P2P Lending in Portugal

July 31st, 2020
8 minutes read

The Portuguese Market for Crowdfunding

According to data from the latest report by Cambridge Centre for Alternative Finance (CCAF) on the global market of alternative finance and crowdfunding, Portugal had a total funding volume of €14.8 million in 2018, up from €8.3 million in 2017, which corresponds to a growth rate of 69.0%. This places Portugal’s crowdfunding market as number 30 in Europe and as number 64 in the worldwide crowdfunding statistics. Thus, especially for its size, Portugal’s crowdfunding is very small and still has plenty of room for further growth. The countries topping the list in Europe are the United Kingdom, the Netherlands, Germany, France, and Italy.

Best Peer-to-Peer Lending Platforms in Portugal

Here, you will find a list of the best peer-to-peer lending platforms in Portugal. When choosing the best peer-to-peer lending sites in a country we consider a variety of factors that you can find in the Methodology below.

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More P2P Lending Platforms in Portugal

Below, you will find a list of the remaining peer-to-peer lending platforms located in Portugal. If a new platform has been launched since this article was published and you do not see it here, please feel free to submit the platform by using the submit formula.

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Taxation on P2P Lending in Portugal

On most platforms in Portugal, the interest income earned is subject to a 28% withholding tax. The interest is taxed at the time it is earned, which means that investors receive the interest net of taxes. This is often not true for projects promoted by a non-Portuguese entity as income must here be paid as income earned in the resident tax country of the given entity. In such a case, investors will most likely receive the gross value of the loan. However, always remember to check the procedure of the platform where you invest.

To get a more in-depth overview of the Portuguese tax system for both companies and individuals, we can recommend this tax summary overview made by PwC.

Keep in mind that this should not be considered tax advice and can be outdated, why you should always contact a tax adviser when handling your taxes.

Regulation on Peer-to-Peer Lending and Crowdfunding in Portugal

Even though they might be on the way, there are no common rules for crowdfunding in the European Union. In 2015, Portugal therefore adopted their own legal framework for crowdfunding covering both lending-based crowdfunding/peer-to-peer lending and investment-based crowdfunding/equity crowdfunding.

Below, you will find an overview of some of the most important aspects of the regulatory framework for P2P lending platforms operating in Portugal. These highlights can also be found in a paper from 16 November 2018 published by the OECD Economics Department on Regulatory framework for the loan-based crowdfunding platforms.

  • Legal status for lending-based crowdfunding platforms: The legal framework for Crowdfunding is provided by Law no. 102/2015, of 24 August 2015. Law no. 3/2018, of 9 February 2018 establishes the sanctions applicable to the infringement of the crowdfunding rules. This Law covers both lending-based crowdfunding platforms and investment-based crowdfunding platforms. The crowdfunding platform itself is not a legal entity separated from the entity managing the platform which is the entity relevant for all legal purposes. The platform itself constitutes a “brand” rather than a legal entity. The entity managing a crowdfunding platform must be a legal person or an individual limited liability establishment.
  • Date of the legislation: The legislation entered into force in February 2018.
  • Name of the supervisor: This currently involves two persons.
  • Type of loan/debt security: There is no limitation as to the kind of loans or securities that can be made available by means of crowdfunding platforms.
  • Minimum capital requirements: The entities managing crowdfunding platforms must have (1) a minimum share capital of €50,000 or (2) a liability insurance for this specific activity or any equivalent warranty covering €1,000.000 per event and, globally, €1,500.000 for events occurred within periods of one year or (3) a mix of both that grants the investors the same type of protection and is accepted by CMVM.
  • Secondary market? There is no legal provision preventing this.
  • Provision fund allowed? There is no legal provision covering this subject matter.
  • Max size of loan: Maximum amounts applicable are €1,000.000 per year and per project and €5,000.000 if the offer is limited to legal persons, professional investors or individuals with an annual income equal or higher than €70,000.
  • Max invested amount: Individuals with an annual income inferior to €70,000 are subject to maximum investment limits: €3,000.00 per offer; and €10,000.00 in total crowdfunding investments during the period of 12 months.
  • Scoring model verified by the regulator: Risk models of platforms are being studied by the CMVM for supervision purposes only.
  • Collateral allowed? The is no legal provision for this. The answer is likely negative.
  • Access to credit information sharing scheme allowed?
  • Disclosure and risk warnings: All beneficiaries of crowdfunding are required to provide the platform with the following information to be made available online to investors:
    1. Information on the identification of the beneficiaries of crowdfunding: name, legal nature, contacts, address, identity of the members of the board.
    2. In respect of each offer:
      1. the description of the activity or product to be financed, and the purposes of the financing to be raised;
      2. the amount and term for the collection;
      3. the price of the values of each unit to be subscribed or the form of determination of this price. The information provided to investors must be complete, true, current, clear, objective and lawful, allowing its recipients to form sound judgments about the offer and the beneficiary of the investment.

Beneficiaries of crowdfunding in the form of capital or loan financing must also communicate to the platform, for the purpose of informing investors (making it available online) and the CMVM:

  1. All relevant financial information on the beneficiary entity, on compliance with its tax obligations and on its capital structure.
  2. All relevant information about the projects to be financed, including the associated risks, adequate and proportional to the amount of funding to be raised, in order to ensure the informed nature of the investment option.
  3. Submit annually to the CMVM and to the platforms with which they maintain a relationship in the framework of this law their activity reports, to be available for consultation by investors.
  4. All relevant information to guarantee that investors make an informed decision, including:
    • Information about their previous registration with the CMVM for the purposes of managing the crowdfunding in the form of capital or loan financing electronic platform;
    • Prior information on each offer, submitting a document containing the “key information for investors in crowdfunding investment” with all information necessary for the investor to make an informed decision. This document must contain: The complete identification of the beneficiary; In the case of legal persons, if available, balance sheet and management report of the beneficiary for the immediately preceding financial year; The essential characteristics of the activity or product concerned which enables investors to understand the nature and risks inherent in the product or activity to be financed; The costs and charges associated with the activity or product to be financed, as well as a brief substantiated description of the profitability expectations of the amounts invested; Details of the processing of the offer; The deadline for revocation of the acceptance by the recipients of the offer, when applicable; The timing and manner for the transfer of the amounts raised, in particular the subscription mechanisms, and also for the refund of the amounts invested if there is a collection higher than the amounts provided or if the amounts indicated are not raised and the to provide for the possibility of changing conditions under the rules of the applicable legal regime; Warning about the risk of partial or total loss of the amounts invested; Warning as to the risk of not verifying the estimated profitability of the amounts invested; Warning regarding liquidity risk or lack of secondary market for financial instruments or credits subscribed by investors; Warning that the products and activities to be financed through collaborative financing are not subject to authorisation or supervision by the CMVM or by any other financial supervisory authority, nor do these entities approve the information made available on them; Warning that the investment is not covered by the Investor Compensation Scheme unless it is derived from financial intermediation and verified the assumptions of its application; Warning that the capital invested is not guaranteed under the deposit guarantee fund; Warning that, in the case of issuance of financial instruments, the issue is not subject to CMVM supervision, the CMVM does not approve the information made available through the key information document; Warning that, in the case of loans, this activity is not supervised by Bank of Portugal and it does not approve the information made available through the key information document; Applicable tax regime;
    • Information on current offers including identification of the beneficiary, crowdfunding form, deadline, rate of remuneration, total amount of the offer, percentage of the amount raised, any credit ratings and guarantees provided, and any other materially relevant information on the terms and conditions of such operations;
    • Historical information on the projects financed, including the number of projects and respective amounts, broken down by type of crowdfunding and the situation in which the financing is found (financing not due, financing repaid on time and financing not repaid within the term), indicating the average rate of return and the average term of the loans;
    • Pricing;
    • Information on investor protection procedures that should be adopted in the event of insolvency, cessation of activity and prolonged inactivity by the managing entity of the crowdfunding electronic platform.
  • Do lenders have to pass a financial literacy test? No.
  • Business continuity requirements: Yes.
  • Can platforms invest in loans/securities that they facilitate? No.
  • Authorisation of platforms and professional requirements for applicants: The request includes (i) data on the platform – i.e. on the entity managing the platform, (ii) identification of the members of the board of directors, including data on education, experience and repute, (iii) identification of the persons/entities that control the platform or hold qualifying holdings, including data on experience and repute, (iv) accounts of the last three financial years, (v) business plan and description of the structure of the organization as well as of the human and technical support, (vi) business model, including description of the procedures regarding financial flows and/or subscription of securities, (vii) internal policies and procedures of the entity, namely on anti-money laundering (viii) date established for the beginning of operations. After receiving the request for registration and any additional information from the platform CMVM has 30 business days to make a decision and to grant the registration.
Methodology

At P2PMarketData we are dedicated to providing an unbiased overview of the Peer-to-Peer Lending market and platforms. Among other, in our mission to bring more transparency to the market for online lending we track over 70 platforms funding volumes.

When choosing the best platforms in a country we have considered a variety of factors such as:

  • Number of investors
  • Minimum investment requirement
  • Historical annual returns
  • Diversification opportunities
  • Reinvestment opportunities
  • Educational and informational offerings
  • Platform fees
  • Total capital invested
  • Features (such as secondary market and automatic investing)
  • General transparency (the difficulty of finding who the owners are, how they make money on the platform (fees), terms & conditions and more)
  • Management team

We also look into the company’s online reputation (for example customer reviews, news, complaints, average monthly searches and social media).