Morais Leitão, Galvão Teles, Soares da Silva & Associados

On the 10th of January, the International Criminal Police Organisation (Interpol) announced the first publication of a Silver Notice, and, in the meantime, released its legal framework. The Silver Notice aims to locate and recover assets of illicit origin as a way of strengthening international police cooperation, in order to combat transnational organised crime. The purpose of this Legal Alert is to clarify the contours of this new Interpol legal mechanism. I. What is the Silver Notice? The Silver Notice is the latest addition to Interpol’s wide range of international cooperation mechanisms, which allow police in Interpol member States to request and share critical information. Interpol organizes these notices by a color code. The Silver Notice was introduced as part of Interpol’s strategy to combat money laundering and financial flows from illicit sources. This new notice is currently the subject of a pilot project involving 52 states and territories, including Portugal, which will run until at least November 2025. II. Main purpose The new Silver Notice aims, among other things, to help anti-corruption units, financial institutions and national criminal justice systems recover illicit funds and/or discover the identity of agents involved in economic and financial crimes. Through the Silver Notice, Interpol member States will be able to request information about a particular person's assets linked to criminal activities. The Silver Notice facilitates the location, identification, and gathering of information on assets, including property, vehicles, financial accounts and businesses. States can subsequently use this information as a basis for bilateral engagements, including the seizure, confiscation, or recovery of these assets, in accordance with national legislation. III. Legal regime Interpol recently made public the legal framework governing the Silver Notice pilot project: a) Applicable standards The first part sets out the general legal framework applicable: • Articles 2 and 3 of the Interpol’s Constitution; • Articles 10 to 18, 73 to 81 and 97 to 100 of the Interpol’s Data Processing Rules; • All the rules governing the work of the Interpol File Control Commission also apply, in particular, the aforementioned Constitution and the CCF Statutes. b) Special rules The second part of the Silver Notice legal regime lays down specific rules for its diffusion during the pilot project. Article 1 indicates the objectives of the Silver Notices, which may be published at the request of a National Central Bureau (NCB) for the following purposes: to locate assets, to identify them, to obtain information about assets or to monitor them discreetly and/or continuously. Requests and the sharing of information serve the purpose of criminal or civil confiscation of the assets, which may be carried out on a basis of post-conviction or non-conviction-based forfeiture. However, during the pilot phase, the Silver Notice should only be used for non-coercive measures, such as requesting and sharing information, in order to facilitate bilateral cooperation. Article 2 sets out the specific conditions for the publication and circulation of Silver Notices: • Firstly, there are cumulative minimum criteria that must be met for one of these notices to be issued: (i) it must relate to a natural person who is subject to a criminal investigation; (ii) it can only be published in relation to serious crimes punishable by deprivation of liberty of at least four years, in accordance with Article 2(b) of the United Nations Convention against Transnational Organised Crime; • Secondly, there is a set of minimum data essential for the Silver Notice to be issued: (i) on the one hand, it requires data identifying the person, such as first name, surname, sex, date of birth, and a physical description or good quality photograph; (ii) on the other hand, it requires judicial data relating to the ongoing criminal investigation, such as a summary of the facts of the case, a valid judicial reference relating to a natural person who is subject to criminal investigation that indicates that person’s assets, the charge, and the law covering the offense; • Finally, Interpol clarifies that Silver Notice extracts will not be published on the organisation’s public website. Finally, Article 3 clarifies the measures to be taken once the assets have been located. The State where the asset is located must inform the requesting NCB and the General Secretariat and must provide information on the procedures that the requesting State must adopt. The requesting NCB then ensures the rapid transmission of the data and documents requested by the State where the asset has been located. Subsequently, the General Secretariat provides due assistance to the competent NCB, in particular by facilitating the transfer of documents related to the decision to monitor, retain or confiscate the assets, in accordance with national rules or applicable international treaties. Tiago da Costa Andrade Edgar da Silva Palma Mário Sousa Ribeiro This publication is purely informational and is not meant to be a source of legal advice, nor does it contain a comprehensive review of all aspects of the law and practice referred to. The information contained herein refers to the date of first publication, readers being warned to take legal advice before applying it to specific issues or transactions. The contents of this publication may not be copied, disclosed or distributed in whole or in part without prior consent. For more information please contact us at [email protected].

On 24 March 2025, Decree-Laws nos. 33/2025, 34/2025, and 35/2025, were published, amending the VAT Code, the Special Regime for Second-hand Goods, Works of Art, Collectors’ Items and Antiques, the Cash Accounting Scheme, the VAT Regime for Intra-Community Transactions, and complementary legislation, and the Personal Income Tax Code (PIT). I. Decree-Law no. 33/2025: Partial Transposition of Article 1 of Directive (EU) 2022/542 – Amendments to the VAT Code and the Special Regime for Second-hand Goods, Works of Art, Collectors’ Items and Antiques Decree-Law no. 33/2025, of March 24, partially transposed Article 1 of Directive (EU) 2022/542 of the Council, April 5, 2022. Accordingly, this Decree-Law amended Articles 6 and 18 of the VAT Code, introducing a modification to the location rules applicable to the provision of services of cultural, artistic, sporting, scientific, educational, entertainment and similar services when participation in such events occurs virtually or through live streaming activities. According to the new rules, when such services are provided to VAT-taxable persons, taxation will take place in the location where the recipient has their business establishment, fixed establishment, or domicile to which the services are supplied. In the case of services provided to non-VAT taxable persons, these services will be taxed at the place where the recipient is established, has their domicile, or habitual residence. However, if the services are provided to a person established or domiciled in another Member State, Portugal may tax those services, provided their effective use or enjoyment takes place within Portuguese territory. For taxation purposes in Portugal, the effective use or enjoyment of the services is considered to occur within the national territory when the recipient's physical presence is required for the provision of the services. This Decree-Law also amended the special VAT scheme for second-hand goods, works of art, collectors’ items, and antiques, established in the annex to Decree-Law no. 199/96 of October 18. Under the new rules, it is no longer possible to opt for the margin scheme when the works of art, collectors’ items, or antiques that the reseller intends to include in this scheme have been acquired or imported at a reduced VAT rate. The Decree-Law also includes a transitional provision for resellers of works of art. Those who have opted for the special VAT scheme for second-hand goods, works of art, collectors’ items, and antiques may continue to deduct the VAT paid on the acquisition of such goods at the reduced rate until the entry into force of the Decree-Law (March 29, 2025). The deductible tax calculated in such manner is subject to deduction until the end of the following period, corresponding to the month of April 2025 or the following quarter of 2025, depending on whether the VAT is reported monthly or quarterly. II. Decree-Law no. 34/2025: Extension of the Scope of the VAT Cash Accounting Scheme Decree-Law no. 34/2025, of March 24, introduced changes to the VAT Cash Accounting Scheme, expanding its application to VAT-taxable persons whose annual turnover does not exceed EUR 2 000 000 (previously, the limit was set at EUR 500 000). As a result, the VAT Cash Accounting Scheme is now available to taxable persons who meet the following requirements: • Annual turnover in the previous calendar year equal to or less than EUR 2 000 000; • Do not engage exclusively in an activity listed under Article 9 of the VAT Code; • Do not benefit from a VAT exemption or fall under the scheme for small retailers. This change enables a greater number of economic operators to benefit from the scheme, thus fulfilling its primary objective: to enhance companies’ financial positions by mitigating the cash flow impact of paying VAT to the State prior to receiving payment. This Decree-Law will come into effect on 1 July 2025. III. Decree-Law no. 35/2025: Amendments to the VAT Exemption Scheme for Small Companies Decree-Law no. 35/2025, dated March 24, partially transposes into Portuguese law Article 1 of the Directive (EU) 2020/285 of February 18, 2020 and Article 2 of the Directive (EU) 2022/542 of the Council, April 5, 2022, introducing amendments to the VAT Code, the VAT Regime for Intra-Community Transactions, and complementary legislation, as well as to the PIT, within the scope of the VAT exemption scheme applicable to small companies. The amendments introduced to the special VAT exemption regime in Portugal now allow micro-companies with organized accounting, as well as taxable persons who carry out imports and supplies of goods or services listed in Annex E of the VAT Code, to benefit from this regime. The new rules also allow small companies in the European Union with an annual turnover in the European Union not exceeding EUR 100 000 to benefit from the VAT exemption regime, even if they are not established in the Member State where the transactions take place, provided they meet the conditions set out for operators in those Member States. Until now, this regime applied only to companies established in the Member States where the tax was due. Thus, the following taxable persons can benefit from this regime: • Taxable persons with their place of establishment or permanent address in Portugal who, while not carrying out export transactions or related activities, have not achieved an annual turnover in national territory of more than EUR 15 000 in the previous calendar year. • Taxable persons with place of establishment or permanent address in other Member States, provided that: o Their annual turnover in the European Union does not exceed EUR 100 000; o Notify the Member States where they are established of their intention to benefit from the exemption in Portugal; o They obtain an individual identification number with the suffix “EX”. By fulfilling these conditions, they will be able to benefit from the exemption regime on other Member States for transactions carried out therein. This new regime introduces new reporting obligations, especially for taxable persons wishing to benefit from the exemption in other Member States. To this end, taxable persons must: • Notify the Tax Authority (AT), which will assign them an individual identification number with the suffix “EX”, which will only be used for transactions in exempt Member States, remaining registered for VAT purposes exclusively in Portugal; • Provide information on turnover in Portugal and in the other Member States in the calendar year prior to the one in which they wish to benefit from the exemption and in the current calendar year; • Submit electronically to the AT a quarterly declaration with the value of the transactions carried out, both in Portugal and in the other Member States. The application of the regime ceases for taxable persons established in Portugal or in other Member States in the following situations: • When, in the previous calendar year, the annual turnover in Portugal exceeds the exemption threshold of EUR 15 000; • When, in the current calendar year, this threshold is exceeded by more than 25%, i.e. it exceeds EUR 18 750; • When any of the other conditions laid down for the application of the scheme to taxable persons with their place of establishment or permanent address in Portugal cease to apply. Without prejudice to the above, application of the exemption scheme ceases for VAT-taxable persons not established in Portugal when, either in the previous calendar year or in the current calendar year, their annual turnover in the European Union exceeds EUR 100 000. It should be noted that if a company with place of establishment or permanent address in Portugal is covered by the VAT exemption scheme and exceeds the turnover threshold in the European Union due to activities carried out in other Member States, it can continue to benefit from the exemption scheme in Portugal, provided that the turnover in national territory remains below the stipulated threshold. Taxable persons covered by this exemption scheme, whether established in Portugal or not, do not charge VAT on the transfer of goods and provision of services, nor can they deduct the VAT incurred in carrying out exempt activities. On the other hand, taxable persons with their place of establishment or permanent address in Portugal, under the normal tax regime, who benefit from the small companies exemption regime in other Member States, in transactions carried out on those countries, cannot deduct the VAT incurred in Portugal for carrying out exempt activities in those Member States. In addition, the new regime also brings simplifications for VAT-taxable persons who are individuals. These persons may, if they do not have or are not required to have organized accounting, choose the option to issue invoices through the applications provided by the AT, and are exempt from the obligation to maintain a record book for VAT and PIT purposes. This Decree-Law also establishes important transitional provisions, including: • For taxable persons with their place of establishment or permanent address in other Member State, who are subject to the special exemption regime, they will no longer be able to benefit from the regime starting from 1 July 2025. For this purpose, they must submit a declaration of cessation of activity in the national territory; • For taxable persons with their place of establishment or permanent address in Portugal, who are not exempt, and who wish to apply this regime, they must submit an amendment declaration to the declaration related to the start of activity during the month of June 2025, with effect from July 1, 2025. However, if in the first half of 2025 the taxable person exceeds a turnover of EUR 18 750, the application of the exemption regime will no longer be possible. Morais Leitão tax team is available for any further clarification on this matter. António Côrte-Real Neves Pedro Soares da Silva This publication is purely informational and is not meant to be a source of legal advice, nor does it contain a comprehensive review of all aspects of the law and practice referred to. The information contained herein refers to the date of first publication, readers being warned to take legal advice before applying it to specific issues or transactions. The contents of this publication may not be copied, disclosed or distributed in whole or in part without prior consent. For more information please contact us at [email protected].

Background Russia’s military aggression against Ukraine has marked the dramatic return of territorial conflict and high-intensity warfare on European soil. This structural change in the European security and defence and European geopolitics, has led European Union (EU) Member States to rethink their defence plans and capacities. The EU Heads of State or Government, meeting in Versailles on 10 and 11 March 2022, committed to “bolster European defence capabilities”. These aims were reiterated in the Strategic Compass for Security and Defence. The EU has adopted two emergency instruments to face the immediate consequences of Russia’s war of aggression against Ukraine, namely the Regulation establishing an instrument for the reinforcement of the European defence industry through common procurement (EDIRPA) and the Regulation on supporting ammunition production (ASAP). On March 2023, the European Commission and High Representative also presented a European Defence Industrial Strategy (EDIS) which highlighted that EU Member States were still buying predominantly alone and from abroad. This observation was confirmed by the report on the future of European competitiveness, authored by Professor Mario Draghi. EDIS consequently underlined the need for Member States to spend more, better, together and European in order to reverse negative trends affecting the European Defence Technological and Industrial Base (EDTIB) and effectively enhance the EU’s defence industrial readiness. In this context, the European Commission presented a five-pillar ReArm Europe Plan to the European Council on 6 March 2025. It aims to address the urgency of the situation by unlocking up to EUR 800 billion. This framework has now led to a Council proposal, dated 19 March 2025, for a Regulation, with a EUR 150 billion funding, aiming at mobilising the Union budget to support and accelerate national investments through a new financial EU instrument: the Regulation establishing the Security Action For Europe (SAFE) through the reinforcement of the European defence industry instrument. Key Insights of the SAFE Regulation proposal The SAFE lays down the rules on simplified and accelerated common procurement procedures for the acquisition of defence products and other products for defence purposes belonging to the following categories: ammunition and missiles; artillery systems; small drones (NATO class 1) and related anti-drone systems; critical infrastructure protection; cyber and military mobility; air and missile defence; drones other than small drones (NATO class 2 and 3) and related anti-drone systems; strategic enablers; space assets protection; artificial intelligence and electronic warfare. SAFE provides financial assistance to Member States for activities, expenditures and measures related to defence products carried out through common procurement aiming at: speeding up, in a collaborative manner, the adjustment of the defence industry to structural changes, including through the creation and ramp-up of its manufacturing capacities as well as related supporting activities; improving the timely availability of defence products, including through the reduction of their delivery lead time, reservation of manufacturing slots or stockpiling of defence products, intermediate products or raw materials. The financial assistance takes the form of loans granted by the Union to the Member States, totalling EUR 150 billion of financial assistance; Member States wishing to receive financial assistance under the SAFE must submit a European Defence Industry Investment Plan to the Commission within six months as of the entry into force of the SAFE; The SAFE provides for the participation conditions for contractors and subcontractors involved in the common procurement. As a rule, contractors and subcontractors at stake shall be established and have their executive management structures in the Union, EEA EFTA States or Ukraine. Third country contractors are subject to a screening procedure, appropriate mitigating measures or, if applicable, guarantees, under a standardised template provided by the Commission; To facilitate the exchange of classified information and sensitive information between the Commission and the Member States and, where appropriate, with the contractors or other final recipients, the Commission shall implement a secured exchange information system. Next Steps SAFE regulation approval by the Council; The Commission will launch a call for expressions of interest, requesting interested Member States to provide, within a two-month period, a target for the financial assistance requested as well as an indicative maximum and minimum loan amount; The Commission shall afterwards notify the interested Member States, within two weeks, about the allocations of the loan amounts available to each Member State. Beyond the matter addressed in this Legal Alert, Morais Leitão continues to closely monitor all legal instruments related to the EU Defence sector. Eduardo Maia Cadete Dzhamil Oda This publication is purely informational and is not meant to be a source of legal advice, nor does it contain a comprehensive review of all aspects of the law and practice referred to. The information contained herein refers to the date of first publication, readers being warned to take legal advice before applying it to specific issues or transactions. The contents of this publication may not be copied, disclosed or distributed in whole or in part without prior consent. For more information please contact us at [email protected].