money laundering.
References to legal instruments and hyperlinksEffective December 4, 2006, the Notice of Banco de Portugal 11/2006 amended the Notice of Banco de Portugal 1/99.
Exchange Arrangement
CurrencyThe currency of Portugal is the euro.
Exchange rate structureUnitary.
Classification
Independently floatingPortugal participates in a currency union (EMU) with 12 other members of the EU and has no separate legal tender. Effective January 1, 2007, the exchange arrangement of the EMU countries has been reclassified to the category independently floating from the category exchange arrangement with no separate legal tender. The new classification is based on the behavior of the common currency, whereas the previous classification was based on the lack of a separate legal tender. The new classification thus reflects only a definitional change, and is not based on a judgment that there has been a substantive change in the exchange regime or other policies of the currency union or its members.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketYes.
References to legal instruments and hyperlinksNotice of Banco de Portugal 1/99, amended by Notice of Banco de Portugal 11/2006.
Arrangements for Payments and Receipts
Prescription of currency requirements
Use of foreign exchange among residentsOperations in foreign exchange are permitted through the banking system.
Payments arrangementsNo.
Administration of controlThere are no exchange controls. Foreign trade policy is implemented by the Ministry of Economy, which is responsible for administering trade controls and for issuing import and export licenses, declarations, and certificates.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)A declaration is required for exports or imports of gold (coins or bullion) valued at the equivalent of €12,500 or more by resident or nonresident travelers.
Controls on exports and imports of banknotesThe exportation or importation by resident or nonresident travelers of banknotes, coins, checks, and traveler’s checks equal to or exceeding the equivalent of €12,500 must be declared to the authorities. Decree-Law No. 61/2007, dated March 14, 2007, amending Decree-Law No. 295/2003 and implementing Regulation (EC) No. 1889/2005 of the European Parliament and of the Council of October 26, 2005, on Controls of Cash Entering or Leaving the Community, established that residents or nonresident travelers entering or leaving the European Community (EC) must declare to the customs authorities exports and imports of gold, banknotes, coins, and other means of payment valued at the equivalent of €10,000 or more. When required by the customs authorities, a similar declaration should be presented for the movements within the EC. This regulation will go into effect in 2007.
References to legal instruments and hyperlinksDecree-Law No. 295/2003, dated November 21, 2003; Decree-Law No. 61/2007, dated March 14, 2007, amending Decree-Law No. 295/2003 and implementing Regulation (EC) No. 1889/2005 of the European Parliament and of the Council of October 26, 2005, on Controls of Cash Entering or Leaving the Community.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksDecree-Law No. 295/2003, dated November 21, 2003.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
References to legal instruments and hyperlinksDecree-Law 295/2003, dated November 21, 2003.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Negative listImports of certain products are subject to an import license and are allowed under specific conditions, or are prohibited for reasons of health, public order, or the prevention of commercial fraud. For agricultural products covered by the CAP, an import certificate may be required. A few industrial products, such as steel products and some textiles and clothing, are subject to EU import restrictions when they originate in certain third countries.



In accordance with UN Security Council resolutions and EU regulations, sanctions have been imposed on specific transactions involving diamonds (Liberia and Sierra Leone), armaments (Iraq; Liberia; Zimbabwe; the Taliban; and individuals, groups, and organizations associated with terrorism), and oil (Iraq).
Open general licensesProducts of dual use may require a certificate. Precursor chemicals are subject to licensing.
Licenses with quotasImports subject to quantitative restrictions require an import license. Generally, licenses are valid for six months for customs clearance purposes.
Other nontariff measuresFor products under EU surveillance, the appropriate import documents, when required, are issued for statistical purposes and are granted automatically in four or five days.
Import taxes and/or tariffsYes.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasIn accordance with UN Security Council resolutions and EU regulations, sanctions are imposed on specific transactions involving nuclear proliferation concerning the Islamic Republic of Iran and the Democratic People’s Republic of Korea. For agricultural products covered by the CAP, an export certificate may be required. Products of dual use may require a certificate. Precursor chemicals are subject to licensing.
Export taxesNo.
References to legal instruments and hyperlinksDecree-Law No. 295/2003, dated November 21, 2003.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksDecree-Law No. 295/2003, dated November 21, 2003.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksDecree-Law No. 295/2003, dated November 21, 2003.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsControls apply to the purchase of shares and other securities of a participating nature that may be affected by the laws on inward direct investment and establishment. Purchases made through a takeover bid (public offer) are subject to previous registration with the Portuguese Securities Markets Commission (CMVM—Comissão do Mercado de Valores Mobiliários) and require the prior publication of offer documents.
Sale or issue locally by nonresidentsWhen securities are offered to the public, prior publication of a prospectus is required (Article 134 of the Securities Code). Prospectuses relating to public offerings for distribution are subject to approval by the CMVM (Article 114 of the Securities Code). However, a prospectus approved by the competent authority of an EU member state may be valid in Portugal, provided the CMVM receives from the competent authority certain documentation (Article 146 of the Securities Code). The CMVM may also approve prospectuses of an issuer from a non-EU member state provided they have been drawn up in accordance with international standards set by international securities commission organizations and that they contain information equivalent to the requirements under the Securities Code (Article 146 of the Securities Code).
Sale or issue abroad by residentsSales or issues through a public offering launched simultaneously in Portugal and abroad require the prior publication of a prospectus in Portugal (Article 134 of the Securities Code), which must be approved by the CMVM (Article 145, subparagraph 1, of the Securities Code). If the sale or issue occurs through a public offering launched only abroad, the CMVM has no authority to control such an offering, but may be consulted by foreign authorities.
Bonds or other debt securities
Purchase locally by nonresidentsThe regulations governing shares or other securities of a participating nature apply.
Sale or issue locally by nonresidentsThe regulations governing shares or other securities of a participating nature apply.
Sale or issue abroad by residentsThe regulations governing shares or other securities of a participating nature apply.
On collective investment securities
Sale or issue locally by nonresidentsThe sale or issue of units of foreign investment funds is subject to the CMVM’s authorization (Article 78, subparagraph 6, of Decree-Law 252/2003, dated October 17, 2003, which applies the UCITS Directive to the national law). This control by the CMVM does not apply to UCITS from EU countries that, following an EU directive, are regulated according to the principle of home country authorization. In such a case, the CMVM is requested to ascertain whether the marketing arrangements for units comply with the directive (Article 78, subparagraphs 1 to 5, of Decree-Law 252/2003, dated October 17, 2003).
Sale or issue abroad by residentsIn the case of UCITS regulated by the EU directive, the CMVM has jurisdiction, even when they are marketed in other EU countries (Article 79 of Decree-Law 252/2003, dated October 17, 2003).
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Outward direct investmentControls apply to establishment in non-EC member countries of branches and subsidiaries of (1) credit institutions and financial companies (“sociedades financieras”); and (2) financial companies that are not subsidiaries of credit institutions, as defined in Article 18 (2) of EC Directive 89/646, dated December 15, 1989.
Inward direct investmentControls apply to (1) establishment of agencies of foreign insurers originating in non-EU member states for which a special deposit and financial guarantee are required, and whose parent company must have been authorized to exercise such an activity for a least five years; (2) investment by non-EU investors in regular air transport (domestic and international) exceeding 49% of the company’s capital; and (3) establishment of travel agencies by non-EU investors, except through an enterprise incorporated in Portugal.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
References to legal instruments and hyperlinksEnglish version of the Portuguese Securities Code: www.cmvm.pt/english_pages/legislacao_regulamentos/legislacao/codigo_dos_valores_mobiliarios/index.asp; Portuguese version of Decree-Law 252/2003, dated October 17, 2003: www.cmvm.pt; Decree Law No. 201/2002, amending Decree Law No. 298/92, on the Legal Framework of Credit Institutions and Financial Companies; Decree Law No. 295/2003, dated November 21, 2003.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions
Investment regulations
Abroad by banksNondiscriminatory prudential rules apply to (1) the establishment of branches abroad, for which prior notification to and permission of the Banco de Portugal (BDP) are required; (2) the establishment of subsidiaries in non-EEA countries, for which prior notification to and permission of the BDP are required; (3) the acquisition of qualifying holdings in foreign banks or other credit institutions, for which prior notification to the BDP is required; and (4) limits on other investments (e.g., capital holdings in a company may not exceed 15% of a bank’s own funds, and the total amount of qualifying holdings may not exceed 60% of a bank’s own funds—in both cases, these limits are not applied to shareholdings in companies included in the supervision on a consolidated basis to which the shareholding bank is subject). These rules are also applicable to establishments, acquisitions, and investments by other credit institutions.
In banks by nonresidentsNondiscriminatory prudential rules apply to the acquisition of qualifying holdings in banks and credit institutions.
Open foreign exchange position limitsThe prudential minimum own funds requirements are applied on a nondiscriminatory basis to credit institutions as well.
Provisions specific to institutional investors
Insurance companies
Currency-matching regulations on assets/liabilities compositionThe currency-matching requirement for insurance companies is 80%.
Pension funds
Limits (min.) on investment portfolio held locallyn.a.
Currency-matching regulations on assets/liabilities compositionThe currency-matching requirement for pension funds is 70%.
Investment firms and collective investment fundsNondiscriminatory prudential rules apply to (1) the establishment of branches abroad, for which prior notification to and permission of the BDP are required; (2) the establishment of subsidiaries in non-EEA countries, for which prior notification to and permission of the BDP are required; (3) the acquisition of qualifying holdings in foreign banks or other credit institutions, for which prior notification to the BDP is required; and (4) limits on other investments (e.g., capital holdings in a company may not exceed 15% of a bank’s own funds, and the total amount of qualifying holdings may not exceed 60% of a bank’s own funds—in both cases, these limits are not applied to shareholdings in companies included in the supervision on a consolidated basis to which the shareholding bank is subject). These rules are also applicable to establishments, acquisitions, and investments by other credit institutions.



Nondiscriminatory prudential rules apply to the acquisition of qualifying holdings and the creation of new investment firms. Prudential minimum own funds requirements are applied on a nondiscriminatory basis.
Limits (max.) on securities issued by nonresidentsn.a.
Limits (max.) on investment portfolio held abroadn.a.
Limits (min.) on investment portfolio held locallyn.a.
Currency-matching regulations on assets/liabilities compositionn.a.
References to legal instruments and hyperlinksLegal Framework Applicable to Credit Institutions and Financial Companies, approved by Decree-Law 298/92, dated December 31, 1992: Articles 36 to 43-A and 100, and Articles 102–108; Notice of Banco de Portugal 7/96 on Capital Requirements Concerning Market Risks.
Changes during 2006
Exchange measuresDecember 4. The Notice of Banco de Portugal No. 11/2006 amended the Notice of Banco de Portugal No. 1/99.
Changes during 2007
Exchange arrangementJanuary 1. The exchange arrangement of the EMU countries was reclassified to the category independently floating from the category exchange arrangement with no separate legal tender. The new classification reflects only a definitional change.

    Other Resources Citing This Publication