Foreign exchange authority

Banco de Portugal is the foreign exchange authority of the Portuguese Republic (Art. 20 of the Organic Law). As such, the Bank shall be particularly responsible for the licensing and controlling of external payments whenever required in accordance with the Treaty establishing the European Community and the definition of the principles governing gold and foreign exchange operations.

Decree-Law No 295/2003 of 21 November regulates external economic and financial operations (defined as acts and businesses irrespective of their nature, which give rise or may give rise to receipts or payments between residents and non-residents), as well as foreign exchange operations (which are basically considered the buying and selling of foreign currency and transfers from or to foreign countries denominated in foreign currency).

In line with the Treaty, the conduct and settlement of external economic and financial operations may be carried out freely, without prejudice to any exceptions on the grounds of serious political reasons or urgency.

The general principle of intermediation by an entity authorised to carry out foreign exchange activities applies to foreign exchange operations. However, residents may directly carry out their payments/receipts to/from non-residents or extinguish their obligations towards non-residents using any means of payment denominated in foreign currency. Residents may also incur debts or grant loans among themselves in foreign currency or in units of account used in international payments and clearing.

In this context, accounts may be freely opened and operated with authorised institutions in the national territory, in the name of residents, denominated in foreign currency, gold or in units of account, as well as in the name of non-residents, denominated in euros, foreign currency, gold or in units of account. The opening and operation of accounts by residents with non-resident institutions is also free.

Decree-Law No. 61/2007 has introduced some changes in Decree-Law No 295/2003, namely establishing that natural persons, entering or leaving the national territory, originating or terminating in a territory outside the European Community, carrying an amount of cash equal to or exceeding €10 000 shall declare said amount to the Customs authorities. If these cash movements are carried out with European Union Member States, the amount carried shall be declared if requested by said authorities. Regarding the implementation of Decree-Law No 295/2003, Banco de Portugal is entrusted with the investigation, instruction and decision on proceedings relating to breaches of foreign exchange regulations, as well as the inclusion in a special registry of contracts for the carrying out of currency‑changing transactions by non-financial institutions (see Notice No 13/2003). In relation to foreign exchange markets, Notice No 1/99 determines, in particular:   

• That exchange rates  and applicable fees may be freely negociated when buying and selling foreign currencies; 

• That, for information purposes, Banco de Portugal shall publish euro reference exchange rates on a daily basis (which are the responsibility of the European Central Bank) and may also publish similar rates for an additional set of currencies;

• That entities carrying out foreign exchange activities shall visibly display updated information on exchange rates and fees and commissions charged on foreign exchange operations.