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All about real estate crowdfunding
Financing a real estate operation in Portugal
October 6, 2022
Raizers, a real estate real estate crowdfundingnow gives you access to operations in Portugal. A good way to further diversify your investments while still investing in the same type of financial product.
The opening of this new market is accompanied by a thorough analysis of its technical, administrative, legal and fiscal specificities. Here is a summary of the important things to know about real estate in Portugal.
In the context of a real estate operation located in Portugal and in order to use crowdfunding on Raizers, a particular structuring must be put in place. Indeed, while waiting for the European approval (PSFP), Raizers cannot raise funds directly on behalf of a Portuguese company.
Therefore, a company wholly owned by Raizers SAS must be created. It is this company that acts as the issuer and raises the funds. These funds will then be transferred to the Portuguese company carrying the project via a credit agreement. This contract, established between the Portuguese company and the company created by Raizers, duplicates all the conditions of the bond contract.
Beyond this particular structuring, Portugal has legal, administrative and fiscal rules that differ from those we know in France.
The Portuguese State provides for several compulsory insurances in the context of real estate operations. These differ somewhat from those provided for in France.
First of all, all real estate is required to be insured against fire. The latter is less adapted to real estate development operations, since it must be subscribed only when the work is completed. It will thus be subscribed only at the end of the operation and for the lots remaining to be sold.
However, this insurance is essential in the context of property transactions, where the asset is pre-existing the file.
The law also provides for the obligation to subscribe to a Technicians' Liability insurance, similar to the Professional Liability insurance required in France. It covers all damages (resulting from actions, omissions or negligence) caused to a third party within the framework of the activity of the insured company.
The mortgaged property must also be covered by a specific insurance contract, covering all risks related to the nature of the mortgaged property.
In Portugal, interest on loans taken out between two entities (other than banks) is subject to taxation. This tax must be deducted at source directly by the borrower and amounts to 25% of the interest.
In addition to this tax, there is a stamp duty, the amount of which depends on the duration of the loan, ranging from 0.04% to 0.6%.
An exemption from this tax and stamp duty is possible under certain conditions (parent-daughter tax regime, taxation applicable within a group, double taxation agreement).
This exemption is difficult to apply in the context of crowdfunding on Raizers.
To compensate for this tax, the rate agreed between Raizers and the operator is higher than the rate displayed on the platform and the rate paid to investors. The interest rate agreed between the Raizers SPV and the Portuguese company includes the interest tax, deducted at source and paid directly by the operator to its tax authorities.
This taxation is therefore transparent for investors, as the rate displayed on the platform corresponds to the expected rate of return.
The opening of the Portuguese market allows Raizers to offer you more opportunities to diversify your portfolio.
Learn more about the technical specifics of real estate operations in Portugal
Learn more about the VAT regime for real estate operations in Portugal
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