Practice Areas: Public and Environment

Industries: Mining

Portugal Mining and Minerals: Legal Regime, Incentives and Taxation in Portugal


According to the regulatory agency for the mining sector, Directorate-General for Geology and Energy (the “DGEG”, in Portuguese), in July 2019, there were 36 exploitation agreements and 23 prospection and exploration agreements on going across the country. These impressive numbers may justify the strong contribution of the mining sector on the Portuguese economy and exports, which according with the recent information released by the Portuguese Institute of Statistics (INE), contributed circa €900 million in Portuguese exports in January 2020, equivalent to 8,8% of the total exports of Portugal.


Mining is therefore a relevant economic activity in Portugal and a priority for the Portuguese Government.



As a rule, the Portuguese State has full ownership rights of all mineral resources located in the soil, subsoil, territorial waters, Exclusive Economic Zone (the “Portuguese EEZ”) and continental platforms[1].

Mining activities comprise the prospection, exploration and exploitation of geological resources existing in the earth crust and on the territorial sea and is governed by Law 54/2015, of June 22 (“Law 54/15”), with the exception of petroleum, and by Decree-Law 88/90, of March 16 1990, specifically defining provisions regarding ore deposits (“DL 88/90”) including all metallic and radioactive ores, coal, graphite, pyrites, phosphate, asbestos, talcum, kaolin, diatomite, quartz, feldspar, precious and semi-precious stones, potassium salts and rock-salt, as well as the respective mineralogy industrial facilities, extractive metallurgy and trade and transit of minerals.

DL 88/90 divides the mining activity in two main subgroups (i) Prospection and Exploration; and (ii) Mining exploitation (in this case including the production, manufacturing, trade and other activities set forth in the concession agreement), allowing the concessionaire to develop both activities, under a sole agreement. The rights to develop such activities are, as a rule, subject to public tender procedures and the execution of concession agreements. The Government may also directly grant concession rights under certain terms and conditions set forth in the law.


Pursuant to the applicable legal provisions, the following definitions should be considered:

  • Mine” includes the agglomeration of the mineral deposits covered by the concession, the mining annexes, the works and the immovable assets used in the exploitation of the Mine.
  • Prospection and Exploration” includes the activities aiming at the discovery of mineral occurrences and the determination of their characteristics until verification of economic discovery (exploitation activities).
  • Exploitation” covers the activities following prospection and exploration, involving the recognition, preparation and extraction of raw ore, as well as its treatment and transformation.


The law sets forth four different sets of mining rights, which may be granted:

  1. Prior assessment rights to be applied for by any interested party willing to research and develop studies regarding metallic mineral resources which will allow a better knowledge of the geological potential of a given area. These rights are granted for a one year period and may not be extended;
  2. Prospection and Exploration rights granted by means of the execution of an administrative agreement, regarding mineral deposits and granted for maximum five-year term (including possible extensions), following a public tender procedure or a private application by an interested party;
  3. Experimental Exploitation rights which may granted for a maximum period of five years by means of the execution of an administrative agreement with the State allowing the holder of such mining rights to develop already identified mining resources but regarding which there are no clear conditions that allow progressing into a full exploitation stage; and
  4. Exploitation Rights or the definitive concession for exploitation of mining resources (appraisal, development and production contract) which is granted to the holder of previous mining rights through which the resources have been revealed. This contract has a maximum term of 90 years (including possible extensions).


Within the framework of the exploitation rights, the holder is entitled to several rights such as to: (i) explore the resources and trade all products arisen from such exploitation; (ii) use the waters and the available public domain assets; (iii) execute outsourcing agreements for special assignments which cannot be deemed or interpreted as transferring of the concessionaire position; (iv) request the compulsory acquisition for public purposes of real estate necessary for the prosecution of the exploitation activity or the creation of easements. 

Mining rights referred in b) and d) require the compatibility of the envisaged mining activity with existing zoning requirements, public easements and other State or administrative restrictions and, in principle, an environmental impact study will have to be carried out.  

The geological resources industry is under the supervision of the Energy and Geology and, in case of competition matters, the Competition Authority.



  1. Foreign Investment

There are no restrictions to the entry of foreign capitals or any investment discrimination. Also, it is not mandatory to have a national partner and there are no specific obligations to the foreign investors.


  1. Tax incentives for productive investment

Tax incentives are available for investments of at least € 3.000.000,00, executed until the end of 2020, which are regarded as relevant for the development of business sectors important for the national economy and the reduction of regional asymmetries, creating jobs and enhancing technological innovation and national scientific innovation. The incentives, granted for a maximum period of 10 years, may include a 10% to 25% Corporate Income Tax credit and an exemption from, or reduction of, Property Tax, Transfer Tax and Stamp Duty. Incentives are available for R&D investment, exemption on capital gains realized by non-investors and on income related to securities.



  1. Dividends

Dividends paid to a non-resident without a permanent establishment in Portugal are subject to a 25% withholding tax. The rate is of 35% if the payee is subject to a more privileged tax regime (according to a list published by the Ministry of Finance that follows closely the OECD list). There are no specific restrictions on the payment of dividends or repayment of shareholders loans to a foreign shareholder.


  1. Parent Subsidiary Directive

In accordance with the Parent Subsidiary Directive[2], dividends paid to an EU shareholder, are exempt from withholding tax, provided that the beneficiary holds, directly, at least 10% of the Portuguese subsidiary for a minimum uninterrupted period of 1 year before the distribution date. 


  1. Interest and Royalties

Interest payments to non-resident companies without a permanent establishment in Portugal are normally subject to withholding tax of 25%. The rate is of 35% if the payees are subject to a more privileged tax regime.  Royalty payments (including fees for technical assistance, know-how and leasing of equipment) to non-residents without a permanent establishment in Portugal are generally subject to a withholding tax of 25% (35% if paid to entities subject to a more privileged tax regime).

In accordance with the Interest and Royalties Directive[3], the payment of interest and royalties to EU and Swiss residents is exempt from withholding tax provided that: (i) both debtor and beneficiary are incorporated under a legal form foreseen in the Annex to the Directive; (ii) both are subject to income tax, without the possibility of being exempt; and (iii) there is a direct participation of 25% or more between those companies, or they are both owned in 25% or more by a third company, which complies with the above conditions. Furthermore a minimum 2-year holding period has to be fulfilled.

Currently royalties over production with reference to mine mouth value apply pursuant to the percentage agreed within the concession contracts. Our experience shows that the exploitation charge is usually periodic as a consideration for the extraction of minerals and calculated with reference to the market value of the metals sold in each quarter. Discounts may be available pursuant to investments made by the concessionaire in investigation, local or regional responsibility and/or environmental programmes.


  1. Restrictions, fees or taxes relating to the export of minerals

The export of minerals out of the European Union (EU) must comply with the general procedures set out in the Community Customs Code.  The transportation of minerals between EU Member-States is assimilated to intracommunity trade and is thus exempt from customs constraints.


  1. Expected Developments

 In 2012 the Government approved a Strategy for the Exploitation of Geological Resources (Resolution 78/2012 published on September, 11 2012) with the aim of boosting the mining sector including  a re-definition of the types of contracts and clarification of pre-contractual rules and the anticipation of off-shore mining activities, namely in the Portuguese EEZ. This Strategy also fosters the sustainable development of the mining industry through corporate social responsibility projects towards the integration and development of local communities, creation of an ad valorem royalty, with a progressive rate considering each ore, and of a royalty on the profits with a fixed rate.


Part of the foregoing was included in Law 54/2015, also applicable to the Portuguese EEZ. This law brings new guidelines for the contracts, the rights for the previous evaluation, exploration, experimental and definitive operation rights as well as  the monitoring and controlling of such activities by the competent authority (the Directorate-General for Geology and Energy - DGEG).

In the recent past, there has been a strong interest of both the government and industry players for the Portuguese lithium reserves, revealed as one of the biggest lithium reserves of Europe.

In 2018, following the issue of a report on the high potential of lithium resources and its industrial applicability’s, the Government approved Resolution 11/2018, of January, 31 (known as “Lithium strategy”) with a view to boost the launching of public tenders for the award of the exploitation of such resources but more than that, envisaging to develop in Portugal the processing of such resources for their industrial use.

Lithium has been clearly identified as a top priority in the sector and the State Budget for 2020 stresses the willingness of the Government to create a lithium cluster in the country not only covering the exploitation of such mining resources but also more added value segments and activities associated with its processing, transformation and industrial use.



[1] The law provides an exception to certain residual mining resources regarding which there may be private property rights and other in rem rights.

[2] Council Directive 90/435/CEE, of 23rd July, 1990

[3] Council Directive 2003/49/EC, of 3 June.

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