You are here

Frequently Asked Questions – Brexit

NB: Following the decisions adopted by the European Council on 22 March and 11 April 2019, reference to the United Kingdom’s withdrawal from the EU on 29 March and 12 April should be read as 31 October 2019, in the absence of a ratified Withdrawal Agreement.

In line with the decision adopted by the European Council on 11 April 2019, should the Withdrawal Agreement be ratified at any stage before 31 October 2019, the withdrawal of the United Kingdom from the EU will take place on the first day of the month following the completion of the ratification procedures.

 

Rules on authorisations to carry out financial activities in Portugal

Banco de Portugal has developed a set of answers to frequently asked questions (FAQs) for entities that carry out, or intend to carry out, activities in Portugal subject to prior authorisation from Banco de Portugal. These entities include credit institutions, investment firms, payment institutions and electronic money institutions, which operate in Portugal through branches or under the freedom to provide services and whose operations may be affected by the United Kingdom´s (UK) withdrawal from the European Union (EU). Payment institutions and electronic money institutions can still operate in Portugal through the use of agents or electronic money distributors.

The UK’s withdrawal from the EU, set for 29 March 2019, means that entities with their head offices in that member state will lose free access to the EU market (establishment of branches and freedom to provide services, and as well via networks of agents or electronic money distributors), as, in the absence of an agreed transition period, the UK will become a third country for the EU.

 

These FAQs are no substitute for consulting the relevant legal texts in force.

 

1. Will institutions with headquarters in the UK be able to continue to provide financial services in Portugal following the UK’s withdrawal from the EU?

2. For institutions with headquarters in the UK that wish to continue operating in Portugal and whose activities are supervised by Banco de Portugal, are applications for authorisation automatic?

3. For entities having ongoing applications for authorisation with Banco de Portugal at the time of the UK’s withdrawal from the EU, will there be a temporary authorisations regime in place, so that entities currently operating in Portugal are able to continue to do so until Banco de Portugal decides on the applications for authorisation?

4. What are the rules that govern the authorisation processes regarding third country entities that wish to provide financial services in Portugal?


1. Will institutions with headquarters in the UK be able to continue to provide financial services in Portugal following the UK’s withdrawal from the EU?

The current rules on market access will remain temporarily in force if a deal (once formally approved and ratified) is secured between the EU and the UK, establishing a transition period. After the transition period, EU law will cease to apply to the UK.

In a no-deal scenario, institutions with headquarters in the UK will be considered third country entities. In this case, if institutions wish to start or continue to provide financial services in Portugal, they must apply for authorisation and registration with Banco de Portugal, according to the framework described under question 4.

Alternatively, institutions with headquarters in the UK with a subsidiary in the European Economic Area (EEA, comprising EU Member States, Norway, Iceland and Liechtenstein), may, via this subsidiary, exercise the right of establishment and the freedom to provide services to carry out activities and provide financial services in Portugal (after notifying the competent authority of the country where the subsidiary is established of the intention to carry out activities in Portugal).

 

2. For institutions with headquarters in the UK that wish to continue operating in Portugal and whose activities are supervised by Banco de Portugal, are applications for authorisation automatic?

No. Entities that wish to continue to operate in Portugal must submit their applications for authorisation to Banco de Portugal, as described under question 4, having particular attention to rules relating to time limits.

 

3. For entities having ongoing applications for authorisation with Banco de Portugal at the time of the UK’s withdrawal from the EU, will there be a temporary authorisations regime in place, so that entities currently operating in Portugal are able to continue to do so until Banco de Portugal decides on the applications for authorisation?

A temporary authorisations regime is not foreseen to be in place for entities operating in Portugal with ongoing applications for authorisation with Banco de Portugal at the time of UK’s withdrawal from the EU.

For more information, see under question 1.  

 

4. What are the rules that govern the authorisation processes regarding third country entities that wish to provide financial services in Portugal?

Applicable rules on this matter are conditional on the type of entity and the legal form under which these entities intend to operate in Portugal. The following situations may occur. 

 

Credit institutions

Credit institutions with headquarters in a third country that wish to carry out activities in Portugal may:

  • Set up a subsidiary. In this case, the credit institution must submit an application for authorisation and registration with Banco de Portugal. The application for authorisation should be accompanied by the documents listed in Article 17 of the Legal Framework of Credit Institutions and Financial Companies (Portuguese acronym: RGICSF). The credit institution authorisation process lasts for six months from the date when Banco de Portugal receives all necessary evidence and information related to the compilation of the application file, and up to 12 months of the initial application. Although the application must be submitted to Banco de Portugal, the European Central Bank is the competent authority to grant authorisations to credit institutions, under the remit of the Single Supervisory Mechanism.
  • Establish a branch. For the establishment of a branch of a third country credit institution, the competent authority of the said third country must send a communication (accompanied by the application for authorisation) setting out all the items listed in Article 17 (3), Article 49 and Article 58 (2) of the RGICSF to Banco de Portugal. Articles 45, 57 (2), and 59 are also relevant for the carrying out of activities by third country branches in Portugal. The branch authorisation process lasts for six months from the date when Banco de Portugal receives all necessary evidence and information related to the compilation of the application file, and up to 12 months of the initial application.
  • Establish a branch, under the European passport scheme, in case there is already a subsidiary in a EU Member State or in a EEA member country. If a credit institution with headquarters in a third country has a subsidiary in a EU Member State or a EEA member country, it may send to the competent authorities of the subsidiary's home Member State a branch passport notification, via the aforementioned subsidiary. Unless the competent authorities of the home Member State have reasons to doubt the adequacy of the administrative structure or the financial situation of the credit institution, taking into account the activities envisaged, authorities must, within three months of receiving the information sent by the credit institution, communicate it to Banco de Portugal. Before the branch of a credit institution commences business, Banco de Portugal must, within two months of receiving that information from the competent authorities of the home Member State, prepare for the supervision of the credit institution and, if necessary, indicate the conditions under which those activities may be carried out in Portugal.
  • Carry on business under the freedom to provide services, in case there is already a subsidiary in a EU Member State or in a EEA member country. If a credit institution with headquarters in a third country has a subsidiary in a EU Member State or in a EEA member country, it may send a notification of intent to conduct business in Portugal, under the freedom to provide services, to the competent authorities of the subsidiary’s home Member State. The competent authorities of the home Member State must communicate the information submitted by the credit institution to Banco de Portugal, within one month of receipt of this information.

 

Investment firms

Investment firms with headquarters in a third country that wish to carry out activities in Portugal may:

  • Set up a subsidiary. To this end, the investment firm must submit an application for authorisation and registration with Banco de Portugal. The application for authorisation should be accompanied by the items listed in Article 17 of RGICSF, with due note to Article 199-C of RGICSF. The investment firm authorisation process lasts for six months from the date when Banco de Portugal receives all necessary evidence and information related to the compilation of the application file, and up to 12 months of the initial application.
  • Establish a branch. For the establishment of a branch of a third country investment firm, the home country’s competent authority must send a communication setting out all the items listed in Article 199-FB (4), Article 58 (2) and Article 49 of RGICSF to Banco de Portugal. The conditions set out in Article 199-FA of RGICSF must also be met. The branch authorisation process lasts for six months from the date when Banco de Portugal receives all necessary evidence and information related to the compilation of the application file.
  • Establish a branch, under the European passport scheme, in case there is already a subsidiary in a EU Member State or in a EEA member country. If an investment firm with headquarters in a third country has a subsidiary in a EU Member State or a EEA member country, it may send to the competent authorities of the subsidiary's home Member State a branch passport notification via the aforementioned subsidiary, setting out the items listed in Article 49 (1) of RGICSF, other than those provided for in subparagraphs (d), (e) and (f), subject to Article 199-E of RGICSF. The competent authorities of the subsidiary’s home Member State must submit a passport notification to the Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários – CMVM).
  • Carry on business under the freedom to provide services, in case there is already a subsidiary in a EU Member State or in a EEA member country. If an investment firm with headquarters in a third country has a subsidiary in a EU Member State or in an EEA member country, it may send a notification of intent to conduct business in Portugal, under the freedom to provide services, to the competent authorities of the subsidiary’s home Member State, via the aforementioned subsidiary, which must then submit the notification to CMVM.
  • Provide services at the exclusive initiative of the client. The authorisation requirement referred to in Article 199-FB of RGICSF shall not apply to third country investment firms that provide services due to the exclusive initiative of the client, whether these are professional or retail clients, within the meaning of the Portuguese Securities Code (Article 199-FD of RGICSF). The restrictions provided for by the article 199-FD of the RGICSF must be fully complied with.

 

Payment institutions and electronic money institutions

Payment institutions and electronic money institutions with headquarters in a third-country that wish to carry out activities in Portugal may:

  • Set up a subsidiary. To this end, the institution must submit an application for authorisation and registration with Banco de Portugal. The application for authorisation should be accompanied by the items listed in Article 19 of the Legal Framework for Payment Services and Electronic Money (Portuguese acronym: RJSPME). The payment institution/electronic money institution authorisation process lasts for three months from the date when Banco de Portugal receives all necessary evidence and information related to the compilation of the application file, and up to 12 months of the initial application (Article 23 of RJSPME).
  • Establish a branch (only permitted in the case of electronic money institutions). Portuguese law does not allow for the establishment in Portugal of a branch of third country payment institutions. It does, however, provide for the establishment of branches of third country electronic money institutions, under the scheme envisaged in Article 47 of RJSPME. For the establishment of a branch of a third country electronic money institution, the competent authority of the home country must send a communication setting out all the items listed in Article 49 (1) and Article 58 (2) of RGICSF, mutatis mutandis, to Banco de Portugal. The branch authorisation process lasts for three months from the date when Banco de Portugal receives all necessary evidence and information related to the compilation of the application file, and up to 12 months of the initial application. 
  • Estabelecer uma sucursal, contratar agente ou distribuidor de moeda eletrónica, ou exercer atividade em regime de livre prestação de serviços ao abrigo do regime de “passaporte”, no caso de essa instituição possuir uma filial na União EuropeiEstablish a branch, use agents or electronic money distributors, or carry out activities under the freedom to provide services through the European passport scheme, if these entities already have a subsidiary in the EU. In this case, the payment institution or electronic money institution, via its subsidiary established in a EU Member State, may send to the competent authorities of the subsidiary's home Member State a passport notification to provide services in Portugal, either under the freedom to provide services or the freedom of establishing a branch, the use of agents or electronic money distributors, provided that these services are covered by the authorisation granted to the subsidiary. Within one month of receipt of all necessary information, the competent authorities of the home Member State must send it to Banco de Portugal. Within one month of receipt of the information by the home Member State’s competent authorities, Banco de Portugal must assess the aforementioned information and provide all relevant information for the provision of services as set out by the institution to the competent authorities of the home Member State.

 

Collective Investment Management Companies

The procedures for obtaining the necessary authorizations and registrations for Collective Investment Management Companies to operate in Portugal are described in the Banco de Portugal and CMVM Welcoming Guide