Centralized treasury management, or Cash Pooling (CP), is a banking product for liquidity management applicable to groups of companies, in which the individual bank position is physically - in the physical type - or virtually - in the notional type - pooled into a master account. Among other advantages, this instrument leads to the reduction of external financing and consequent debt costs, as well as a reduction in interest paid, calculated by the net pool position. Physical transfer of funds only takes place in the physical CP. These transfers correspond to intra-group loans, subject to Stamp Duty in Portugal. Considering the taxation represents an obstacle to its adoption, this work aims to analyse the most relevant topics, especially the most controversial, in order to simplify CP taxation for its users. Among the most controversial issues is the territoriality principle applied to credits granted by Portuguese entities to non-resident entities. The analysis carried out suggests there is no incidence of Stamp Duty in Portugal in this situation, given that the legislator intends to tax the use of credit, which does not occur in this territory. The 2020’s State Budget introduced a specific exemption for CP, which is no longer dependent on the hard demonstration of the exclusive purpose of covering cash shortages criteria, present in the previous non-specific exemption for these contracts. However, this exemption is restricted to a group relationship in which vertical or horizontal participation must be greater than 75%, instead of a simple majority interest. This limitation imposes the ongoing use of the previous lateral exemption. Another debated topic, both in doctrine and jurisprudence, concerns the exemptions’ exclusion in the situations where the debtor of the financing is a non-resident entity, and the creditor is an entity resident in the Portuguese territory. This law is questionable under the European Union principles. Considering the aforementioned understanding, there is no tax incidence in the situation described. This finding supports the view that does not exist a discriminatory practice. On the contrary, this omission result from the fact that this reality is not even taxed. Finally, both physical and notional CP contracts may take cross guarantees between participants, which are taxable in Stamp Duty. Due to the significance it may entail, we suggest its development in a future study.
- Cash pooling
- Centralized cash management
- Stamp duty
- Territoriality principle
- Mestrado em Auditoria e Fiscalidade