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Portugal – The New Tax Regime For Inbound Talent Explained
09.07.2026
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For over a decade, Portugal’s Non-Habitual Resident (NHR) regime was the country’s flagship tool to attract international talent — a broad tax gateway that turned Lisbon, Porto and the Algarve into a top destination for retirees, investors and a wide range of professionals. Since the 2024 State Budget, that gateway has been closed to new applicants and replaced by a more specialised and technically demanding framework: the Tax Incentive for Scientific Research and Innovation (IFICI), commonly branded as “NHR 2.0”.
This article explains, from a Portuguese tax-law perspective, what changed, who can still qualify, and how the new application cycle works in practice.
What is the IFICI regime (NHR 2.0)?
IFICI was created by Law 82/2023 (the 2024 State Budget), which inserted Article 58-A in the Portuguese Tax Benefits Statute (EBF — Estatuto dos Benefícios Fiscais). After almost a year of regulatory limbo, the regime was finally implemented by Ordinance no. 352/2024/1, with retroactive effects to 1 January 2024.
In essence, IFICI offers, for a non-renewable 10-year period:
- A 20% flat personal income tax rate on employment (Category A) and self-employment (Category B) income derived from eligible activities; and
- A general exemption (with progression) on most foreign-source income — Categories A, B, E (capital), F (rental) and G (capital gains) — provided the income is not paid by entities based in blacklisted jurisdictions (in which case a 35% flat rate applies).
Crucially — and this is one of the biggest differences from the old NHR — foreign pensions (Category H) are excluded from the new regime and are taxed at standard progressive rates.
What happened to the “old” NHR?
The original NHR has been revoked for new applicants, but it is not gone overnight:
- Individuals who already held NHR status on 31 December 2023 keep their benefits until the end of their 10-year period.
- A transitional regime under Article 236 of the 2024 State Budget allowed certain individuals with prior ties to Portugal (employment contracts, lease agreements, school enrolment of dependants, residence-permit procedures already underway) to still apply for the original NHR in 2024 — in some cases with the registration deadline extended to 31 March 2025.
All other inbound taxpayers must now look at IFICI, not the old NHR.
Who qualifies for IFICI in Portugal?
To benefit, two cumulative conditions must be met:
- Personal eligibility: the individual becomes a Portuguese tax resident and was not a tax resident in any of the previous five years, and has not previously benefited from the NHR or the IRS Jovem regime.
- Professional eligibility: the activity falls within one of the categories listed in Article 58-A of the Portuguese Tax Benefits Statute and detailed in Ordinance 352/2024/1. The main eligibility routes are:
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- Scientific research and higher education — teaching positions at higher-education institutions and research within the national science and technology system.
- Certified startups — employment, self-employment or board positions in entities certified under the Portuguese Startup Law (Law. 21/2023).
- R&D centres and recognised innovation centres.
- Highly qualified professionals — roles listed in Annex I of Ordinance 352/2024/1 by reference to the Portuguese Classification of Occupations (CPP), such as the following ones: 112 — CEOs and executive managers; 12 — Directors of administrative and commercial services; 13 — Directors of production and specialised services; 21 — Specialists in physical sciences, mathematics, engineering and related areas; 2163.1 — Industrial product or equipment designers; 221 — Physicians; 231 — University professors; 25 — ICT specialists;
- Industrial and service exporters — qualified jobs in companies whose main activity falls under specific CAE codes (Annex II of the Ordinance) and that export at least 50% of their turnover in the year the position starts or in either of the two preceding years.
- Activities under contractual investment incentives (CFI/RFAI) and roles in entities recognised by AICEP or IAPMEI as relevant to the national economy.
A minimum academic qualification is also required for highly qualified professions: a PhD, or a bachelor’s/master’s degree combined with at least three years of professional experience.
IFICI vs NHR: key differences at a glance
Scope of beneficiaries:
- Original NHR: broad, including retirees, investors and “high-value” professionals.
- IFICI / NHR 2.0: narrow, including researchers, startup staff, ICT, engineers and exporters.
Flat tax on qualifying income:
- Original NHR: 20%.
- IFICI / NHR 2.0: 20%.
Foreign-source income:
- Original NHR: broad exemption, including pensions.
- IFICI / NHR 2.0: exemption for categories A, B, E, F and G; pensions taxed at progressive rates; 35% on blacklisted jurisdictions.
Duration:
- Original NHR: 10 consecutive years.
- IFICI / NHR 2.0: 10 consecutive years.
Corporate substance:
- Original NHR: minimal requirements for the employer.
- IFICI / NHR 2.0: strict — startup, R&D, RFAI or 50% exporter.
Application channel:
- Original NHR: Portal das Finanças, in one step.
- IFICI / NHR 2.0: competent entity — FCT, AICEP, IAPMEI, ANI or Startup Portugal — plus Portal das Finanças.
Registration deadline;
- Original NHR: 31 March of the following year.
- IFICI / NHR 2.0: 15 January of the following year.
Compliance:
- Original NHR: generally one-off.
- IFICI / NHR 2.0: annual verification of ongoing eligibility.
How to apply for IFICI: deadlines and competent authorities
Unlike the NHR, IFICI is not registered directly with the Portuguese Tax Authority (AT). The process runs through sectoral authorities, each handling a different eligibility route:
- FCT (Fundação para a Ciência e a Tecnologia) — research and higher-education roles.
- AICEP and IAPMEI — qualified jobs and corporate-body positions in entities recognised as relevant to the national economy.
- ANI (Agência Nacional de Inovação) — R&D personnel whose costs qualify under the SIFIDE II tax credit.
- Startup Portugal — positions in certified startups.
- Tax Authority (AT) — final registration via the Portal das Finanças.
The compliance calendar is now an annual cycle:
- 15 January — deadline to file the IFICI application for the previous year of residence.
- 15 February — competent entities communicate the taxpayer’s compliance status to the AT.
- 31 March — taxpayers can obtain confirmation of their registration status on the Portal das Finanças.
A failure to confirm continued eligibility — for example, if the employer ceases to meet the export threshold or the startup loses certification — can result in suspension of the regime for that year, although the underlying 10-year window keeps running.
IFICI Eligibility Checklist
Before finalising a move or filing a Portuguese tax return, candidates should be able to tick all of the following:
- 5-year rule: not a Portuguese tax resident in any of the five years preceding the year of arrival.
- No prior NHR / IRS Jovem: the regime is not available to those who already benefited from those frameworks.
- Activity alignment: professional role explicitly covered by Article 58-A of Portuguese Tax Benefits Statute and Annexes I/II of Ordinance 352/2024/1.
- Employer filter: for highly qualified roles, the employer is a startup, an R&D/innovation centre, an RFAI/CFI beneficiary, or a ≥50% exporter.
- Application route identified: the correct competent entity (FCT, AICEP, IAPMEI, ANI, Startup Portugal) is selected.
- Deadline: application filed by 15 January of the year following arrival.
- Annual compliance plan in place to confirm continued eligibility.
Conclusion: A more specialised, but still attractive, gateway
The shift from NHR to IFICI represents a deliberate narrowing of Portugal’s tax incentives: a move from a broad “welcome mat” to a surgical tool focused on scientific research, innovation, qualified employment and exporting activities. For retirees and passive investors, Portugal is no longer the obvious choice it was a decade ago. For researchers, startup teams, ICT specialists, engineers, physicians and executives moving into exporting groups, however, IFICI remains one of the most competitive personal-tax frameworks in Europe — provided the move is properly planned, with the right legal and tax structuring in place ahead of residency.
FAQ
Is the NHR still available in Portugal?
Not for new applicants. Only those who became Portuguese tax residents by the end of 2023 — or who qualified under the transitional rules of Article 236 of the Portuguese Tax Benefits Statute — could still register for the original NHR. Existing beneficiaries keep their status for the remainder of their 10-year period.
Is IFICI the same as NHR?
No. IFICI shares the 20% flat rate and the 10-year duration with the NHR, but it is narrower in scope, has stricter corporate requirements, and excludes foreign pensions from the exemption.
Are foreign pensions tax-free under IFICI?
No. Foreign pensions are taxed at general progressive rates. This is one of the most significant differences from the old NHR.
Can a remote worker qualify for IFICI?
Only if the activity falls within one of the eligible categories and the employer or activity meets the corporate requirements (startup, R&D, RFAI, ≥50% exporter, etc.). Working remotely from Portugal for a foreign company does not, in itself, grant access to the regime.
What is the application deadline for IFICI?
15 January of the year following the year in which the individual becomes a Portuguese tax resident.
Are foreign dividends, royalties and capital gains exempt under IFICI?
Generally yes — subject to declaration for progression purposes — provided they are not paid by entities located in jurisdictions on the Portuguese blacklist, in which case a 35% flat rate applies.
After more than twenty years of negotiations, the EU/Mercosur agreement remains in a legally incomplete but commercially relevant stage. For lawyers advising clients in the wine industry, the key issue is no longer whether the agreement will reshape trade, but how and when its provisions will begin to affect market access, regulatory compliance, and competitive positioning.
A negotiated agreement, yet without full legal effect
The trade pillar of the agreement was politically concluded in 2019, followed by ongoing revisions and additional negotiations, particularly on environmental commitments. Even though the full agreement is pending ratification processes on both sides, at this stage, the temporary agreement is already in force, producing its effects.
From a legal standpoint, this creates a hybrid scenario: (i) the text is sufficiently defined to anticipate obligations and opportunities, (ii) but not yet fully binding, (iii) with temporary measures already applicable.
This distinction is critical for legal advisors. The full agreement cannot yet be invoked as applicable law, but it already serves as a reliable roadmap for future regulatory and commercial conditions.
Why wine matters in this agreement
The wine sector sits at the intersection of several key chapters of the agreement:
- tariff liberalisation;
- sanitary and phytosanitary (SPS) measures;
- technical barriers to trade (TBT);
- intellectual property, particularly geographical indications (GIs).
This makes wine a multi-layered case study of how the agreement will operate in practice.
At the same time, the economic context reinforces its relevance. The European Union is Mercosur’s second-largest trading partner, with strong complementarities in trade flows. Mercosur’s exports are concentrated in agricultural goods, while EU exports are concentrated in higher value-added categories, where wine is positioned.
Tariffs: gradual but meaningful impact
Today, wine exports to Mercosur, especially to Brazil, face import duties combined with complex internal taxation. While the agreement does not eliminate all barriers immediately, it provides for progressive tariff reductions and improved quota conditions.
Meanwhile, the Brazilian tax system is under complete reform, which reinforces the importance of specialised legal assistance.
For legal practitioners, this raises practical issues:
- interpretation of tariff schedules and staging periods;
- interaction with domestic tax regimes;
- structuring of distribution agreements to capture tariff advantages over time.
The key point is that tariff benefits will not be uniform or immediate. They will require active legal planning to be effectively utilised.
Beyond tariffs: regulatory friction is the real battlefield
More significant than tariffs are the provisions addressing regulatory barriers.
Wine exports are heavily affected by labelling requirements, certification procedures, sanitary controls, product registration rules and geographical protections.
The agreement introduces commitments to increase transparency and reduce unnecessary barriers, particularly under the «Sanitary and Phytosanitary Measures» (SPS) and «Technical Barriers to Trade» (TBT) chapters. However, it does not create full harmonisation.
This means that regulatory compliance will remain jurisdiction-specific, but procedures should become more predictable and less discretionary.
For lawyers, this translates into a shift from navigating opaque systems to advising within a more structured, but still fragmented, regulatory framework.
Geographical indications: protection and tension
One of the most legally sensitive aspects of the agreement is the protection of geographical indications.
The EU seeks recognition and protection of a wide range of European GIs in Mercosur countries, including wine denominations. This implies stronger protection for European producers against the misuse of names and potential restrictions on local producers’ use of certain terms.
From a legal perspective, the new framework raises issues such as:
- coexistence with pre-existing trademarks;
- transition periods for local operators;
- enforcement mechanisms and litigation risks.
This is an area where disputes are likely to arise, particularly in markets with established local practices.
Services, distribution, and market structure
Although often overlooked, service provisions are highly relevant for the wine sector.
Each year, the EU exports nearly €30 billion in services to Mercosur, double the amount in the opposite direction.
The agreement aims to improve conditions for:
- logistics providers
- distribution networks
- commercial representation
- marketing and advertising agencies
For wine exporters, market access is not only about tariffs but also about how products reach consumers.
Legal advisors will need to consider:
- distribution agreements and exclusivity clauses
- regulatory requirements for importers and distributors
- compliance with competition rules
The implementation gap: where risk lies
Even after ratification, the agreement will not produce immediate uniform effects.
Its implementation will depend on phased tariff reductions, domestic regulatory adjustments and administrative practices.
This creates a gap between formal commitments and practical outcomes.
For lawyers, this is where advisory work becomes most valuable:
- managing client expectations
- identifying timing mismatches between legal changes and market reality
- mitigating risks linked to partial or inconsistent implementation
What should lawyers be doing now?
Treating the agreement as a distant political project is a mistake. The ratification is not around the corner, but it will happen.
Instead of just waiting, legal advisors should:
- analyze the relevant chapters (tariffs, SPS, TBT, GIs) from a sector-specific perspective;
- anticipate how domestic law will interact with the agreement;
- prepare contractual structures that can adapt to phased changes;
- monitor closely ratification and implementation developments.
In practical terms, the agreement should already be part of strategic legal advice, even before its formal entry into force.
Final sip
The EU/Mercosur agreement will not revolutionise the wine trade overnight. Its impact will be gradual, technical, and often subtle, but for those advising in the sector, it introduces a clear shift. We are moving from a fragmented and often opaque regulatory environment to a more structured, rule-based framework that is complex, but more predictable.
Understanding the agreement in theory is just the first step. The real challenge is to translate its provisions into practical legal strategies before competitors do.
Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.
For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.
What the EU decision does (and does not) do
The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.
At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.
In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.
The ideological paradox: a Socialist Republic on a tax-haven list
Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one.
Why Vietnam was added: the listing criteria and timeline
Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.
The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.
Vietnam’s response and the path to delisting
Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.
How different payment types are affected in practice
Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.
The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.
Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.
If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.
Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.
Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.
Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.
Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.
Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.
Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.
How European banks may respond (and what that looks like in practice)
Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.
For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.
A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.
Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.
A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.
This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.
A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.
A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.
Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.
EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.
Non-tax defensive measures and EU funding implications
Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.
DAC6 reporting and public country-by-country reporting
Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.
Country notes (alphabetical)
Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.
France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.
Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.
Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.
For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.
Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.
Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.
Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.
Practical next steps for EU companies
- Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
- Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
- DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
- Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
- Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
- Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
- Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
- Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
- Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.
Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.
Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.
Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:
- Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
- Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
- Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
- Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
- Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
- Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.
Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.
Legal Forms of Joint Ventures
Investors should understand the different corporate structures available for joint ventures:
- Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
- Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
- Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.
Foreign Investment Law
Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:
- Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
- Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.
Why is ISIC4 Relevant?
The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.
Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:
- Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
- Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
- Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
- Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
- Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
- Service Categories: Activities classified under service categories generally require significantly lower capital requirements.
Strategic Considerations
- Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
- Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.
Practical Tips
- Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
- A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
- Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.
Compliance with Local Regulations
- Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
- Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
- Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.
Conclusion
Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.
Executive Summary
The African Continental Free Trade Area (AfCFTA) remains one of the most ambitious integration projects in the world. Yet, several years into its operational phase, it has not (yet) delivered the structural shift many expected. A recent analysis underscores the gap between political momentum and economic reality: implementation remains uneven, the agreement is still used by only a portion of participating states, and non-tariff barriers and infrastructure deficits continue to dominate the cost of doing business across borders. For Egypt, the opportunity is still real — but it depends less on treaty headlines and more on enabling conditions: trade logistics, customs efficiency, regulatory convergence, and competitive industrial capacity.
Looking Back: The Promise of a Single African Market
When the AfCFTA was launched, expectations were understandably high. A continent-wide trade framework was supposed to reduce tariffs, facilitate trade in goods and services, and strengthen regional value chains — with the broader goal of moving African economies up the value ladder.
In my 2022 article, I asked whether AfCFTA could become a game changer for Egypt, given Egypt’s industrial base, strategic geography, and the potential to diversify export markets beyond traditional partners. (For background, see the earlier article here”).
The Reality Check: Intra-African Trade Remains Structurally Weak
Several years later, the interim assessment is sobering. As the Frankfurter Allgemeine Zeitung (FAZ) recently put it, AfCFTA is not a “game changer” yet, and only about half of member states currently meet the practical prerequisites to trade under the agreement.
A deeper reason is structural: no other world region trades so little with itself, and while statistics may undercount informal cross-border flows (especially in food), the overall picture remains unchanged.
Trade integration cannot deliver transformative outcomes if production, logistics, and institutions do not support scale.
Implementation Has Been Slow — and Often Symbolic
Operationalisation did not start with full-scale liberalisation. Instead, the AfCFTA began with a pilot approach: the Guided Trade Initiative (GTI) launched in October 2022, initially with eight states, later joined by additional countries, including Nigeria and South Africa by spring 2025.
The GTI created valuable learning effects, but it also underlined a key point: early progress was often presented through symbolic deals, while product coverage and volumes remained limited. FAZ highlights that only selected goods could be traded duty-free and that key sectors remained constrained for a long time due to missing or unresolved technical rules.
A pilot, however, cannot substitute for full operational certainty — the kind businesses need to restructure supply chains and invest.
Tariffs Are Not the Main Barrier — Trade Costs Are
AfCFTA is frequently discussed in terms of tariff liberalisation. Yet, evidence suggests that the largest gains do not come from tariffs but from reducing non-tariff barriers and improving trade infrastructure.
FAZ points to a central reality: tariffs tend to add around 20–30% to intra-African trade costs, whereas non-tariff costs can be far higher — driven by bureaucracy, lack of harmonised standards, inefficient border processes, and transport barriers.
This is the crux: even with reduced tariffs, trade will not expand meaningfully if goods still cannot move cheaply, quickly, and predictably.
Integration Complexity and Distributional Politics
Africa’s integration landscape is shaped by multiple overlapping regional economic communities and trade regimes. This creates legal and administrative complexity — often described as an integration “spaghetti bowl.” FAZ notes the challenge of coordination and the continued fragmentation of rules.
There is also a political economy dimension. Intra-African trade is heavily influenced by a small number of larger economies — and the distribution of benefits matters. FAZ highlights the dominance of major players (notably South Africa) and the concern that tariff liberalisation alone may entrench existing industrial advantages.
Where governments expect asymmetric outcomes, resistance often takes the form of delay, narrow implementation, or persistent non-tariff barriers.
What This Means for Egypt: The Opportunity Is Real — But Conditional
Egypt’s strategic case for AfCFTA participation remains strong: industrial potential, geographic location, and the opportunity to access and shape growing markets. But the experience so far suggests that the treaty text alone does not generate trade flows.
For Egypt’s private sector, the decisive factors are practical:
- predictable and efficient customs clearance and border procedures,
- logistics corridors and port efficiency,
- regulatory convergence (standards, certification, compliance),
- stable access to trade finance and payments,
- competitive energy and production conditions for manufacturing and processing.
AfCFTA can support these developments — but it cannot replace them.
The “Game Changer” Pathway: What Must Happen Next
FAZ concludes that AfCFTA will only become truly impactful if it is paired with the fundamentals: major infrastructure investment, stronger production and processing capacity, and a credible industrial policy.
At the same time, Africa faces a classic chicken-and-egg problem: without development there is limited investment appeal; without investment there is limited development.
For Egypt and its partners, a pragmatic strategy would be to:
- treat AfCFTA as a platform for real trade-cost reduction, not only tariff debates;
- focus on a limited number of scalable corridors and sectors where regional value chains can realistically grow;
- strengthen implementation capacity so that preferences become usable for firms — especially SMEs;
- enhance legal certainty and dispute resolution reliability for cross-border commerce.
Conclusion
AfCFTA remains a landmark achievement in terms of political commitment. But as of today, it has not yet been the “game changer” many hoped for.
For Egypt, the key question is no longer whether AfCFTA is visionary — it is. The question is whether governments and businesses can translate it into lower real trade costs, higher competitiveness, and bankable cross-border transactions. If those enabling conditions improve, AfCFTA’s promise can still become commercial reality.
This is the fourth article of a series decidated to purchasing real estate property in Spain: previously, we presented how to structure the purchase of a real estate property and what steps you must undertake to ensure the purchase is efficient and safe (you can find it here), the financial and tax information as well as practical tips related to the purchase process (here) and how to handle international inheritance tax implications (here).
How to obtain a mortgage loan when Purchasing Property in Spain
When a buyer in Spain wishes to purchase property using a mortgage loan, the financing process typically begins after selecting a specific property and signing a private purchase agreement, which is usually accompanied by a deposit payment. The entire financing process is strictly regulated under Spanish civil and banking law, offering a high degree of legal security, including foreign and non-resident buyers.
Once the private purchase contract is signed, the bank initiates an official property valuation. This is a mandatory step for determining the maximum loan amount, the financing conditions and for loan approval.
Only after the valuation is completed will the bank issue a formal mortgage offer. The entire process, from the initial application to the final offer, can take several weeks, depending on the complexity of the buyer’s financial profile and the documentation required. The final step occurs before a Spanish notary, where two deeds are signed simultaneously:
- The public deed of sale, and
- The mortgage deed.
At this stage, the bank transfers the loan amount directly to the seller, ensuring legal and financial certainty for all parties involved.
While this structure guarantees legal clarity, it also means that mortgage financing is not secured at the time the private agreement is signed. Therefore, it is strongly recommended to include a mortgage contingency clause in the private purchase contract. This clause makes the completion of the sale conditional upon obtaining financing, thereby protecting the buyer’s deposit in the event of a mortgage denial.
Key Differences for Foreign Buyers
Spanish banks do not generally issue binding pre-approvals before a specific property has been chosen. Foreign buyers, particularly non-residents, should also be aware of additional requirements, including:
- Submission of translated or apostilled foreign documents,
- More extensive due diligence and KYC (Know Your Customer) procedures, and
- Generally longer processing times.
These factors may extend the mortgage timeline and should be accounted for in the overall transaction planning.
Differences between buying a second-hand apartment/house and buying a new apartment/house directly from the developer
The main difference is that, in the case of a new home, VAT and AJD (stamp duty) are paid, and in the case of a second-hand home, only ITP (property transfer tax) is paid, as already explained in section III, paragraph 3.
In addition, in the case of new homes, a series of legal guarantees are established—for 1, 3, and 10 years—for possible construction defects that may arise in the home, for which the developer is liable. On the other hand, in the case of second-hand homes, the seller is liable for hidden defects only for a period of 6 months from delivery.
If the property is purchased from a natural person, it will generally be a second-hand home, whereas if it is purchased from a legal entity, it will normally be a new build and will be purchased from a developer.
Therefore, the fundamental differences will be those already mentioned above: different taxation and greater legal guarantees in the case of purchase from legal entities. Additionally, in the case of purchasing the property from a legal entity developer, there are enhanced documentation and reporting obligations, which do not apply in the case of sale by individuals.
Are there debts associated with the property that the buyer will be liable for?
The buyer is liable for any debts owed to the Homeowners’ Association for the three years prior to the purchase and for the outstanding portion of the current year’s dues. The buyer is also vicariously liable for any outstanding property tax (IBI) or other local taxes owed by the previous owner.
To adequately protect their interests, the buyer should, on the one hand, request a certificate of debts from the Homeowners’ Association and, on the other hand, check the status of payments of property tax and other municipal taxes.
What are the specific provions of Spanish Coastal Law (Ley De Costas)?
Properties located near the sea may fall under the Spanish Coastal Law (Ley de Costas), which regulates land use in the public maritime-terrestrial zone and its surrounding protected areas. These coastal strips are public domain, and strict limitations apply to ownership, construction, and renovation.
Even for older, long-standing buildings, it is vital to verify whether the property lies within a protection zone. Depending on the classification of the area, consequences can range from restricted use or denial of renovation permits to expiration of rights of use or, in extreme cases, administrative demolition orders.
Legal due diligence is essential to determine the status of the plot and identify any concessions or time-limited occupancy rights granted by the authorities.
What rules apply to Country Houses (Fincas Rústicas)?
Country houses (fincas rústicas) deserve special attention due to their location in rural and often protected areas, which are subject to strict urban planning and environmental regulations.
Depending on local and regional classifications, the land may be designated exclusively for agriculture, forestry, or conservation, limiting the potential for construction, expansion, or change of use.
Additionally, many rural properties have existing buildings that may never have been fully or properly legalised. As with coastal properties, buyers should review all applicable planning and environmental restrictions carefully before purchasing.
How are squatting cases (Okupas) regulated under Spanish law?
In recent years, Spain has experienced a rise in squatting cases, influenced by housing shortages, unaffordable rents, and high costs in urban or tourist areas. While the issue is complex and socio-politically sensitive, this section focuses on practical implications for property owners.
Importantly, unlawful occupation (okupación) is relatively uncommon in most parts of Spain. The majority of property owners, especially those who secure and monitor their homes properly, are unlikely to be affected.
Effective deterrents include:
- Alarm systems and surveillance cameras,
- Remote monitoring,
- Local property management services (especially for second homes).
Spanish law differentiates between:
- Intrusion into a primary residence (treated as unlawful entry),
- Occupation of vacant or second homes (classified as usurpation, requiring court action).
Recent Legal Reforms – “Anti-Squatting Law” (Ley Orgánica 1/2025): To address lengthy eviction timelines, Spain introduced reforms, which include:
- Within the first 48 hours of occupation:
Police may evict squatters without a court order if no legal proof of residence is presented. Owners must provide immediate proof of ownership. - After 48 hours: Eviction must follow a formal judicial process.
- Fast-track legal procedures: Eviction claims may now be processed in about 15 working days under accelerated procedures—though real-world implementation may vary by jurisdiction.
While these special topics may not apply to every transaction, they highlight the importance of thorough due diligence and professional legal advice when buying property in Spain. Understanding the implications of coastal laws, rural zoning, inheritance regulations, and property security helps international buyers make informed, secure, and future-proof investments.
After “Liberation Day,” many foreign companies offered discounts to American importers to help them offset the tariffs. A few months later, the US Supreme Court declared the «reciprocal» tariffs unlawful, but on the same day, President Trump announced new tariffs. In this article, we provide a practical overview of how to handle various scenarios, shifting from a reactive, unstructured approach to deliberate management of price volatility and trade flows caused by the introduction, adjustment, and removal of tariffs.
Tariff Sharing agreements
For a long time, the question has been straightforward: who absorbs the extra customs cost? The exporter? The importer? Both? The question remains important, but today it is incomplete.
The new scenario, in light of the recent ruling by the US Court of Justice on March 20, 2026, is: what happens if that duty is then canceled and refunded? If the cost was shared between the parties, the benefit of the refund must follow a consistent logic. In the absence of a clear agreement on this point, however, there is a risk of economic misalignment that could compromise the commercial relationship.
Let’s imagine an Italian winery that sells its products to a US importer. Following the introduction of reciprocal duties, the parties have decided that the exporter will grant an extraordinary discount of 7.5%, explicitly motivated by the need to share the impact of the duty. The commercial relationship continues, volumes remain stable, and the importer avoids passing on the entire increase to the end customer.
As a result of the Supreme Court ruling (or, in the future, another ruling or administrative decision), the importer obtains a refund of the duties paid during that period.
If no formal agreements have been made on this point and the documentation refers generically to a «commercial discount» and says nothing about reimbursement, the situation afterward may be difficult to reconstruct and, above all, could lead to commercial tension. As a result, a positive development (the cancellation of the duty and the right to reimbursement) becomes a problematic factor that jeopardizes the relationship.
Is the exporter entitled to a refund of the discounts granted to mitigate the duties?
In the absence of a different agreement between the parties, the right to reimbursement belongs to the party who paid the duty, i.e., in most cases, the importer. Therefore, there is a risk that the importer will enjoy a double benefit (the discount and the duty refund), while the exporter will get nothing.
For this reason, it is essential that the parties do not limit themselves to negotiating prices and discounts, but also establish the consequences of the adoption, modification, or revocation of duties on the contract, including any refunds.
To achieve this, the first step is to accurately classify and document the discounts granted. If only a «commercial discount» appears in emails, commercial orders, credit notes, and invoices, it will be harder to later argue that this discount was actually an extraordinary, temporary contribution related to the duty. Conversely, if the documentation and contract specify that it is a tariff sharing or tariff mitigation measure, identifying the amounts to be refunded after the fact becomes much simpler.
The goal is to create a clear view of the trend in discounts and payments so that, if needed, financial flows can be adjusted to align with the original terms of the agreement: if the exporter has helped cover a cost that then, in whole or in part, does not end up materializing, they will be eligible for a refund of the contribution paid.
The contract will therefore include, in addition to the Tariff Sharing clause, a Tariff Reimbursement Allocation clause, which states that if the importer receives a refund, credit, or any other economic benefit related to the duty for which the exporter has granted a discount, the importer must return the corresponding portion of the benefit to the exporter in full. or proportionally, depending on how the parties intend to distribute risk and incentive.
Importer’s responsibility to seek reimbursement
It is unclear whether, in the case of US reciprocal duties, importers can simply file an administrative claim to get a refund or if legal action will be required. The latter seems more probable.
Generally, obtaining a duty refund involves action, deadlines, documentation, and coordination with brokers and customs consultants. In most cases, the entity controlling the process is the importer (or someone acting on their behalf).
This raises a sensitive but very real issue: if the importer knows that they will have to invest time and money to obtain a refund, only to then have to share the benefit with the exporter, their incentive to take action may be reduced. To prevent this inertia the contract should contain an express obligation to take action, set out as a duty of best efforts or commercially reasonable efforts.
For example, the contract should specify that the importer must inquire about the conditions and time limits of the process, keep relevant documentation, regularly inform the exporter about the progress of the initiatives, and not unilaterally waive or reduce the claim if it affects the exporter’s economic rights.
Preventive Agreements on Litigation and Cost Allocation
When reimbursement involves a lawsuit or structured legal action, the obstacles are organizational and financial: who decides if and when to proceed, who selects the lawyers, who pays the costs upfront, how the net recovery is divided, and who has the final say on a settlement. This generally applies to all contracts, not just this case: dispute resolution methods must be addressed and agreed upon before the problem arises.
Otherwise, the dispute resolution process risks becoming a secondary improvised negotiation at the worst time — when the parties are already under pressure from margins, cash flow, and regulatory uncertainty. As a result, it becomes much harder to reach an agreement.
How to handle new tariffs and their potential cancellation
To safeguard against uncertainty, the agreement should be organized into two stages.
- The first stage regulates the immediate impact of the change in scenario, for example, the introduction of a new tariff or its increase (renegotiation, cost sharing, automatic adjustment : I discussed this in this article).
- The second stage manages the possible «rollback» (right to reimbursement, process, allocation criteria).
This approach has a clear benefit: it does not force the parties to discuss every time the tariff regime changes or a decision to cancel tariffs is made. Instead of reacting to market changes, a tool is adopted to manage potential scenarios, which is much more resilient commercially and easier to oversee, as the rules have already been agreed upon.
This allows the impact of duties to be regulated not as an extraordinary variable, to be agreed upon on a one-time basis, but as a structural, adaptable phenomenon that could last a long time.
This is why it is crucial to know how to draft contracts that cover both the current situation and potential changes, including any refunds.
Conclusion: Three practical steps for companies exporting to the US
The first is to agree on the consequences for the contract of the introduction of a new duty, increasing it, or revoking it (renegotiation, cost sharing, automatic price adjustment, right to share the refund).
The second is to clearly document any discount granted to offset a duty. If it remains a generic «commercial discount,» the right to a refund if reimbursement occurs will be much harder to enforce.
The third step is to determine what happens if the duty is canceled or revoked: the importer’s responsibility to take action to get a refund, manage the administrative process or litigation, how to divide costs, who oversees the activities of consultants and lawyers, and how the recovered funds will be allocated.
Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.
Where this new duty comes from
The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”
Companies involved in the investigation
The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.
U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.
Next steps in the procedure
Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.
The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.
The preliminary nature of this determination means there is still room to change the decision before it becomes final.
Possible effective date
The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.
If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.
What to do between now and January 1, 2026?
At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.
So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:
- Some rushed to ship as many products as possible before the potential effective date of the duty;
- Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
- Some suspended orders, pending definitive news on the impact of the duties.
These are all valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.
The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.
The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.
Канада 
Cartels, Compliance, and Data Privacy: The New «Brazil Risk»
- Соответствие требованиям
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EU – Mercosur and the Wine Trade: What Lawyers Need to Understand Before It Comes into Force
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Ceo fraud in Portugal: how to react fast, recover funds and strengthen payment security
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Spain | Franchising, Theory Of Risk and Guarantees By Franchisee
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Brazil’s New Digital Child Protection Law: Practical Implications for Foreign Tech Companies
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Scrivi a David
EU – Mercosur and the Wine Trade: What Lawyers Need to Understand Before It Comes into Force
09.07.2026
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Бразилия
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For over a decade, Portugal’s Non-Habitual Resident (NHR) regime was the country’s flagship tool to attract international talent — a broad tax gateway that turned Lisbon, Porto and the Algarve into a top destination for retirees, investors and a wide range of professionals. Since the 2024 State Budget, that gateway has been closed to new applicants and replaced by a more specialised and technically demanding framework: the Tax Incentive for Scientific Research and Innovation (IFICI), commonly branded as “NHR 2.0”.
This article explains, from a Portuguese tax-law perspective, what changed, who can still qualify, and how the new application cycle works in practice.
What is the IFICI regime (NHR 2.0)?
IFICI was created by Law 82/2023 (the 2024 State Budget), which inserted Article 58-A in the Portuguese Tax Benefits Statute (EBF — Estatuto dos Benefícios Fiscais). After almost a year of regulatory limbo, the regime was finally implemented by Ordinance no. 352/2024/1, with retroactive effects to 1 January 2024.
In essence, IFICI offers, for a non-renewable 10-year period:
- A 20% flat personal income tax rate on employment (Category A) and self-employment (Category B) income derived from eligible activities; and
- A general exemption (with progression) on most foreign-source income — Categories A, B, E (capital), F (rental) and G (capital gains) — provided the income is not paid by entities based in blacklisted jurisdictions (in which case a 35% flat rate applies).
Crucially — and this is one of the biggest differences from the old NHR — foreign pensions (Category H) are excluded from the new regime and are taxed at standard progressive rates.
What happened to the “old” NHR?
The original NHR has been revoked for new applicants, but it is not gone overnight:
- Individuals who already held NHR status on 31 December 2023 keep their benefits until the end of their 10-year period.
- A transitional regime under Article 236 of the 2024 State Budget allowed certain individuals with prior ties to Portugal (employment contracts, lease agreements, school enrolment of dependants, residence-permit procedures already underway) to still apply for the original NHR in 2024 — in some cases with the registration deadline extended to 31 March 2025.
All other inbound taxpayers must now look at IFICI, not the old NHR.
Who qualifies for IFICI in Portugal?
To benefit, two cumulative conditions must be met:
- Personal eligibility: the individual becomes a Portuguese tax resident and was not a tax resident in any of the previous five years, and has not previously benefited from the NHR or the IRS Jovem regime.
- Professional eligibility: the activity falls within one of the categories listed in Article 58-A of the Portuguese Tax Benefits Statute and detailed in Ordinance 352/2024/1. The main eligibility routes are:
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- Scientific research and higher education — teaching positions at higher-education institutions and research within the national science and technology system.
- Certified startups — employment, self-employment or board positions in entities certified under the Portuguese Startup Law (Law. 21/2023).
- R&D centres and recognised innovation centres.
- Highly qualified professionals — roles listed in Annex I of Ordinance 352/2024/1 by reference to the Portuguese Classification of Occupations (CPP), such as the following ones: 112 — CEOs and executive managers; 12 — Directors of administrative and commercial services; 13 — Directors of production and specialised services; 21 — Specialists in physical sciences, mathematics, engineering and related areas; 2163.1 — Industrial product or equipment designers; 221 — Physicians; 231 — University professors; 25 — ICT specialists;
- Industrial and service exporters — qualified jobs in companies whose main activity falls under specific CAE codes (Annex II of the Ordinance) and that export at least 50% of their turnover in the year the position starts or in either of the two preceding years.
- Activities under contractual investment incentives (CFI/RFAI) and roles in entities recognised by AICEP or IAPMEI as relevant to the national economy.
A minimum academic qualification is also required for highly qualified professions: a PhD, or a bachelor’s/master’s degree combined with at least three years of professional experience.
IFICI vs NHR: key differences at a glance
Scope of beneficiaries:
- Original NHR: broad, including retirees, investors and “high-value” professionals.
- IFICI / NHR 2.0: narrow, including researchers, startup staff, ICT, engineers and exporters.
Flat tax on qualifying income:
- Original NHR: 20%.
- IFICI / NHR 2.0: 20%.
Foreign-source income:
- Original NHR: broad exemption, including pensions.
- IFICI / NHR 2.0: exemption for categories A, B, E, F and G; pensions taxed at progressive rates; 35% on blacklisted jurisdictions.
Duration:
- Original NHR: 10 consecutive years.
- IFICI / NHR 2.0: 10 consecutive years.
Corporate substance:
- Original NHR: minimal requirements for the employer.
- IFICI / NHR 2.0: strict — startup, R&D, RFAI or 50% exporter.
Application channel:
- Original NHR: Portal das Finanças, in one step.
- IFICI / NHR 2.0: competent entity — FCT, AICEP, IAPMEI, ANI or Startup Portugal — plus Portal das Finanças.
Registration deadline;
- Original NHR: 31 March of the following year.
- IFICI / NHR 2.0: 15 January of the following year.
Compliance:
- Original NHR: generally one-off.
- IFICI / NHR 2.0: annual verification of ongoing eligibility.
How to apply for IFICI: deadlines and competent authorities
Unlike the NHR, IFICI is not registered directly with the Portuguese Tax Authority (AT). The process runs through sectoral authorities, each handling a different eligibility route:
- FCT (Fundação para a Ciência e a Tecnologia) — research and higher-education roles.
- AICEP and IAPMEI — qualified jobs and corporate-body positions in entities recognised as relevant to the national economy.
- ANI (Agência Nacional de Inovação) — R&D personnel whose costs qualify under the SIFIDE II tax credit.
- Startup Portugal — positions in certified startups.
- Tax Authority (AT) — final registration via the Portal das Finanças.
The compliance calendar is now an annual cycle:
- 15 January — deadline to file the IFICI application for the previous year of residence.
- 15 February — competent entities communicate the taxpayer’s compliance status to the AT.
- 31 March — taxpayers can obtain confirmation of their registration status on the Portal das Finanças.
A failure to confirm continued eligibility — for example, if the employer ceases to meet the export threshold or the startup loses certification — can result in suspension of the regime for that year, although the underlying 10-year window keeps running.
IFICI Eligibility Checklist
Before finalising a move or filing a Portuguese tax return, candidates should be able to tick all of the following:
- 5-year rule: not a Portuguese tax resident in any of the five years preceding the year of arrival.
- No prior NHR / IRS Jovem: the regime is not available to those who already benefited from those frameworks.
- Activity alignment: professional role explicitly covered by Article 58-A of Portuguese Tax Benefits Statute and Annexes I/II of Ordinance 352/2024/1.
- Employer filter: for highly qualified roles, the employer is a startup, an R&D/innovation centre, an RFAI/CFI beneficiary, or a ≥50% exporter.
- Application route identified: the correct competent entity (FCT, AICEP, IAPMEI, ANI, Startup Portugal) is selected.
- Deadline: application filed by 15 January of the year following arrival.
- Annual compliance plan in place to confirm continued eligibility.
Conclusion: A more specialised, but still attractive, gateway
The shift from NHR to IFICI represents a deliberate narrowing of Portugal’s tax incentives: a move from a broad “welcome mat” to a surgical tool focused on scientific research, innovation, qualified employment and exporting activities. For retirees and passive investors, Portugal is no longer the obvious choice it was a decade ago. For researchers, startup teams, ICT specialists, engineers, physicians and executives moving into exporting groups, however, IFICI remains one of the most competitive personal-tax frameworks in Europe — provided the move is properly planned, with the right legal and tax structuring in place ahead of residency.
FAQ
Is the NHR still available in Portugal?
Not for new applicants. Only those who became Portuguese tax residents by the end of 2023 — or who qualified under the transitional rules of Article 236 of the Portuguese Tax Benefits Statute — could still register for the original NHR. Existing beneficiaries keep their status for the remainder of their 10-year period.
Is IFICI the same as NHR?
No. IFICI shares the 20% flat rate and the 10-year duration with the NHR, but it is narrower in scope, has stricter corporate requirements, and excludes foreign pensions from the exemption.
Are foreign pensions tax-free under IFICI?
No. Foreign pensions are taxed at general progressive rates. This is one of the most significant differences from the old NHR.
Can a remote worker qualify for IFICI?
Only if the activity falls within one of the eligible categories and the employer or activity meets the corporate requirements (startup, R&D, RFAI, ≥50% exporter, etc.). Working remotely from Portugal for a foreign company does not, in itself, grant access to the regime.
What is the application deadline for IFICI?
15 January of the year following the year in which the individual becomes a Portuguese tax resident.
Are foreign dividends, royalties and capital gains exempt under IFICI?
Generally yes — subject to declaration for progression purposes — provided they are not paid by entities located in jurisdictions on the Portuguese blacklist, in which case a 35% flat rate applies.
After more than twenty years of negotiations, the EU/Mercosur agreement remains in a legally incomplete but commercially relevant stage. For lawyers advising clients in the wine industry, the key issue is no longer whether the agreement will reshape trade, but how and when its provisions will begin to affect market access, regulatory compliance, and competitive positioning.
A negotiated agreement, yet without full legal effect
The trade pillar of the agreement was politically concluded in 2019, followed by ongoing revisions and additional negotiations, particularly on environmental commitments. Even though the full agreement is pending ratification processes on both sides, at this stage, the temporary agreement is already in force, producing its effects.
From a legal standpoint, this creates a hybrid scenario: (i) the text is sufficiently defined to anticipate obligations and opportunities, (ii) but not yet fully binding, (iii) with temporary measures already applicable.
This distinction is critical for legal advisors. The full agreement cannot yet be invoked as applicable law, but it already serves as a reliable roadmap for future regulatory and commercial conditions.
Why wine matters in this agreement
The wine sector sits at the intersection of several key chapters of the agreement:
- tariff liberalisation;
- sanitary and phytosanitary (SPS) measures;
- technical barriers to trade (TBT);
- intellectual property, particularly geographical indications (GIs).
This makes wine a multi-layered case study of how the agreement will operate in practice.
At the same time, the economic context reinforces its relevance. The European Union is Mercosur’s second-largest trading partner, with strong complementarities in trade flows. Mercosur’s exports are concentrated in agricultural goods, while EU exports are concentrated in higher value-added categories, where wine is positioned.
Tariffs: gradual but meaningful impact
Today, wine exports to Mercosur, especially to Brazil, face import duties combined with complex internal taxation. While the agreement does not eliminate all barriers immediately, it provides for progressive tariff reductions and improved quota conditions.
Meanwhile, the Brazilian tax system is under complete reform, which reinforces the importance of specialised legal assistance.
For legal practitioners, this raises practical issues:
- interpretation of tariff schedules and staging periods;
- interaction with domestic tax regimes;
- structuring of distribution agreements to capture tariff advantages over time.
The key point is that tariff benefits will not be uniform or immediate. They will require active legal planning to be effectively utilised.
Beyond tariffs: regulatory friction is the real battlefield
More significant than tariffs are the provisions addressing regulatory barriers.
Wine exports are heavily affected by labelling requirements, certification procedures, sanitary controls, product registration rules and geographical protections.
The agreement introduces commitments to increase transparency and reduce unnecessary barriers, particularly under the «Sanitary and Phytosanitary Measures» (SPS) and «Technical Barriers to Trade» (TBT) chapters. However, it does not create full harmonisation.
This means that regulatory compliance will remain jurisdiction-specific, but procedures should become more predictable and less discretionary.
For lawyers, this translates into a shift from navigating opaque systems to advising within a more structured, but still fragmented, regulatory framework.
Geographical indications: protection and tension
One of the most legally sensitive aspects of the agreement is the protection of geographical indications.
The EU seeks recognition and protection of a wide range of European GIs in Mercosur countries, including wine denominations. This implies stronger protection for European producers against the misuse of names and potential restrictions on local producers’ use of certain terms.
From a legal perspective, the new framework raises issues such as:
- coexistence with pre-existing trademarks;
- transition periods for local operators;
- enforcement mechanisms and litigation risks.
This is an area where disputes are likely to arise, particularly in markets with established local practices.
Services, distribution, and market structure
Although often overlooked, service provisions are highly relevant for the wine sector.
Each year, the EU exports nearly €30 billion in services to Mercosur, double the amount in the opposite direction.
The agreement aims to improve conditions for:
- logistics providers
- distribution networks
- commercial representation
- marketing and advertising agencies
For wine exporters, market access is not only about tariffs but also about how products reach consumers.
Legal advisors will need to consider:
- distribution agreements and exclusivity clauses
- regulatory requirements for importers and distributors
- compliance with competition rules
The implementation gap: where risk lies
Even after ratification, the agreement will not produce immediate uniform effects.
Its implementation will depend on phased tariff reductions, domestic regulatory adjustments and administrative practices.
This creates a gap between formal commitments and practical outcomes.
For lawyers, this is where advisory work becomes most valuable:
- managing client expectations
- identifying timing mismatches between legal changes and market reality
- mitigating risks linked to partial or inconsistent implementation
What should lawyers be doing now?
Treating the agreement as a distant political project is a mistake. The ratification is not around the corner, but it will happen.
Instead of just waiting, legal advisors should:
- analyze the relevant chapters (tariffs, SPS, TBT, GIs) from a sector-specific perspective;
- anticipate how domestic law will interact with the agreement;
- prepare contractual structures that can adapt to phased changes;
- monitor closely ratification and implementation developments.
In practical terms, the agreement should already be part of strategic legal advice, even before its formal entry into force.
Final sip
The EU/Mercosur agreement will not revolutionise the wine trade overnight. Its impact will be gradual, technical, and often subtle, but for those advising in the sector, it introduces a clear shift. We are moving from a fragmented and often opaque regulatory environment to a more structured, rule-based framework that is complex, but more predictable.
Understanding the agreement in theory is just the first step. The real challenge is to translate its provisions into practical legal strategies before competitors do.
Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.
For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.
What the EU decision does (and does not) do
The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.
At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.
In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.
The ideological paradox: a Socialist Republic on a tax-haven list
Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one.
Why Vietnam was added: the listing criteria and timeline
Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.
The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.
Vietnam’s response and the path to delisting
Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.
How different payment types are affected in practice
Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.
The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.
Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.
If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.
Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.
Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.
Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.
Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.
Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.
Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.
How European banks may respond (and what that looks like in practice)
Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.
For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.
A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.
Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.
A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.
This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.
A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.
A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.
Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.
EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.
Non-tax defensive measures and EU funding implications
Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.
DAC6 reporting and public country-by-country reporting
Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.
Country notes (alphabetical)
Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.
France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.
Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.
Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.
For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.
Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.
Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.
Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.
Practical next steps for EU companies
- Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
- Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
- DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
- Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
- Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
- Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
- Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
- Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
- Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.
Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.
Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.
Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:
- Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
- Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
- Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
- Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
- Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
- Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.
Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.
Legal Forms of Joint Ventures
Investors should understand the different corporate structures available for joint ventures:
- Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
- Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
- Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.
Foreign Investment Law
Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:
- Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
- Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.
Why is ISIC4 Relevant?
The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.
Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:
- Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
- Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
- Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
- Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
- Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
- Service Categories: Activities classified under service categories generally require significantly lower capital requirements.
Strategic Considerations
- Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
- Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.
Practical Tips
- Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
- A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
- Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.
Compliance with Local Regulations
- Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
- Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
- Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.
Conclusion
Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.
Executive Summary
The African Continental Free Trade Area (AfCFTA) remains one of the most ambitious integration projects in the world. Yet, several years into its operational phase, it has not (yet) delivered the structural shift many expected. A recent analysis underscores the gap between political momentum and economic reality: implementation remains uneven, the agreement is still used by only a portion of participating states, and non-tariff barriers and infrastructure deficits continue to dominate the cost of doing business across borders. For Egypt, the opportunity is still real — but it depends less on treaty headlines and more on enabling conditions: trade logistics, customs efficiency, regulatory convergence, and competitive industrial capacity.
Looking Back: The Promise of a Single African Market
When the AfCFTA was launched, expectations were understandably high. A continent-wide trade framework was supposed to reduce tariffs, facilitate trade in goods and services, and strengthen regional value chains — with the broader goal of moving African economies up the value ladder.
In my 2022 article, I asked whether AfCFTA could become a game changer for Egypt, given Egypt’s industrial base, strategic geography, and the potential to diversify export markets beyond traditional partners. (For background, see the earlier article here”).
The Reality Check: Intra-African Trade Remains Structurally Weak
Several years later, the interim assessment is sobering. As the Frankfurter Allgemeine Zeitung (FAZ) recently put it, AfCFTA is not a “game changer” yet, and only about half of member states currently meet the practical prerequisites to trade under the agreement.
A deeper reason is structural: no other world region trades so little with itself, and while statistics may undercount informal cross-border flows (especially in food), the overall picture remains unchanged.
Trade integration cannot deliver transformative outcomes if production, logistics, and institutions do not support scale.
Implementation Has Been Slow — and Often Symbolic
Operationalisation did not start with full-scale liberalisation. Instead, the AfCFTA began with a pilot approach: the Guided Trade Initiative (GTI) launched in October 2022, initially with eight states, later joined by additional countries, including Nigeria and South Africa by spring 2025.
The GTI created valuable learning effects, but it also underlined a key point: early progress was often presented through symbolic deals, while product coverage and volumes remained limited. FAZ highlights that only selected goods could be traded duty-free and that key sectors remained constrained for a long time due to missing or unresolved technical rules.
A pilot, however, cannot substitute for full operational certainty — the kind businesses need to restructure supply chains and invest.
Tariffs Are Not the Main Barrier — Trade Costs Are
AfCFTA is frequently discussed in terms of tariff liberalisation. Yet, evidence suggests that the largest gains do not come from tariffs but from reducing non-tariff barriers and improving trade infrastructure.
FAZ points to a central reality: tariffs tend to add around 20–30% to intra-African trade costs, whereas non-tariff costs can be far higher — driven by bureaucracy, lack of harmonised standards, inefficient border processes, and transport barriers.
This is the crux: even with reduced tariffs, trade will not expand meaningfully if goods still cannot move cheaply, quickly, and predictably.
Integration Complexity and Distributional Politics
Africa’s integration landscape is shaped by multiple overlapping regional economic communities and trade regimes. This creates legal and administrative complexity — often described as an integration “spaghetti bowl.” FAZ notes the challenge of coordination and the continued fragmentation of rules.
There is also a political economy dimension. Intra-African trade is heavily influenced by a small number of larger economies — and the distribution of benefits matters. FAZ highlights the dominance of major players (notably South Africa) and the concern that tariff liberalisation alone may entrench existing industrial advantages.
Where governments expect asymmetric outcomes, resistance often takes the form of delay, narrow implementation, or persistent non-tariff barriers.
What This Means for Egypt: The Opportunity Is Real — But Conditional
Egypt’s strategic case for AfCFTA participation remains strong: industrial potential, geographic location, and the opportunity to access and shape growing markets. But the experience so far suggests that the treaty text alone does not generate trade flows.
For Egypt’s private sector, the decisive factors are practical:
- predictable and efficient customs clearance and border procedures,
- logistics corridors and port efficiency,
- regulatory convergence (standards, certification, compliance),
- stable access to trade finance and payments,
- competitive energy and production conditions for manufacturing and processing.
AfCFTA can support these developments — but it cannot replace them.
The “Game Changer” Pathway: What Must Happen Next
FAZ concludes that AfCFTA will only become truly impactful if it is paired with the fundamentals: major infrastructure investment, stronger production and processing capacity, and a credible industrial policy.
At the same time, Africa faces a classic chicken-and-egg problem: without development there is limited investment appeal; without investment there is limited development.
For Egypt and its partners, a pragmatic strategy would be to:
- treat AfCFTA as a platform for real trade-cost reduction, not only tariff debates;
- focus on a limited number of scalable corridors and sectors where regional value chains can realistically grow;
- strengthen implementation capacity so that preferences become usable for firms — especially SMEs;
- enhance legal certainty and dispute resolution reliability for cross-border commerce.
Conclusion
AfCFTA remains a landmark achievement in terms of political commitment. But as of today, it has not yet been the “game changer” many hoped for.
For Egypt, the key question is no longer whether AfCFTA is visionary — it is. The question is whether governments and businesses can translate it into lower real trade costs, higher competitiveness, and bankable cross-border transactions. If those enabling conditions improve, AfCFTA’s promise can still become commercial reality.
This is the fourth article of a series decidated to purchasing real estate property in Spain: previously, we presented how to structure the purchase of a real estate property and what steps you must undertake to ensure the purchase is efficient and safe (you can find it here), the financial and tax information as well as practical tips related to the purchase process (here) and how to handle international inheritance tax implications (here).
How to obtain a mortgage loan when Purchasing Property in Spain
When a buyer in Spain wishes to purchase property using a mortgage loan, the financing process typically begins after selecting a specific property and signing a private purchase agreement, which is usually accompanied by a deposit payment. The entire financing process is strictly regulated under Spanish civil and banking law, offering a high degree of legal security, including foreign and non-resident buyers.
Once the private purchase contract is signed, the bank initiates an official property valuation. This is a mandatory step for determining the maximum loan amount, the financing conditions and for loan approval.
Only after the valuation is completed will the bank issue a formal mortgage offer. The entire process, from the initial application to the final offer, can take several weeks, depending on the complexity of the buyer’s financial profile and the documentation required. The final step occurs before a Spanish notary, where two deeds are signed simultaneously:
- The public deed of sale, and
- The mortgage deed.
At this stage, the bank transfers the loan amount directly to the seller, ensuring legal and financial certainty for all parties involved.
While this structure guarantees legal clarity, it also means that mortgage financing is not secured at the time the private agreement is signed. Therefore, it is strongly recommended to include a mortgage contingency clause in the private purchase contract. This clause makes the completion of the sale conditional upon obtaining financing, thereby protecting the buyer’s deposit in the event of a mortgage denial.
Key Differences for Foreign Buyers
Spanish banks do not generally issue binding pre-approvals before a specific property has been chosen. Foreign buyers, particularly non-residents, should also be aware of additional requirements, including:
- Submission of translated or apostilled foreign documents,
- More extensive due diligence and KYC (Know Your Customer) procedures, and
- Generally longer processing times.
These factors may extend the mortgage timeline and should be accounted for in the overall transaction planning.
Differences between buying a second-hand apartment/house and buying a new apartment/house directly from the developer
The main difference is that, in the case of a new home, VAT and AJD (stamp duty) are paid, and in the case of a second-hand home, only ITP (property transfer tax) is paid, as already explained in section III, paragraph 3.
In addition, in the case of new homes, a series of legal guarantees are established—for 1, 3, and 10 years—for possible construction defects that may arise in the home, for which the developer is liable. On the other hand, in the case of second-hand homes, the seller is liable for hidden defects only for a period of 6 months from delivery.
If the property is purchased from a natural person, it will generally be a second-hand home, whereas if it is purchased from a legal entity, it will normally be a new build and will be purchased from a developer.
Therefore, the fundamental differences will be those already mentioned above: different taxation and greater legal guarantees in the case of purchase from legal entities. Additionally, in the case of purchasing the property from a legal entity developer, there are enhanced documentation and reporting obligations, which do not apply in the case of sale by individuals.
Are there debts associated with the property that the buyer will be liable for?
The buyer is liable for any debts owed to the Homeowners’ Association for the three years prior to the purchase and for the outstanding portion of the current year’s dues. The buyer is also vicariously liable for any outstanding property tax (IBI) or other local taxes owed by the previous owner.
To adequately protect their interests, the buyer should, on the one hand, request a certificate of debts from the Homeowners’ Association and, on the other hand, check the status of payments of property tax and other municipal taxes.
What are the specific provions of Spanish Coastal Law (Ley De Costas)?
Properties located near the sea may fall under the Spanish Coastal Law (Ley de Costas), which regulates land use in the public maritime-terrestrial zone and its surrounding protected areas. These coastal strips are public domain, and strict limitations apply to ownership, construction, and renovation.
Even for older, long-standing buildings, it is vital to verify whether the property lies within a protection zone. Depending on the classification of the area, consequences can range from restricted use or denial of renovation permits to expiration of rights of use or, in extreme cases, administrative demolition orders.
Legal due diligence is essential to determine the status of the plot and identify any concessions or time-limited occupancy rights granted by the authorities.
What rules apply to Country Houses (Fincas Rústicas)?
Country houses (fincas rústicas) deserve special attention due to their location in rural and often protected areas, which are subject to strict urban planning and environmental regulations.
Depending on local and regional classifications, the land may be designated exclusively for agriculture, forestry, or conservation, limiting the potential for construction, expansion, or change of use.
Additionally, many rural properties have existing buildings that may never have been fully or properly legalised. As with coastal properties, buyers should review all applicable planning and environmental restrictions carefully before purchasing.
How are squatting cases (Okupas) regulated under Spanish law?
In recent years, Spain has experienced a rise in squatting cases, influenced by housing shortages, unaffordable rents, and high costs in urban or tourist areas. While the issue is complex and socio-politically sensitive, this section focuses on practical implications for property owners.
Importantly, unlawful occupation (okupación) is relatively uncommon in most parts of Spain. The majority of property owners, especially those who secure and monitor their homes properly, are unlikely to be affected.
Effective deterrents include:
- Alarm systems and surveillance cameras,
- Remote monitoring,
- Local property management services (especially for second homes).
Spanish law differentiates between:
- Intrusion into a primary residence (treated as unlawful entry),
- Occupation of vacant or second homes (classified as usurpation, requiring court action).
Recent Legal Reforms – “Anti-Squatting Law” (Ley Orgánica 1/2025): To address lengthy eviction timelines, Spain introduced reforms, which include:
- Within the first 48 hours of occupation:
Police may evict squatters without a court order if no legal proof of residence is presented. Owners must provide immediate proof of ownership. - After 48 hours: Eviction must follow a formal judicial process.
- Fast-track legal procedures: Eviction claims may now be processed in about 15 working days under accelerated procedures—though real-world implementation may vary by jurisdiction.
While these special topics may not apply to every transaction, they highlight the importance of thorough due diligence and professional legal advice when buying property in Spain. Understanding the implications of coastal laws, rural zoning, inheritance regulations, and property security helps international buyers make informed, secure, and future-proof investments.
After “Liberation Day,” many foreign companies offered discounts to American importers to help them offset the tariffs. A few months later, the US Supreme Court declared the «reciprocal» tariffs unlawful, but on the same day, President Trump announced new tariffs. In this article, we provide a practical overview of how to handle various scenarios, shifting from a reactive, unstructured approach to deliberate management of price volatility and trade flows caused by the introduction, adjustment, and removal of tariffs.
Tariff Sharing agreements
For a long time, the question has been straightforward: who absorbs the extra customs cost? The exporter? The importer? Both? The question remains important, but today it is incomplete.
The new scenario, in light of the recent ruling by the US Court of Justice on March 20, 2026, is: what happens if that duty is then canceled and refunded? If the cost was shared between the parties, the benefit of the refund must follow a consistent logic. In the absence of a clear agreement on this point, however, there is a risk of economic misalignment that could compromise the commercial relationship.
Let’s imagine an Italian winery that sells its products to a US importer. Following the introduction of reciprocal duties, the parties have decided that the exporter will grant an extraordinary discount of 7.5%, explicitly motivated by the need to share the impact of the duty. The commercial relationship continues, volumes remain stable, and the importer avoids passing on the entire increase to the end customer.
As a result of the Supreme Court ruling (or, in the future, another ruling or administrative decision), the importer obtains a refund of the duties paid during that period.
If no formal agreements have been made on this point and the documentation refers generically to a «commercial discount» and says nothing about reimbursement, the situation afterward may be difficult to reconstruct and, above all, could lead to commercial tension. As a result, a positive development (the cancellation of the duty and the right to reimbursement) becomes a problematic factor that jeopardizes the relationship.
Is the exporter entitled to a refund of the discounts granted to mitigate the duties?
In the absence of a different agreement between the parties, the right to reimbursement belongs to the party who paid the duty, i.e., in most cases, the importer. Therefore, there is a risk that the importer will enjoy a double benefit (the discount and the duty refund), while the exporter will get nothing.
For this reason, it is essential that the parties do not limit themselves to negotiating prices and discounts, but also establish the consequences of the adoption, modification, or revocation of duties on the contract, including any refunds.
To achieve this, the first step is to accurately classify and document the discounts granted. If only a «commercial discount» appears in emails, commercial orders, credit notes, and invoices, it will be harder to later argue that this discount was actually an extraordinary, temporary contribution related to the duty. Conversely, if the documentation and contract specify that it is a tariff sharing or tariff mitigation measure, identifying the amounts to be refunded after the fact becomes much simpler.
The goal is to create a clear view of the trend in discounts and payments so that, if needed, financial flows can be adjusted to align with the original terms of the agreement: if the exporter has helped cover a cost that then, in whole or in part, does not end up materializing, they will be eligible for a refund of the contribution paid.
The contract will therefore include, in addition to the Tariff Sharing clause, a Tariff Reimbursement Allocation clause, which states that if the importer receives a refund, credit, or any other economic benefit related to the duty for which the exporter has granted a discount, the importer must return the corresponding portion of the benefit to the exporter in full. or proportionally, depending on how the parties intend to distribute risk and incentive.
Importer’s responsibility to seek reimbursement
It is unclear whether, in the case of US reciprocal duties, importers can simply file an administrative claim to get a refund or if legal action will be required. The latter seems more probable.
Generally, obtaining a duty refund involves action, deadlines, documentation, and coordination with brokers and customs consultants. In most cases, the entity controlling the process is the importer (or someone acting on their behalf).
This raises a sensitive but very real issue: if the importer knows that they will have to invest time and money to obtain a refund, only to then have to share the benefit with the exporter, their incentive to take action may be reduced. To prevent this inertia the contract should contain an express obligation to take action, set out as a duty of best efforts or commercially reasonable efforts.
For example, the contract should specify that the importer must inquire about the conditions and time limits of the process, keep relevant documentation, regularly inform the exporter about the progress of the initiatives, and not unilaterally waive or reduce the claim if it affects the exporter’s economic rights.
Preventive Agreements on Litigation and Cost Allocation
When reimbursement involves a lawsuit or structured legal action, the obstacles are organizational and financial: who decides if and when to proceed, who selects the lawyers, who pays the costs upfront, how the net recovery is divided, and who has the final say on a settlement. This generally applies to all contracts, not just this case: dispute resolution methods must be addressed and agreed upon before the problem arises.
Otherwise, the dispute resolution process risks becoming a secondary improvised negotiation at the worst time — when the parties are already under pressure from margins, cash flow, and regulatory uncertainty. As a result, it becomes much harder to reach an agreement.
How to handle new tariffs and their potential cancellation
To safeguard against uncertainty, the agreement should be organized into two stages.
- The first stage regulates the immediate impact of the change in scenario, for example, the introduction of a new tariff or its increase (renegotiation, cost sharing, automatic adjustment : I discussed this in this article).
- The second stage manages the possible «rollback» (right to reimbursement, process, allocation criteria).
This approach has a clear benefit: it does not force the parties to discuss every time the tariff regime changes or a decision to cancel tariffs is made. Instead of reacting to market changes, a tool is adopted to manage potential scenarios, which is much more resilient commercially and easier to oversee, as the rules have already been agreed upon.
This allows the impact of duties to be regulated not as an extraordinary variable, to be agreed upon on a one-time basis, but as a structural, adaptable phenomenon that could last a long time.
This is why it is crucial to know how to draft contracts that cover both the current situation and potential changes, including any refunds.
Conclusion: Three practical steps for companies exporting to the US
The first is to agree on the consequences for the contract of the introduction of a new duty, increasing it, or revoking it (renegotiation, cost sharing, automatic price adjustment, right to share the refund).
The second is to clearly document any discount granted to offset a duty. If it remains a generic «commercial discount,» the right to a refund if reimbursement occurs will be much harder to enforce.
The third step is to determine what happens if the duty is canceled or revoked: the importer’s responsibility to take action to get a refund, manage the administrative process or litigation, how to divide costs, who oversees the activities of consultants and lawyers, and how the recovered funds will be allocated.
Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.
Where this new duty comes from
The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”
Companies involved in the investigation
The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.
U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.
Next steps in the procedure
Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.
The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.
The preliminary nature of this determination means there is still room to change the decision before it becomes final.
Possible effective date
The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.
If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.
What to do between now and January 1, 2026?
At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.
So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:
- Some rushed to ship as many products as possible before the potential effective date of the duty;
- Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
- Some suspended orders, pending definitive news on the impact of the duties.
These are all valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.
The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.
The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.
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For over a decade, Portugal’s Non-Habitual Resident (NHR) regime was the country’s flagship tool to attract international talent — a broad tax gateway that turned Lisbon, Porto and the Algarve into a top destination for retirees, investors and a wide range of professionals. Since the 2024 State Budget, that gateway has been closed to new applicants and replaced by a more specialised and technically demanding framework: the Tax Incentive for Scientific Research and Innovation (IFICI), commonly branded as “NHR 2.0”.
This article explains, from a Portuguese tax-law perspective, what changed, who can still qualify, and how the new application cycle works in practice.
What is the IFICI regime (NHR 2.0)?
IFICI was created by Law 82/2023 (the 2024 State Budget), which inserted Article 58-A in the Portuguese Tax Benefits Statute (EBF — Estatuto dos Benefícios Fiscais). After almost a year of regulatory limbo, the regime was finally implemented by Ordinance no. 352/2024/1, with retroactive effects to 1 January 2024.
In essence, IFICI offers, for a non-renewable 10-year period:
- A 20% flat personal income tax rate on employment (Category A) and self-employment (Category B) income derived from eligible activities; and
- A general exemption (with progression) on most foreign-source income — Categories A, B, E (capital), F (rental) and G (capital gains) — provided the income is not paid by entities based in blacklisted jurisdictions (in which case a 35% flat rate applies).
Crucially — and this is one of the biggest differences from the old NHR — foreign pensions (Category H) are excluded from the new regime and are taxed at standard progressive rates.
What happened to the “old” NHR?
The original NHR has been revoked for new applicants, but it is not gone overnight:
- Individuals who already held NHR status on 31 December 2023 keep their benefits until the end of their 10-year period.
- A transitional regime under Article 236 of the 2024 State Budget allowed certain individuals with prior ties to Portugal (employment contracts, lease agreements, school enrolment of dependants, residence-permit procedures already underway) to still apply for the original NHR in 2024 — in some cases with the registration deadline extended to 31 March 2025.
All other inbound taxpayers must now look at IFICI, not the old NHR.
Who qualifies for IFICI in Portugal?
To benefit, two cumulative conditions must be met:
- Personal eligibility: the individual becomes a Portuguese tax resident and was not a tax resident in any of the previous five years, and has not previously benefited from the NHR or the IRS Jovem regime.
- Professional eligibility: the activity falls within one of the categories listed in Article 58-A of the Portuguese Tax Benefits Statute and detailed in Ordinance 352/2024/1. The main eligibility routes are:
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- Scientific research and higher education — teaching positions at higher-education institutions and research within the national science and technology system.
- Certified startups — employment, self-employment or board positions in entities certified under the Portuguese Startup Law (Law. 21/2023).
- R&D centres and recognised innovation centres.
- Highly qualified professionals — roles listed in Annex I of Ordinance 352/2024/1 by reference to the Portuguese Classification of Occupations (CPP), such as the following ones: 112 — CEOs and executive managers; 12 — Directors of administrative and commercial services; 13 — Directors of production and specialised services; 21 — Specialists in physical sciences, mathematics, engineering and related areas; 2163.1 — Industrial product or equipment designers; 221 — Physicians; 231 — University professors; 25 — ICT specialists;
- Industrial and service exporters — qualified jobs in companies whose main activity falls under specific CAE codes (Annex II of the Ordinance) and that export at least 50% of their turnover in the year the position starts or in either of the two preceding years.
- Activities under contractual investment incentives (CFI/RFAI) and roles in entities recognised by AICEP or IAPMEI as relevant to the national economy.
A minimum academic qualification is also required for highly qualified professions: a PhD, or a bachelor’s/master’s degree combined with at least three years of professional experience.
IFICI vs NHR: key differences at a glance
Scope of beneficiaries:
- Original NHR: broad, including retirees, investors and “high-value” professionals.
- IFICI / NHR 2.0: narrow, including researchers, startup staff, ICT, engineers and exporters.
Flat tax on qualifying income:
- Original NHR: 20%.
- IFICI / NHR 2.0: 20%.
Foreign-source income:
- Original NHR: broad exemption, including pensions.
- IFICI / NHR 2.0: exemption for categories A, B, E, F and G; pensions taxed at progressive rates; 35% on blacklisted jurisdictions.
Duration:
- Original NHR: 10 consecutive years.
- IFICI / NHR 2.0: 10 consecutive years.
Corporate substance:
- Original NHR: minimal requirements for the employer.
- IFICI / NHR 2.0: strict — startup, R&D, RFAI or 50% exporter.
Application channel:
- Original NHR: Portal das Finanças, in one step.
- IFICI / NHR 2.0: competent entity — FCT, AICEP, IAPMEI, ANI or Startup Portugal — plus Portal das Finanças.
Registration deadline;
- Original NHR: 31 March of the following year.
- IFICI / NHR 2.0: 15 January of the following year.
Compliance:
- Original NHR: generally one-off.
- IFICI / NHR 2.0: annual verification of ongoing eligibility.
How to apply for IFICI: deadlines and competent authorities
Unlike the NHR, IFICI is not registered directly with the Portuguese Tax Authority (AT). The process runs through sectoral authorities, each handling a different eligibility route:
- FCT (Fundação para a Ciência e a Tecnologia) — research and higher-education roles.
- AICEP and IAPMEI — qualified jobs and corporate-body positions in entities recognised as relevant to the national economy.
- ANI (Agência Nacional de Inovação) — R&D personnel whose costs qualify under the SIFIDE II tax credit.
- Startup Portugal — positions in certified startups.
- Tax Authority (AT) — final registration via the Portal das Finanças.
The compliance calendar is now an annual cycle:
- 15 January — deadline to file the IFICI application for the previous year of residence.
- 15 February — competent entities communicate the taxpayer’s compliance status to the AT.
- 31 March — taxpayers can obtain confirmation of their registration status on the Portal das Finanças.
A failure to confirm continued eligibility — for example, if the employer ceases to meet the export threshold or the startup loses certification — can result in suspension of the regime for that year, although the underlying 10-year window keeps running.
IFICI Eligibility Checklist
Before finalising a move or filing a Portuguese tax return, candidates should be able to tick all of the following:
- 5-year rule: not a Portuguese tax resident in any of the five years preceding the year of arrival.
- No prior NHR / IRS Jovem: the regime is not available to those who already benefited from those frameworks.
- Activity alignment: professional role explicitly covered by Article 58-A of Portuguese Tax Benefits Statute and Annexes I/II of Ordinance 352/2024/1.
- Employer filter: for highly qualified roles, the employer is a startup, an R&D/innovation centre, an RFAI/CFI beneficiary, or a ≥50% exporter.
- Application route identified: the correct competent entity (FCT, AICEP, IAPMEI, ANI, Startup Portugal) is selected.
- Deadline: application filed by 15 January of the year following arrival.
- Annual compliance plan in place to confirm continued eligibility.
Conclusion: A more specialised, but still attractive, gateway
The shift from NHR to IFICI represents a deliberate narrowing of Portugal’s tax incentives: a move from a broad “welcome mat” to a surgical tool focused on scientific research, innovation, qualified employment and exporting activities. For retirees and passive investors, Portugal is no longer the obvious choice it was a decade ago. For researchers, startup teams, ICT specialists, engineers, physicians and executives moving into exporting groups, however, IFICI remains one of the most competitive personal-tax frameworks in Europe — provided the move is properly planned, with the right legal and tax structuring in place ahead of residency.
FAQ
Is the NHR still available in Portugal?
Not for new applicants. Only those who became Portuguese tax residents by the end of 2023 — or who qualified under the transitional rules of Article 236 of the Portuguese Tax Benefits Statute — could still register for the original NHR. Existing beneficiaries keep their status for the remainder of their 10-year period.
Is IFICI the same as NHR?
No. IFICI shares the 20% flat rate and the 10-year duration with the NHR, but it is narrower in scope, has stricter corporate requirements, and excludes foreign pensions from the exemption.
Are foreign pensions tax-free under IFICI?
No. Foreign pensions are taxed at general progressive rates. This is one of the most significant differences from the old NHR.
Can a remote worker qualify for IFICI?
Only if the activity falls within one of the eligible categories and the employer or activity meets the corporate requirements (startup, R&D, RFAI, ≥50% exporter, etc.). Working remotely from Portugal for a foreign company does not, in itself, grant access to the regime.
What is the application deadline for IFICI?
15 January of the year following the year in which the individual becomes a Portuguese tax resident.
Are foreign dividends, royalties and capital gains exempt under IFICI?
Generally yes — subject to declaration for progression purposes — provided they are not paid by entities located in jurisdictions on the Portuguese blacklist, in which case a 35% flat rate applies.
After more than twenty years of negotiations, the EU/Mercosur agreement remains in a legally incomplete but commercially relevant stage. For lawyers advising clients in the wine industry, the key issue is no longer whether the agreement will reshape trade, but how and when its provisions will begin to affect market access, regulatory compliance, and competitive positioning.
A negotiated agreement, yet without full legal effect
The trade pillar of the agreement was politically concluded in 2019, followed by ongoing revisions and additional negotiations, particularly on environmental commitments. Even though the full agreement is pending ratification processes on both sides, at this stage, the temporary agreement is already in force, producing its effects.
From a legal standpoint, this creates a hybrid scenario: (i) the text is sufficiently defined to anticipate obligations and opportunities, (ii) but not yet fully binding, (iii) with temporary measures already applicable.
This distinction is critical for legal advisors. The full agreement cannot yet be invoked as applicable law, but it already serves as a reliable roadmap for future regulatory and commercial conditions.
Why wine matters in this agreement
The wine sector sits at the intersection of several key chapters of the agreement:
- tariff liberalisation;
- sanitary and phytosanitary (SPS) measures;
- technical barriers to trade (TBT);
- intellectual property, particularly geographical indications (GIs).
This makes wine a multi-layered case study of how the agreement will operate in practice.
At the same time, the economic context reinforces its relevance. The European Union is Mercosur’s second-largest trading partner, with strong complementarities in trade flows. Mercosur’s exports are concentrated in agricultural goods, while EU exports are concentrated in higher value-added categories, where wine is positioned.
Tariffs: gradual but meaningful impact
Today, wine exports to Mercosur, especially to Brazil, face import duties combined with complex internal taxation. While the agreement does not eliminate all barriers immediately, it provides for progressive tariff reductions and improved quota conditions.
Meanwhile, the Brazilian tax system is under complete reform, which reinforces the importance of specialised legal assistance.
For legal practitioners, this raises practical issues:
- interpretation of tariff schedules and staging periods;
- interaction with domestic tax regimes;
- structuring of distribution agreements to capture tariff advantages over time.
The key point is that tariff benefits will not be uniform or immediate. They will require active legal planning to be effectively utilised.
Beyond tariffs: regulatory friction is the real battlefield
More significant than tariffs are the provisions addressing regulatory barriers.
Wine exports are heavily affected by labelling requirements, certification procedures, sanitary controls, product registration rules and geographical protections.
The agreement introduces commitments to increase transparency and reduce unnecessary barriers, particularly under the «Sanitary and Phytosanitary Measures» (SPS) and «Technical Barriers to Trade» (TBT) chapters. However, it does not create full harmonisation.
This means that regulatory compliance will remain jurisdiction-specific, but procedures should become more predictable and less discretionary.
For lawyers, this translates into a shift from navigating opaque systems to advising within a more structured, but still fragmented, regulatory framework.
Geographical indications: protection and tension
One of the most legally sensitive aspects of the agreement is the protection of geographical indications.
The EU seeks recognition and protection of a wide range of European GIs in Mercosur countries, including wine denominations. This implies stronger protection for European producers against the misuse of names and potential restrictions on local producers’ use of certain terms.
From a legal perspective, the new framework raises issues such as:
- coexistence with pre-existing trademarks;
- transition periods for local operators;
- enforcement mechanisms and litigation risks.
This is an area where disputes are likely to arise, particularly in markets with established local practices.
Services, distribution, and market structure
Although often overlooked, service provisions are highly relevant for the wine sector.
Each year, the EU exports nearly €30 billion in services to Mercosur, double the amount in the opposite direction.
The agreement aims to improve conditions for:
- logistics providers
- distribution networks
- commercial representation
- marketing and advertising agencies
For wine exporters, market access is not only about tariffs but also about how products reach consumers.
Legal advisors will need to consider:
- distribution agreements and exclusivity clauses
- regulatory requirements for importers and distributors
- compliance with competition rules
The implementation gap: where risk lies
Even after ratification, the agreement will not produce immediate uniform effects.
Its implementation will depend on phased tariff reductions, domestic regulatory adjustments and administrative practices.
This creates a gap between formal commitments and practical outcomes.
For lawyers, this is where advisory work becomes most valuable:
- managing client expectations
- identifying timing mismatches between legal changes and market reality
- mitigating risks linked to partial or inconsistent implementation
What should lawyers be doing now?
Treating the agreement as a distant political project is a mistake. The ratification is not around the corner, but it will happen.
Instead of just waiting, legal advisors should:
- analyze the relevant chapters (tariffs, SPS, TBT, GIs) from a sector-specific perspective;
- anticipate how domestic law will interact with the agreement;
- prepare contractual structures that can adapt to phased changes;
- monitor closely ratification and implementation developments.
In practical terms, the agreement should already be part of strategic legal advice, even before its formal entry into force.
Final sip
The EU/Mercosur agreement will not revolutionise the wine trade overnight. Its impact will be gradual, technical, and often subtle, but for those advising in the sector, it introduces a clear shift. We are moving from a fragmented and often opaque regulatory environment to a more structured, rule-based framework that is complex, but more predictable.
Understanding the agreement in theory is just the first step. The real challenge is to translate its provisions into practical legal strategies before competitors do.
Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.
For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.
What the EU decision does (and does not) do
The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.
At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.
In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.
The ideological paradox: a Socialist Republic on a tax-haven list
Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one.
Why Vietnam was added: the listing criteria and timeline
Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.
The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.
Vietnam’s response and the path to delisting
Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.
How different payment types are affected in practice
Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.
The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.
Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.
If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.
Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.
Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.
Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.
Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.
Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.
Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.
How European banks may respond (and what that looks like in practice)
Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.
For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.
A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.
Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.
A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.
This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.
A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.
A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.
Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.
EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.
Non-tax defensive measures and EU funding implications
Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.
DAC6 reporting and public country-by-country reporting
Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.
Country notes (alphabetical)
Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.
France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.
Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.
Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.
For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.
Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.
Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.
Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.
Practical next steps for EU companies
- Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
- Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
- DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
- Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
- Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
- Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
- Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
- Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
- Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.
Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.
Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.
Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:
- Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
- Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
- Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
- Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
- Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
- Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.
Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.
Legal Forms of Joint Ventures
Investors should understand the different corporate structures available for joint ventures:
- Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
- Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
- Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.
Foreign Investment Law
Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:
- Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
- Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.
Why is ISIC4 Relevant?
The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.
Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:
- Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
- Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
- Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
- Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
- Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
- Service Categories: Activities classified under service categories generally require significantly lower capital requirements.
Strategic Considerations
- Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
- Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.
Practical Tips
- Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
- A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
- Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.
Compliance with Local Regulations
- Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
- Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
- Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.
Conclusion
Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.
Executive Summary
The African Continental Free Trade Area (AfCFTA) remains one of the most ambitious integration projects in the world. Yet, several years into its operational phase, it has not (yet) delivered the structural shift many expected. A recent analysis underscores the gap between political momentum and economic reality: implementation remains uneven, the agreement is still used by only a portion of participating states, and non-tariff barriers and infrastructure deficits continue to dominate the cost of doing business across borders. For Egypt, the opportunity is still real — but it depends less on treaty headlines and more on enabling conditions: trade logistics, customs efficiency, regulatory convergence, and competitive industrial capacity.
Looking Back: The Promise of a Single African Market
When the AfCFTA was launched, expectations were understandably high. A continent-wide trade framework was supposed to reduce tariffs, facilitate trade in goods and services, and strengthen regional value chains — with the broader goal of moving African economies up the value ladder.
In my 2022 article, I asked whether AfCFTA could become a game changer for Egypt, given Egypt’s industrial base, strategic geography, and the potential to diversify export markets beyond traditional partners. (For background, see the earlier article here”).
The Reality Check: Intra-African Trade Remains Structurally Weak
Several years later, the interim assessment is sobering. As the Frankfurter Allgemeine Zeitung (FAZ) recently put it, AfCFTA is not a “game changer” yet, and only about half of member states currently meet the practical prerequisites to trade under the agreement.
A deeper reason is structural: no other world region trades so little with itself, and while statistics may undercount informal cross-border flows (especially in food), the overall picture remains unchanged.
Trade integration cannot deliver transformative outcomes if production, logistics, and institutions do not support scale.
Implementation Has Been Slow — and Often Symbolic
Operationalisation did not start with full-scale liberalisation. Instead, the AfCFTA began with a pilot approach: the Guided Trade Initiative (GTI) launched in October 2022, initially with eight states, later joined by additional countries, including Nigeria and South Africa by spring 2025.
The GTI created valuable learning effects, but it also underlined a key point: early progress was often presented through symbolic deals, while product coverage and volumes remained limited. FAZ highlights that only selected goods could be traded duty-free and that key sectors remained constrained for a long time due to missing or unresolved technical rules.
A pilot, however, cannot substitute for full operational certainty — the kind businesses need to restructure supply chains and invest.
Tariffs Are Not the Main Barrier — Trade Costs Are
AfCFTA is frequently discussed in terms of tariff liberalisation. Yet, evidence suggests that the largest gains do not come from tariffs but from reducing non-tariff barriers and improving trade infrastructure.
FAZ points to a central reality: tariffs tend to add around 20–30% to intra-African trade costs, whereas non-tariff costs can be far higher — driven by bureaucracy, lack of harmonised standards, inefficient border processes, and transport barriers.
This is the crux: even with reduced tariffs, trade will not expand meaningfully if goods still cannot move cheaply, quickly, and predictably.
Integration Complexity and Distributional Politics
Africa’s integration landscape is shaped by multiple overlapping regional economic communities and trade regimes. This creates legal and administrative complexity — often described as an integration “spaghetti bowl.” FAZ notes the challenge of coordination and the continued fragmentation of rules.
There is also a political economy dimension. Intra-African trade is heavily influenced by a small number of larger economies — and the distribution of benefits matters. FAZ highlights the dominance of major players (notably South Africa) and the concern that tariff liberalisation alone may entrench existing industrial advantages.
Where governments expect asymmetric outcomes, resistance often takes the form of delay, narrow implementation, or persistent non-tariff barriers.
What This Means for Egypt: The Opportunity Is Real — But Conditional
Egypt’s strategic case for AfCFTA participation remains strong: industrial potential, geographic location, and the opportunity to access and shape growing markets. But the experience so far suggests that the treaty text alone does not generate trade flows.
For Egypt’s private sector, the decisive factors are practical:
- predictable and efficient customs clearance and border procedures,
- logistics corridors and port efficiency,
- regulatory convergence (standards, certification, compliance),
- stable access to trade finance and payments,
- competitive energy and production conditions for manufacturing and processing.
AfCFTA can support these developments — but it cannot replace them.
The “Game Changer” Pathway: What Must Happen Next
FAZ concludes that AfCFTA will only become truly impactful if it is paired with the fundamentals: major infrastructure investment, stronger production and processing capacity, and a credible industrial policy.
At the same time, Africa faces a classic chicken-and-egg problem: without development there is limited investment appeal; without investment there is limited development.
For Egypt and its partners, a pragmatic strategy would be to:
- treat AfCFTA as a platform for real trade-cost reduction, not only tariff debates;
- focus on a limited number of scalable corridors and sectors where regional value chains can realistically grow;
- strengthen implementation capacity so that preferences become usable for firms — especially SMEs;
- enhance legal certainty and dispute resolution reliability for cross-border commerce.
Conclusion
AfCFTA remains a landmark achievement in terms of political commitment. But as of today, it has not yet been the “game changer” many hoped for.
For Egypt, the key question is no longer whether AfCFTA is visionary — it is. The question is whether governments and businesses can translate it into lower real trade costs, higher competitiveness, and bankable cross-border transactions. If those enabling conditions improve, AfCFTA’s promise can still become commercial reality.
This is the fourth article of a series decidated to purchasing real estate property in Spain: previously, we presented how to structure the purchase of a real estate property and what steps you must undertake to ensure the purchase is efficient and safe (you can find it here), the financial and tax information as well as practical tips related to the purchase process (here) and how to handle international inheritance tax implications (here).
How to obtain a mortgage loan when Purchasing Property in Spain
When a buyer in Spain wishes to purchase property using a mortgage loan, the financing process typically begins after selecting a specific property and signing a private purchase agreement, which is usually accompanied by a deposit payment. The entire financing process is strictly regulated under Spanish civil and banking law, offering a high degree of legal security, including foreign and non-resident buyers.
Once the private purchase contract is signed, the bank initiates an official property valuation. This is a mandatory step for determining the maximum loan amount, the financing conditions and for loan approval.
Only after the valuation is completed will the bank issue a formal mortgage offer. The entire process, from the initial application to the final offer, can take several weeks, depending on the complexity of the buyer’s financial profile and the documentation required. The final step occurs before a Spanish notary, where two deeds are signed simultaneously:
- The public deed of sale, and
- The mortgage deed.
At this stage, the bank transfers the loan amount directly to the seller, ensuring legal and financial certainty for all parties involved.
While this structure guarantees legal clarity, it also means that mortgage financing is not secured at the time the private agreement is signed. Therefore, it is strongly recommended to include a mortgage contingency clause in the private purchase contract. This clause makes the completion of the sale conditional upon obtaining financing, thereby protecting the buyer’s deposit in the event of a mortgage denial.
Key Differences for Foreign Buyers
Spanish banks do not generally issue binding pre-approvals before a specific property has been chosen. Foreign buyers, particularly non-residents, should also be aware of additional requirements, including:
- Submission of translated or apostilled foreign documents,
- More extensive due diligence and KYC (Know Your Customer) procedures, and
- Generally longer processing times.
These factors may extend the mortgage timeline and should be accounted for in the overall transaction planning.
Differences between buying a second-hand apartment/house and buying a new apartment/house directly from the developer
The main difference is that, in the case of a new home, VAT and AJD (stamp duty) are paid, and in the case of a second-hand home, only ITP (property transfer tax) is paid, as already explained in section III, paragraph 3.
In addition, in the case of new homes, a series of legal guarantees are established—for 1, 3, and 10 years—for possible construction defects that may arise in the home, for which the developer is liable. On the other hand, in the case of second-hand homes, the seller is liable for hidden defects only for a period of 6 months from delivery.
If the property is purchased from a natural person, it will generally be a second-hand home, whereas if it is purchased from a legal entity, it will normally be a new build and will be purchased from a developer.
Therefore, the fundamental differences will be those already mentioned above: different taxation and greater legal guarantees in the case of purchase from legal entities. Additionally, in the case of purchasing the property from a legal entity developer, there are enhanced documentation and reporting obligations, which do not apply in the case of sale by individuals.
Are there debts associated with the property that the buyer will be liable for?
The buyer is liable for any debts owed to the Homeowners’ Association for the three years prior to the purchase and for the outstanding portion of the current year’s dues. The buyer is also vicariously liable for any outstanding property tax (IBI) or other local taxes owed by the previous owner.
To adequately protect their interests, the buyer should, on the one hand, request a certificate of debts from the Homeowners’ Association and, on the other hand, check the status of payments of property tax and other municipal taxes.
What are the specific provions of Spanish Coastal Law (Ley De Costas)?
Properties located near the sea may fall under the Spanish Coastal Law (Ley de Costas), which regulates land use in the public maritime-terrestrial zone and its surrounding protected areas. These coastal strips are public domain, and strict limitations apply to ownership, construction, and renovation.
Even for older, long-standing buildings, it is vital to verify whether the property lies within a protection zone. Depending on the classification of the area, consequences can range from restricted use or denial of renovation permits to expiration of rights of use or, in extreme cases, administrative demolition orders.
Legal due diligence is essential to determine the status of the plot and identify any concessions or time-limited occupancy rights granted by the authorities.
What rules apply to Country Houses (Fincas Rústicas)?
Country houses (fincas rústicas) deserve special attention due to their location in rural and often protected areas, which are subject to strict urban planning and environmental regulations.
Depending on local and regional classifications, the land may be designated exclusively for agriculture, forestry, or conservation, limiting the potential for construction, expansion, or change of use.
Additionally, many rural properties have existing buildings that may never have been fully or properly legalised. As with coastal properties, buyers should review all applicable planning and environmental restrictions carefully before purchasing.
How are squatting cases (Okupas) regulated under Spanish law?
In recent years, Spain has experienced a rise in squatting cases, influenced by housing shortages, unaffordable rents, and high costs in urban or tourist areas. While the issue is complex and socio-politically sensitive, this section focuses on practical implications for property owners.
Importantly, unlawful occupation (okupación) is relatively uncommon in most parts of Spain. The majority of property owners, especially those who secure and monitor their homes properly, are unlikely to be affected.
Effective deterrents include:
- Alarm systems and surveillance cameras,
- Remote monitoring,
- Local property management services (especially for second homes).
Spanish law differentiates between:
- Intrusion into a primary residence (treated as unlawful entry),
- Occupation of vacant or second homes (classified as usurpation, requiring court action).
Recent Legal Reforms – “Anti-Squatting Law” (Ley Orgánica 1/2025): To address lengthy eviction timelines, Spain introduced reforms, which include:
- Within the first 48 hours of occupation:
Police may evict squatters without a court order if no legal proof of residence is presented. Owners must provide immediate proof of ownership. - After 48 hours: Eviction must follow a formal judicial process.
- Fast-track legal procedures: Eviction claims may now be processed in about 15 working days under accelerated procedures—though real-world implementation may vary by jurisdiction.
While these special topics may not apply to every transaction, they highlight the importance of thorough due diligence and professional legal advice when buying property in Spain. Understanding the implications of coastal laws, rural zoning, inheritance regulations, and property security helps international buyers make informed, secure, and future-proof investments.
After “Liberation Day,” many foreign companies offered discounts to American importers to help them offset the tariffs. A few months later, the US Supreme Court declared the «reciprocal» tariffs unlawful, but on the same day, President Trump announced new tariffs. In this article, we provide a practical overview of how to handle various scenarios, shifting from a reactive, unstructured approach to deliberate management of price volatility and trade flows caused by the introduction, adjustment, and removal of tariffs.
Tariff Sharing agreements
For a long time, the question has been straightforward: who absorbs the extra customs cost? The exporter? The importer? Both? The question remains important, but today it is incomplete.
The new scenario, in light of the recent ruling by the US Court of Justice on March 20, 2026, is: what happens if that duty is then canceled and refunded? If the cost was shared between the parties, the benefit of the refund must follow a consistent logic. In the absence of a clear agreement on this point, however, there is a risk of economic misalignment that could compromise the commercial relationship.
Let’s imagine an Italian winery that sells its products to a US importer. Following the introduction of reciprocal duties, the parties have decided that the exporter will grant an extraordinary discount of 7.5%, explicitly motivated by the need to share the impact of the duty. The commercial relationship continues, volumes remain stable, and the importer avoids passing on the entire increase to the end customer.
As a result of the Supreme Court ruling (or, in the future, another ruling or administrative decision), the importer obtains a refund of the duties paid during that period.
If no formal agreements have been made on this point and the documentation refers generically to a «commercial discount» and says nothing about reimbursement, the situation afterward may be difficult to reconstruct and, above all, could lead to commercial tension. As a result, a positive development (the cancellation of the duty and the right to reimbursement) becomes a problematic factor that jeopardizes the relationship.
Is the exporter entitled to a refund of the discounts granted to mitigate the duties?
In the absence of a different agreement between the parties, the right to reimbursement belongs to the party who paid the duty, i.e., in most cases, the importer. Therefore, there is a risk that the importer will enjoy a double benefit (the discount and the duty refund), while the exporter will get nothing.
For this reason, it is essential that the parties do not limit themselves to negotiating prices and discounts, but also establish the consequences of the adoption, modification, or revocation of duties on the contract, including any refunds.
To achieve this, the first step is to accurately classify and document the discounts granted. If only a «commercial discount» appears in emails, commercial orders, credit notes, and invoices, it will be harder to later argue that this discount was actually an extraordinary, temporary contribution related to the duty. Conversely, if the documentation and contract specify that it is a tariff sharing or tariff mitigation measure, identifying the amounts to be refunded after the fact becomes much simpler.
The goal is to create a clear view of the trend in discounts and payments so that, if needed, financial flows can be adjusted to align with the original terms of the agreement: if the exporter has helped cover a cost that then, in whole or in part, does not end up materializing, they will be eligible for a refund of the contribution paid.
The contract will therefore include, in addition to the Tariff Sharing clause, a Tariff Reimbursement Allocation clause, which states that if the importer receives a refund, credit, or any other economic benefit related to the duty for which the exporter has granted a discount, the importer must return the corresponding portion of the benefit to the exporter in full. or proportionally, depending on how the parties intend to distribute risk and incentive.
Importer’s responsibility to seek reimbursement
It is unclear whether, in the case of US reciprocal duties, importers can simply file an administrative claim to get a refund or if legal action will be required. The latter seems more probable.
Generally, obtaining a duty refund involves action, deadlines, documentation, and coordination with brokers and customs consultants. In most cases, the entity controlling the process is the importer (or someone acting on their behalf).
This raises a sensitive but very real issue: if the importer knows that they will have to invest time and money to obtain a refund, only to then have to share the benefit with the exporter, their incentive to take action may be reduced. To prevent this inertia the contract should contain an express obligation to take action, set out as a duty of best efforts or commercially reasonable efforts.
For example, the contract should specify that the importer must inquire about the conditions and time limits of the process, keep relevant documentation, regularly inform the exporter about the progress of the initiatives, and not unilaterally waive or reduce the claim if it affects the exporter’s economic rights.
Preventive Agreements on Litigation and Cost Allocation
When reimbursement involves a lawsuit or structured legal action, the obstacles are organizational and financial: who decides if and when to proceed, who selects the lawyers, who pays the costs upfront, how the net recovery is divided, and who has the final say on a settlement. This generally applies to all contracts, not just this case: dispute resolution methods must be addressed and agreed upon before the problem arises.
Otherwise, the dispute resolution process risks becoming a secondary improvised negotiation at the worst time — when the parties are already under pressure from margins, cash flow, and regulatory uncertainty. As a result, it becomes much harder to reach an agreement.
How to handle new tariffs and their potential cancellation
To safeguard against uncertainty, the agreement should be organized into two stages.
- The first stage regulates the immediate impact of the change in scenario, for example, the introduction of a new tariff or its increase (renegotiation, cost sharing, automatic adjustment : I discussed this in this article).
- The second stage manages the possible «rollback» (right to reimbursement, process, allocation criteria).
This approach has a clear benefit: it does not force the parties to discuss every time the tariff regime changes or a decision to cancel tariffs is made. Instead of reacting to market changes, a tool is adopted to manage potential scenarios, which is much more resilient commercially and easier to oversee, as the rules have already been agreed upon.
This allows the impact of duties to be regulated not as an extraordinary variable, to be agreed upon on a one-time basis, but as a structural, adaptable phenomenon that could last a long time.
This is why it is crucial to know how to draft contracts that cover both the current situation and potential changes, including any refunds.
Conclusion: Three practical steps for companies exporting to the US
The first is to agree on the consequences for the contract of the introduction of a new duty, increasing it, or revoking it (renegotiation, cost sharing, automatic price adjustment, right to share the refund).
The second is to clearly document any discount granted to offset a duty. If it remains a generic «commercial discount,» the right to a refund if reimbursement occurs will be much harder to enforce.
The third step is to determine what happens if the duty is canceled or revoked: the importer’s responsibility to take action to get a refund, manage the administrative process or litigation, how to divide costs, who oversees the activities of consultants and lawyers, and how the recovered funds will be allocated.
Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.
Where this new duty comes from
The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”
Companies involved in the investigation
The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.
U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.
Next steps in the procedure
Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.
The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.
The preliminary nature of this determination means there is still room to change the decision before it becomes final.
Possible effective date
The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.
If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.
What to do between now and January 1, 2026?
At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.
So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:
- Some rushed to ship as many products as possible before the potential effective date of the duty;
- Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
- Some suspended orders, pending definitive news on the impact of the duties.
These are all valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.
The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.
The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.
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For over a decade, Portugal’s Non-Habitual Resident (NHR) regime was the country’s flagship tool to attract international talent — a broad tax gateway that turned Lisbon, Porto and the Algarve into a top destination for retirees, investors and a wide range of professionals. Since the 2024 State Budget, that gateway has been closed to new applicants and replaced by a more specialised and technically demanding framework: the Tax Incentive for Scientific Research and Innovation (IFICI), commonly branded as “NHR 2.0”.
This article explains, from a Portuguese tax-law perspective, what changed, who can still qualify, and how the new application cycle works in practice.
What is the IFICI regime (NHR 2.0)?
IFICI was created by Law 82/2023 (the 2024 State Budget), which inserted Article 58-A in the Portuguese Tax Benefits Statute (EBF — Estatuto dos Benefícios Fiscais). After almost a year of regulatory limbo, the regime was finally implemented by Ordinance no. 352/2024/1, with retroactive effects to 1 January 2024.
In essence, IFICI offers, for a non-renewable 10-year period:
- A 20% flat personal income tax rate on employment (Category A) and self-employment (Category B) income derived from eligible activities; and
- A general exemption (with progression) on most foreign-source income — Categories A, B, E (capital), F (rental) and G (capital gains) — provided the income is not paid by entities based in blacklisted jurisdictions (in which case a 35% flat rate applies).
Crucially — and this is one of the biggest differences from the old NHR — foreign pensions (Category H) are excluded from the new regime and are taxed at standard progressive rates.
What happened to the “old” NHR?
The original NHR has been revoked for new applicants, but it is not gone overnight:
- Individuals who already held NHR status on 31 December 2023 keep their benefits until the end of their 10-year period.
- A transitional regime under Article 236 of the 2024 State Budget allowed certain individuals with prior ties to Portugal (employment contracts, lease agreements, school enrolment of dependants, residence-permit procedures already underway) to still apply for the original NHR in 2024 — in some cases with the registration deadline extended to 31 March 2025.
All other inbound taxpayers must now look at IFICI, not the old NHR.
Who qualifies for IFICI in Portugal?
To benefit, two cumulative conditions must be met:
- Personal eligibility: the individual becomes a Portuguese tax resident and was not a tax resident in any of the previous five years, and has not previously benefited from the NHR or the IRS Jovem regime.
- Professional eligibility: the activity falls within one of the categories listed in Article 58-A of the Portuguese Tax Benefits Statute and detailed in Ordinance 352/2024/1. The main eligibility routes are:
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- Scientific research and higher education — teaching positions at higher-education institutions and research within the national science and technology system.
- Certified startups — employment, self-employment or board positions in entities certified under the Portuguese Startup Law (Law. 21/2023).
- R&D centres and recognised innovation centres.
- Highly qualified professionals — roles listed in Annex I of Ordinance 352/2024/1 by reference to the Portuguese Classification of Occupations (CPP), such as the following ones: 112 — CEOs and executive managers; 12 — Directors of administrative and commercial services; 13 — Directors of production and specialised services; 21 — Specialists in physical sciences, mathematics, engineering and related areas; 2163.1 — Industrial product or equipment designers; 221 — Physicians; 231 — University professors; 25 — ICT specialists;
- Industrial and service exporters — qualified jobs in companies whose main activity falls under specific CAE codes (Annex II of the Ordinance) and that export at least 50% of their turnover in the year the position starts or in either of the two preceding years.
- Activities under contractual investment incentives (CFI/RFAI) and roles in entities recognised by AICEP or IAPMEI as relevant to the national economy.
A minimum academic qualification is also required for highly qualified professions: a PhD, or a bachelor’s/master’s degree combined with at least three years of professional experience.
IFICI vs NHR: key differences at a glance
Scope of beneficiaries:
- Original NHR: broad, including retirees, investors and “high-value” professionals.
- IFICI / NHR 2.0: narrow, including researchers, startup staff, ICT, engineers and exporters.
Flat tax on qualifying income:
- Original NHR: 20%.
- IFICI / NHR 2.0: 20%.
Foreign-source income:
- Original NHR: broad exemption, including pensions.
- IFICI / NHR 2.0: exemption for categories A, B, E, F and G; pensions taxed at progressive rates; 35% on blacklisted jurisdictions.
Duration:
- Original NHR: 10 consecutive years.
- IFICI / NHR 2.0: 10 consecutive years.
Corporate substance:
- Original NHR: minimal requirements for the employer.
- IFICI / NHR 2.0: strict — startup, R&D, RFAI or 50% exporter.
Application channel:
- Original NHR: Portal das Finanças, in one step.
- IFICI / NHR 2.0: competent entity — FCT, AICEP, IAPMEI, ANI or Startup Portugal — plus Portal das Finanças.
Registration deadline;
- Original NHR: 31 March of the following year.
- IFICI / NHR 2.0: 15 January of the following year.
Compliance:
- Original NHR: generally one-off.
- IFICI / NHR 2.0: annual verification of ongoing eligibility.
How to apply for IFICI: deadlines and competent authorities
Unlike the NHR, IFICI is not registered directly with the Portuguese Tax Authority (AT). The process runs through sectoral authorities, each handling a different eligibility route:
- FCT (Fundação para a Ciência e a Tecnologia) — research and higher-education roles.
- AICEP and IAPMEI — qualified jobs and corporate-body positions in entities recognised as relevant to the national economy.
- ANI (Agência Nacional de Inovação) — R&D personnel whose costs qualify under the SIFIDE II tax credit.
- Startup Portugal — positions in certified startups.
- Tax Authority (AT) — final registration via the Portal das Finanças.
The compliance calendar is now an annual cycle:
- 15 January — deadline to file the IFICI application for the previous year of residence.
- 15 February — competent entities communicate the taxpayer’s compliance status to the AT.
- 31 March — taxpayers can obtain confirmation of their registration status on the Portal das Finanças.
A failure to confirm continued eligibility — for example, if the employer ceases to meet the export threshold or the startup loses certification — can result in suspension of the regime for that year, although the underlying 10-year window keeps running.
IFICI Eligibility Checklist
Before finalising a move or filing a Portuguese tax return, candidates should be able to tick all of the following:
- 5-year rule: not a Portuguese tax resident in any of the five years preceding the year of arrival.
- No prior NHR / IRS Jovem: the regime is not available to those who already benefited from those frameworks.
- Activity alignment: professional role explicitly covered by Article 58-A of Portuguese Tax Benefits Statute and Annexes I/II of Ordinance 352/2024/1.
- Employer filter: for highly qualified roles, the employer is a startup, an R&D/innovation centre, an RFAI/CFI beneficiary, or a ≥50% exporter.
- Application route identified: the correct competent entity (FCT, AICEP, IAPMEI, ANI, Startup Portugal) is selected.
- Deadline: application filed by 15 January of the year following arrival.
- Annual compliance plan in place to confirm continued eligibility.
Conclusion: A more specialised, but still attractive, gateway
The shift from NHR to IFICI represents a deliberate narrowing of Portugal’s tax incentives: a move from a broad “welcome mat” to a surgical tool focused on scientific research, innovation, qualified employment and exporting activities. For retirees and passive investors, Portugal is no longer the obvious choice it was a decade ago. For researchers, startup teams, ICT specialists, engineers, physicians and executives moving into exporting groups, however, IFICI remains one of the most competitive personal-tax frameworks in Europe — provided the move is properly planned, with the right legal and tax structuring in place ahead of residency.
FAQ
Is the NHR still available in Portugal?
Not for new applicants. Only those who became Portuguese tax residents by the end of 2023 — or who qualified under the transitional rules of Article 236 of the Portuguese Tax Benefits Statute — could still register for the original NHR. Existing beneficiaries keep their status for the remainder of their 10-year period.
Is IFICI the same as NHR?
No. IFICI shares the 20% flat rate and the 10-year duration with the NHR, but it is narrower in scope, has stricter corporate requirements, and excludes foreign pensions from the exemption.
Are foreign pensions tax-free under IFICI?
No. Foreign pensions are taxed at general progressive rates. This is one of the most significant differences from the old NHR.
Can a remote worker qualify for IFICI?
Only if the activity falls within one of the eligible categories and the employer or activity meets the corporate requirements (startup, R&D, RFAI, ≥50% exporter, etc.). Working remotely from Portugal for a foreign company does not, in itself, grant access to the regime.
What is the application deadline for IFICI?
15 January of the year following the year in which the individual becomes a Portuguese tax resident.
Are foreign dividends, royalties and capital gains exempt under IFICI?
Generally yes — subject to declaration for progression purposes — provided they are not paid by entities located in jurisdictions on the Portuguese blacklist, in which case a 35% flat rate applies.
After more than twenty years of negotiations, the EU/Mercosur agreement remains in a legally incomplete but commercially relevant stage. For lawyers advising clients in the wine industry, the key issue is no longer whether the agreement will reshape trade, but how and when its provisions will begin to affect market access, regulatory compliance, and competitive positioning.
A negotiated agreement, yet without full legal effect
The trade pillar of the agreement was politically concluded in 2019, followed by ongoing revisions and additional negotiations, particularly on environmental commitments. Even though the full agreement is pending ratification processes on both sides, at this stage, the temporary agreement is already in force, producing its effects.
From a legal standpoint, this creates a hybrid scenario: (i) the text is sufficiently defined to anticipate obligations and opportunities, (ii) but not yet fully binding, (iii) with temporary measures already applicable.
This distinction is critical for legal advisors. The full agreement cannot yet be invoked as applicable law, but it already serves as a reliable roadmap for future regulatory and commercial conditions.
Why wine matters in this agreement
The wine sector sits at the intersection of several key chapters of the agreement:
- tariff liberalisation;
- sanitary and phytosanitary (SPS) measures;
- technical barriers to trade (TBT);
- intellectual property, particularly geographical indications (GIs).
This makes wine a multi-layered case study of how the agreement will operate in practice.
At the same time, the economic context reinforces its relevance. The European Union is Mercosur’s second-largest trading partner, with strong complementarities in trade flows. Mercosur’s exports are concentrated in agricultural goods, while EU exports are concentrated in higher value-added categories, where wine is positioned.
Tariffs: gradual but meaningful impact
Today, wine exports to Mercosur, especially to Brazil, face import duties combined with complex internal taxation. While the agreement does not eliminate all barriers immediately, it provides for progressive tariff reductions and improved quota conditions.
Meanwhile, the Brazilian tax system is under complete reform, which reinforces the importance of specialised legal assistance.
For legal practitioners, this raises practical issues:
- interpretation of tariff schedules and staging periods;
- interaction with domestic tax regimes;
- structuring of distribution agreements to capture tariff advantages over time.
The key point is that tariff benefits will not be uniform or immediate. They will require active legal planning to be effectively utilised.
Beyond tariffs: regulatory friction is the real battlefield
More significant than tariffs are the provisions addressing regulatory barriers.
Wine exports are heavily affected by labelling requirements, certification procedures, sanitary controls, product registration rules and geographical protections.
The agreement introduces commitments to increase transparency and reduce unnecessary barriers, particularly under the «Sanitary and Phytosanitary Measures» (SPS) and «Technical Barriers to Trade» (TBT) chapters. However, it does not create full harmonisation.
This means that regulatory compliance will remain jurisdiction-specific, but procedures should become more predictable and less discretionary.
For lawyers, this translates into a shift from navigating opaque systems to advising within a more structured, but still fragmented, regulatory framework.
Geographical indications: protection and tension
One of the most legally sensitive aspects of the agreement is the protection of geographical indications.
The EU seeks recognition and protection of a wide range of European GIs in Mercosur countries, including wine denominations. This implies stronger protection for European producers against the misuse of names and potential restrictions on local producers’ use of certain terms.
From a legal perspective, the new framework raises issues such as:
- coexistence with pre-existing trademarks;
- transition periods for local operators;
- enforcement mechanisms and litigation risks.
This is an area where disputes are likely to arise, particularly in markets with established local practices.
Services, distribution, and market structure
Although often overlooked, service provisions are highly relevant for the wine sector.
Each year, the EU exports nearly €30 billion in services to Mercosur, double the amount in the opposite direction.
The agreement aims to improve conditions for:
- logistics providers
- distribution networks
- commercial representation
- marketing and advertising agencies
For wine exporters, market access is not only about tariffs but also about how products reach consumers.
Legal advisors will need to consider:
- distribution agreements and exclusivity clauses
- regulatory requirements for importers and distributors
- compliance with competition rules
The implementation gap: where risk lies
Even after ratification, the agreement will not produce immediate uniform effects.
Its implementation will depend on phased tariff reductions, domestic regulatory adjustments and administrative practices.
This creates a gap between formal commitments and practical outcomes.
For lawyers, this is where advisory work becomes most valuable:
- managing client expectations
- identifying timing mismatches between legal changes and market reality
- mitigating risks linked to partial or inconsistent implementation
What should lawyers be doing now?
Treating the agreement as a distant political project is a mistake. The ratification is not around the corner, but it will happen.
Instead of just waiting, legal advisors should:
- analyze the relevant chapters (tariffs, SPS, TBT, GIs) from a sector-specific perspective;
- anticipate how domestic law will interact with the agreement;
- prepare contractual structures that can adapt to phased changes;
- monitor closely ratification and implementation developments.
In practical terms, the agreement should already be part of strategic legal advice, even before its formal entry into force.
Final sip
The EU/Mercosur agreement will not revolutionise the wine trade overnight. Its impact will be gradual, technical, and often subtle, but for those advising in the sector, it introduces a clear shift. We are moving from a fragmented and often opaque regulatory environment to a more structured, rule-based framework that is complex, but more predictable.
Understanding the agreement in theory is just the first step. The real challenge is to translate its provisions into practical legal strategies before competitors do.
Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.
For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.
What the EU decision does (and does not) do
The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.
At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.
In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.
The ideological paradox: a Socialist Republic on a tax-haven list
Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one.
Why Vietnam was added: the listing criteria and timeline
Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.
The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.
Vietnam’s response and the path to delisting
Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.
How different payment types are affected in practice
Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.
The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.
Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.
If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.
Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.
Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.
Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.
Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.
Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.
Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.
How European banks may respond (and what that looks like in practice)
Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.
For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.
A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.
Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.
A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.
This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.
A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.
A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.
Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.
EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.
Non-tax defensive measures and EU funding implications
Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.
DAC6 reporting and public country-by-country reporting
Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.
Country notes (alphabetical)
Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.
France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.
Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.
Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.
For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.
Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.
Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.
Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.
Practical next steps for EU companies
- Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
- Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
- DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
- Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
- Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
- Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
- Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
- Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
- Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.
Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.
Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.
Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:
- Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
- Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
- Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
- Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
- Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
- Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.
Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.
Legal Forms of Joint Ventures
Investors should understand the different corporate structures available for joint ventures:
- Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
- Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
- Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.
Foreign Investment Law
Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:
- Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
- Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.
Why is ISIC4 Relevant?
The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.
Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:
- Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
- Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
- Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
- Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
- Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
- Service Categories: Activities classified under service categories generally require significantly lower capital requirements.
Strategic Considerations
- Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
- Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.
Practical Tips
- Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
- A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
- Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.
Compliance with Local Regulations
- Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
- Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
- Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.
Conclusion
Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.
Executive Summary
The African Continental Free Trade Area (AfCFTA) remains one of the most ambitious integration projects in the world. Yet, several years into its operational phase, it has not (yet) delivered the structural shift many expected. A recent analysis underscores the gap between political momentum and economic reality: implementation remains uneven, the agreement is still used by only a portion of participating states, and non-tariff barriers and infrastructure deficits continue to dominate the cost of doing business across borders. For Egypt, the opportunity is still real — but it depends less on treaty headlines and more on enabling conditions: trade logistics, customs efficiency, regulatory convergence, and competitive industrial capacity.
Looking Back: The Promise of a Single African Market
When the AfCFTA was launched, expectations were understandably high. A continent-wide trade framework was supposed to reduce tariffs, facilitate trade in goods and services, and strengthen regional value chains — with the broader goal of moving African economies up the value ladder.
In my 2022 article, I asked whether AfCFTA could become a game changer for Egypt, given Egypt’s industrial base, strategic geography, and the potential to diversify export markets beyond traditional partners. (For background, see the earlier article here”).
The Reality Check: Intra-African Trade Remains Structurally Weak
Several years later, the interim assessment is sobering. As the Frankfurter Allgemeine Zeitung (FAZ) recently put it, AfCFTA is not a “game changer” yet, and only about half of member states currently meet the practical prerequisites to trade under the agreement.
A deeper reason is structural: no other world region trades so little with itself, and while statistics may undercount informal cross-border flows (especially in food), the overall picture remains unchanged.
Trade integration cannot deliver transformative outcomes if production, logistics, and institutions do not support scale.
Implementation Has Been Slow — and Often Symbolic
Operationalisation did not start with full-scale liberalisation. Instead, the AfCFTA began with a pilot approach: the Guided Trade Initiative (GTI) launched in October 2022, initially with eight states, later joined by additional countries, including Nigeria and South Africa by spring 2025.
The GTI created valuable learning effects, but it also underlined a key point: early progress was often presented through symbolic deals, while product coverage and volumes remained limited. FAZ highlights that only selected goods could be traded duty-free and that key sectors remained constrained for a long time due to missing or unresolved technical rules.
A pilot, however, cannot substitute for full operational certainty — the kind businesses need to restructure supply chains and invest.
Tariffs Are Not the Main Barrier — Trade Costs Are
AfCFTA is frequently discussed in terms of tariff liberalisation. Yet, evidence suggests that the largest gains do not come from tariffs but from reducing non-tariff barriers and improving trade infrastructure.
FAZ points to a central reality: tariffs tend to add around 20–30% to intra-African trade costs, whereas non-tariff costs can be far higher — driven by bureaucracy, lack of harmonised standards, inefficient border processes, and transport barriers.
This is the crux: even with reduced tariffs, trade will not expand meaningfully if goods still cannot move cheaply, quickly, and predictably.
Integration Complexity and Distributional Politics
Africa’s integration landscape is shaped by multiple overlapping regional economic communities and trade regimes. This creates legal and administrative complexity — often described as an integration “spaghetti bowl.” FAZ notes the challenge of coordination and the continued fragmentation of rules.
There is also a political economy dimension. Intra-African trade is heavily influenced by a small number of larger economies — and the distribution of benefits matters. FAZ highlights the dominance of major players (notably South Africa) and the concern that tariff liberalisation alone may entrench existing industrial advantages.
Where governments expect asymmetric outcomes, resistance often takes the form of delay, narrow implementation, or persistent non-tariff barriers.
What This Means for Egypt: The Opportunity Is Real — But Conditional
Egypt’s strategic case for AfCFTA participation remains strong: industrial potential, geographic location, and the opportunity to access and shape growing markets. But the experience so far suggests that the treaty text alone does not generate trade flows.
For Egypt’s private sector, the decisive factors are practical:
- predictable and efficient customs clearance and border procedures,
- logistics corridors and port efficiency,
- regulatory convergence (standards, certification, compliance),
- stable access to trade finance and payments,
- competitive energy and production conditions for manufacturing and processing.
AfCFTA can support these developments — but it cannot replace them.
The “Game Changer” Pathway: What Must Happen Next
FAZ concludes that AfCFTA will only become truly impactful if it is paired with the fundamentals: major infrastructure investment, stronger production and processing capacity, and a credible industrial policy.
At the same time, Africa faces a classic chicken-and-egg problem: without development there is limited investment appeal; without investment there is limited development.
For Egypt and its partners, a pragmatic strategy would be to:
- treat AfCFTA as a platform for real trade-cost reduction, not only tariff debates;
- focus on a limited number of scalable corridors and sectors where regional value chains can realistically grow;
- strengthen implementation capacity so that preferences become usable for firms — especially SMEs;
- enhance legal certainty and dispute resolution reliability for cross-border commerce.
Conclusion
AfCFTA remains a landmark achievement in terms of political commitment. But as of today, it has not yet been the “game changer” many hoped for.
For Egypt, the key question is no longer whether AfCFTA is visionary — it is. The question is whether governments and businesses can translate it into lower real trade costs, higher competitiveness, and bankable cross-border transactions. If those enabling conditions improve, AfCFTA’s promise can still become commercial reality.
This is the fourth article of a series decidated to purchasing real estate property in Spain: previously, we presented how to structure the purchase of a real estate property and what steps you must undertake to ensure the purchase is efficient and safe (you can find it here), the financial and tax information as well as practical tips related to the purchase process (here) and how to handle international inheritance tax implications (here).
How to obtain a mortgage loan when Purchasing Property in Spain
When a buyer in Spain wishes to purchase property using a mortgage loan, the financing process typically begins after selecting a specific property and signing a private purchase agreement, which is usually accompanied by a deposit payment. The entire financing process is strictly regulated under Spanish civil and banking law, offering a high degree of legal security, including foreign and non-resident buyers.
Once the private purchase contract is signed, the bank initiates an official property valuation. This is a mandatory step for determining the maximum loan amount, the financing conditions and for loan approval.
Only after the valuation is completed will the bank issue a formal mortgage offer. The entire process, from the initial application to the final offer, can take several weeks, depending on the complexity of the buyer’s financial profile and the documentation required. The final step occurs before a Spanish notary, where two deeds are signed simultaneously:
- The public deed of sale, and
- The mortgage deed.
At this stage, the bank transfers the loan amount directly to the seller, ensuring legal and financial certainty for all parties involved.
While this structure guarantees legal clarity, it also means that mortgage financing is not secured at the time the private agreement is signed. Therefore, it is strongly recommended to include a mortgage contingency clause in the private purchase contract. This clause makes the completion of the sale conditional upon obtaining financing, thereby protecting the buyer’s deposit in the event of a mortgage denial.
Key Differences for Foreign Buyers
Spanish banks do not generally issue binding pre-approvals before a specific property has been chosen. Foreign buyers, particularly non-residents, should also be aware of additional requirements, including:
- Submission of translated or apostilled foreign documents,
- More extensive due diligence and KYC (Know Your Customer) procedures, and
- Generally longer processing times.
These factors may extend the mortgage timeline and should be accounted for in the overall transaction planning.
Differences between buying a second-hand apartment/house and buying a new apartment/house directly from the developer
The main difference is that, in the case of a new home, VAT and AJD (stamp duty) are paid, and in the case of a second-hand home, only ITP (property transfer tax) is paid, as already explained in section III, paragraph 3.
In addition, in the case of new homes, a series of legal guarantees are established—for 1, 3, and 10 years—for possible construction defects that may arise in the home, for which the developer is liable. On the other hand, in the case of second-hand homes, the seller is liable for hidden defects only for a period of 6 months from delivery.
If the property is purchased from a natural person, it will generally be a second-hand home, whereas if it is purchased from a legal entity, it will normally be a new build and will be purchased from a developer.
Therefore, the fundamental differences will be those already mentioned above: different taxation and greater legal guarantees in the case of purchase from legal entities. Additionally, in the case of purchasing the property from a legal entity developer, there are enhanced documentation and reporting obligations, which do not apply in the case of sale by individuals.
Are there debts associated with the property that the buyer will be liable for?
The buyer is liable for any debts owed to the Homeowners’ Association for the three years prior to the purchase and for the outstanding portion of the current year’s dues. The buyer is also vicariously liable for any outstanding property tax (IBI) or other local taxes owed by the previous owner.
To adequately protect their interests, the buyer should, on the one hand, request a certificate of debts from the Homeowners’ Association and, on the other hand, check the status of payments of property tax and other municipal taxes.
What are the specific provions of Spanish Coastal Law (Ley De Costas)?
Properties located near the sea may fall under the Spanish Coastal Law (Ley de Costas), which regulates land use in the public maritime-terrestrial zone and its surrounding protected areas. These coastal strips are public domain, and strict limitations apply to ownership, construction, and renovation.
Even for older, long-standing buildings, it is vital to verify whether the property lies within a protection zone. Depending on the classification of the area, consequences can range from restricted use or denial of renovation permits to expiration of rights of use or, in extreme cases, administrative demolition orders.
Legal due diligence is essential to determine the status of the plot and identify any concessions or time-limited occupancy rights granted by the authorities.
What rules apply to Country Houses (Fincas Rústicas)?
Country houses (fincas rústicas) deserve special attention due to their location in rural and often protected areas, which are subject to strict urban planning and environmental regulations.
Depending on local and regional classifications, the land may be designated exclusively for agriculture, forestry, or conservation, limiting the potential for construction, expansion, or change of use.
Additionally, many rural properties have existing buildings that may never have been fully or properly legalised. As with coastal properties, buyers should review all applicable planning and environmental restrictions carefully before purchasing.
How are squatting cases (Okupas) regulated under Spanish law?
In recent years, Spain has experienced a rise in squatting cases, influenced by housing shortages, unaffordable rents, and high costs in urban or tourist areas. While the issue is complex and socio-politically sensitive, this section focuses on practical implications for property owners.
Importantly, unlawful occupation (okupación) is relatively uncommon in most parts of Spain. The majority of property owners, especially those who secure and monitor their homes properly, are unlikely to be affected.
Effective deterrents include:
- Alarm systems and surveillance cameras,
- Remote monitoring,
- Local property management services (especially for second homes).
Spanish law differentiates between:
- Intrusion into a primary residence (treated as unlawful entry),
- Occupation of vacant or second homes (classified as usurpation, requiring court action).
Recent Legal Reforms – “Anti-Squatting Law” (Ley Orgánica 1/2025): To address lengthy eviction timelines, Spain introduced reforms, which include:
- Within the first 48 hours of occupation:
Police may evict squatters without a court order if no legal proof of residence is presented. Owners must provide immediate proof of ownership. - After 48 hours: Eviction must follow a formal judicial process.
- Fast-track legal procedures: Eviction claims may now be processed in about 15 working days under accelerated procedures—though real-world implementation may vary by jurisdiction.
While these special topics may not apply to every transaction, they highlight the importance of thorough due diligence and professional legal advice when buying property in Spain. Understanding the implications of coastal laws, rural zoning, inheritance regulations, and property security helps international buyers make informed, secure, and future-proof investments.
After “Liberation Day,” many foreign companies offered discounts to American importers to help them offset the tariffs. A few months later, the US Supreme Court declared the «reciprocal» tariffs unlawful, but on the same day, President Trump announced new tariffs. In this article, we provide a practical overview of how to handle various scenarios, shifting from a reactive, unstructured approach to deliberate management of price volatility and trade flows caused by the introduction, adjustment, and removal of tariffs.
Tariff Sharing agreements
For a long time, the question has been straightforward: who absorbs the extra customs cost? The exporter? The importer? Both? The question remains important, but today it is incomplete.
The new scenario, in light of the recent ruling by the US Court of Justice on March 20, 2026, is: what happens if that duty is then canceled and refunded? If the cost was shared between the parties, the benefit of the refund must follow a consistent logic. In the absence of a clear agreement on this point, however, there is a risk of economic misalignment that could compromise the commercial relationship.
Let’s imagine an Italian winery that sells its products to a US importer. Following the introduction of reciprocal duties, the parties have decided that the exporter will grant an extraordinary discount of 7.5%, explicitly motivated by the need to share the impact of the duty. The commercial relationship continues, volumes remain stable, and the importer avoids passing on the entire increase to the end customer.
As a result of the Supreme Court ruling (or, in the future, another ruling or administrative decision), the importer obtains a refund of the duties paid during that period.
If no formal agreements have been made on this point and the documentation refers generically to a «commercial discount» and says nothing about reimbursement, the situation afterward may be difficult to reconstruct and, above all, could lead to commercial tension. As a result, a positive development (the cancellation of the duty and the right to reimbursement) becomes a problematic factor that jeopardizes the relationship.
Is the exporter entitled to a refund of the discounts granted to mitigate the duties?
In the absence of a different agreement between the parties, the right to reimbursement belongs to the party who paid the duty, i.e., in most cases, the importer. Therefore, there is a risk that the importer will enjoy a double benefit (the discount and the duty refund), while the exporter will get nothing.
For this reason, it is essential that the parties do not limit themselves to negotiating prices and discounts, but also establish the consequences of the adoption, modification, or revocation of duties on the contract, including any refunds.
To achieve this, the first step is to accurately classify and document the discounts granted. If only a «commercial discount» appears in emails, commercial orders, credit notes, and invoices, it will be harder to later argue that this discount was actually an extraordinary, temporary contribution related to the duty. Conversely, if the documentation and contract specify that it is a tariff sharing or tariff mitigation measure, identifying the amounts to be refunded after the fact becomes much simpler.
The goal is to create a clear view of the trend in discounts and payments so that, if needed, financial flows can be adjusted to align with the original terms of the agreement: if the exporter has helped cover a cost that then, in whole or in part, does not end up materializing, they will be eligible for a refund of the contribution paid.
The contract will therefore include, in addition to the Tariff Sharing clause, a Tariff Reimbursement Allocation clause, which states that if the importer receives a refund, credit, or any other economic benefit related to the duty for which the exporter has granted a discount, the importer must return the corresponding portion of the benefit to the exporter in full. or proportionally, depending on how the parties intend to distribute risk and incentive.
Importer’s responsibility to seek reimbursement
It is unclear whether, in the case of US reciprocal duties, importers can simply file an administrative claim to get a refund or if legal action will be required. The latter seems more probable.
Generally, obtaining a duty refund involves action, deadlines, documentation, and coordination with brokers and customs consultants. In most cases, the entity controlling the process is the importer (or someone acting on their behalf).
This raises a sensitive but very real issue: if the importer knows that they will have to invest time and money to obtain a refund, only to then have to share the benefit with the exporter, their incentive to take action may be reduced. To prevent this inertia the contract should contain an express obligation to take action, set out as a duty of best efforts or commercially reasonable efforts.
For example, the contract should specify that the importer must inquire about the conditions and time limits of the process, keep relevant documentation, regularly inform the exporter about the progress of the initiatives, and not unilaterally waive or reduce the claim if it affects the exporter’s economic rights.
Preventive Agreements on Litigation and Cost Allocation
When reimbursement involves a lawsuit or structured legal action, the obstacles are organizational and financial: who decides if and when to proceed, who selects the lawyers, who pays the costs upfront, how the net recovery is divided, and who has the final say on a settlement. This generally applies to all contracts, not just this case: dispute resolution methods must be addressed and agreed upon before the problem arises.
Otherwise, the dispute resolution process risks becoming a secondary improvised negotiation at the worst time — when the parties are already under pressure from margins, cash flow, and regulatory uncertainty. As a result, it becomes much harder to reach an agreement.
How to handle new tariffs and their potential cancellation
To safeguard against uncertainty, the agreement should be organized into two stages.
- The first stage regulates the immediate impact of the change in scenario, for example, the introduction of a new tariff or its increase (renegotiation, cost sharing, automatic adjustment : I discussed this in this article).
- The second stage manages the possible «rollback» (right to reimbursement, process, allocation criteria).
This approach has a clear benefit: it does not force the parties to discuss every time the tariff regime changes or a decision to cancel tariffs is made. Instead of reacting to market changes, a tool is adopted to manage potential scenarios, which is much more resilient commercially and easier to oversee, as the rules have already been agreed upon.
This allows the impact of duties to be regulated not as an extraordinary variable, to be agreed upon on a one-time basis, but as a structural, adaptable phenomenon that could last a long time.
This is why it is crucial to know how to draft contracts that cover both the current situation and potential changes, including any refunds.
Conclusion: Three practical steps for companies exporting to the US
The first is to agree on the consequences for the contract of the introduction of a new duty, increasing it, or revoking it (renegotiation, cost sharing, automatic price adjustment, right to share the refund).
The second is to clearly document any discount granted to offset a duty. If it remains a generic «commercial discount,» the right to a refund if reimbursement occurs will be much harder to enforce.
The third step is to determine what happens if the duty is canceled or revoked: the importer’s responsibility to take action to get a refund, manage the administrative process or litigation, how to divide costs, who oversees the activities of consultants and lawyers, and how the recovered funds will be allocated.
Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.
Where this new duty comes from
The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”
Companies involved in the investigation
The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.
U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.
Next steps in the procedure
Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.
The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.
The preliminary nature of this determination means there is still room to change the decision before it becomes final.
Possible effective date
The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.
If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.
What to do between now and January 1, 2026?
At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.
So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:
- Some rushed to ship as many products as possible before the potential effective date of the duty;
- Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
- Some suspended orders, pending definitive news on the impact of the duties.
These are all valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.
The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.
The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.
Cartels, Compliance, and Data Privacy: The New «Brazil Risk»
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- Конфиденциальность - Защита данных
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Бразилия
EU – Mercosur and the Wine Trade: What Lawyers Need to Understand Before It Comes into Force
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Ceo fraud in Portugal: how to react fast, recover funds and strengthen payment security
- Судебная практика
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Spain | Franchising, Theory Of Risk and Guarantees By Franchisee
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Испания
Brazil’s New Digital Child Protection Law: Practical Implications for Foreign Tech Companies
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Scrivi a Christian
Why the African Continental Free Trade Agreement has not yet turned into Reality — and What That Means for Egypt
26.02.2026
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Египет
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For over a decade, Portugal’s Non-Habitual Resident (NHR) regime was the country’s flagship tool to attract international talent — a broad tax gateway that turned Lisbon, Porto and the Algarve into a top destination for retirees, investors and a wide range of professionals. Since the 2024 State Budget, that gateway has been closed to new applicants and replaced by a more specialised and technically demanding framework: the Tax Incentive for Scientific Research and Innovation (IFICI), commonly branded as “NHR 2.0”.
This article explains, from a Portuguese tax-law perspective, what changed, who can still qualify, and how the new application cycle works in practice.
What is the IFICI regime (NHR 2.0)?
IFICI was created by Law 82/2023 (the 2024 State Budget), which inserted Article 58-A in the Portuguese Tax Benefits Statute (EBF — Estatuto dos Benefícios Fiscais). After almost a year of regulatory limbo, the regime was finally implemented by Ordinance no. 352/2024/1, with retroactive effects to 1 January 2024.
In essence, IFICI offers, for a non-renewable 10-year period:
- A 20% flat personal income tax rate on employment (Category A) and self-employment (Category B) income derived from eligible activities; and
- A general exemption (with progression) on most foreign-source income — Categories A, B, E (capital), F (rental) and G (capital gains) — provided the income is not paid by entities based in blacklisted jurisdictions (in which case a 35% flat rate applies).
Crucially — and this is one of the biggest differences from the old NHR — foreign pensions (Category H) are excluded from the new regime and are taxed at standard progressive rates.
What happened to the “old” NHR?
The original NHR has been revoked for new applicants, but it is not gone overnight:
- Individuals who already held NHR status on 31 December 2023 keep their benefits until the end of their 10-year period.
- A transitional regime under Article 236 of the 2024 State Budget allowed certain individuals with prior ties to Portugal (employment contracts, lease agreements, school enrolment of dependants, residence-permit procedures already underway) to still apply for the original NHR in 2024 — in some cases with the registration deadline extended to 31 March 2025.
All other inbound taxpayers must now look at IFICI, not the old NHR.
Who qualifies for IFICI in Portugal?
To benefit, two cumulative conditions must be met:
- Personal eligibility: the individual becomes a Portuguese tax resident and was not a tax resident in any of the previous five years, and has not previously benefited from the NHR or the IRS Jovem regime.
- Professional eligibility: the activity falls within one of the categories listed in Article 58-A of the Portuguese Tax Benefits Statute and detailed in Ordinance 352/2024/1. The main eligibility routes are:
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- Scientific research and higher education — teaching positions at higher-education institutions and research within the national science and technology system.
- Certified startups — employment, self-employment or board positions in entities certified under the Portuguese Startup Law (Law. 21/2023).
- R&D centres and recognised innovation centres.
- Highly qualified professionals — roles listed in Annex I of Ordinance 352/2024/1 by reference to the Portuguese Classification of Occupations (CPP), such as the following ones: 112 — CEOs and executive managers; 12 — Directors of administrative and commercial services; 13 — Directors of production and specialised services; 21 — Specialists in physical sciences, mathematics, engineering and related areas; 2163.1 — Industrial product or equipment designers; 221 — Physicians; 231 — University professors; 25 — ICT specialists;
- Industrial and service exporters — qualified jobs in companies whose main activity falls under specific CAE codes (Annex II of the Ordinance) and that export at least 50% of their turnover in the year the position starts or in either of the two preceding years.
- Activities under contractual investment incentives (CFI/RFAI) and roles in entities recognised by AICEP or IAPMEI as relevant to the national economy.
A minimum academic qualification is also required for highly qualified professions: a PhD, or a bachelor’s/master’s degree combined with at least three years of professional experience.
IFICI vs NHR: key differences at a glance
Scope of beneficiaries:
- Original NHR: broad, including retirees, investors and “high-value” professionals.
- IFICI / NHR 2.0: narrow, including researchers, startup staff, ICT, engineers and exporters.
Flat tax on qualifying income:
- Original NHR: 20%.
- IFICI / NHR 2.0: 20%.
Foreign-source income:
- Original NHR: broad exemption, including pensions.
- IFICI / NHR 2.0: exemption for categories A, B, E, F and G; pensions taxed at progressive rates; 35% on blacklisted jurisdictions.
Duration:
- Original NHR: 10 consecutive years.
- IFICI / NHR 2.0: 10 consecutive years.
Corporate substance:
- Original NHR: minimal requirements for the employer.
- IFICI / NHR 2.0: strict — startup, R&D, RFAI or 50% exporter.
Application channel:
- Original NHR: Portal das Finanças, in one step.
- IFICI / NHR 2.0: competent entity — FCT, AICEP, IAPMEI, ANI or Startup Portugal — plus Portal das Finanças.
Registration deadline;
- Original NHR: 31 March of the following year.
- IFICI / NHR 2.0: 15 January of the following year.
Compliance:
- Original NHR: generally one-off.
- IFICI / NHR 2.0: annual verification of ongoing eligibility.
How to apply for IFICI: deadlines and competent authorities
Unlike the NHR, IFICI is not registered directly with the Portuguese Tax Authority (AT). The process runs through sectoral authorities, each handling a different eligibility route:
- FCT (Fundação para a Ciência e a Tecnologia) — research and higher-education roles.
- AICEP and IAPMEI — qualified jobs and corporate-body positions in entities recognised as relevant to the national economy.
- ANI (Agência Nacional de Inovação) — R&D personnel whose costs qualify under the SIFIDE II tax credit.
- Startup Portugal — positions in certified startups.
- Tax Authority (AT) — final registration via the Portal das Finanças.
The compliance calendar is now an annual cycle:
- 15 January — deadline to file the IFICI application for the previous year of residence.
- 15 February — competent entities communicate the taxpayer’s compliance status to the AT.
- 31 March — taxpayers can obtain confirmation of their registration status on the Portal das Finanças.
A failure to confirm continued eligibility — for example, if the employer ceases to meet the export threshold or the startup loses certification — can result in suspension of the regime for that year, although the underlying 10-year window keeps running.
IFICI Eligibility Checklist
Before finalising a move or filing a Portuguese tax return, candidates should be able to tick all of the following:
- 5-year rule: not a Portuguese tax resident in any of the five years preceding the year of arrival.
- No prior NHR / IRS Jovem: the regime is not available to those who already benefited from those frameworks.
- Activity alignment: professional role explicitly covered by Article 58-A of Portuguese Tax Benefits Statute and Annexes I/II of Ordinance 352/2024/1.
- Employer filter: for highly qualified roles, the employer is a startup, an R&D/innovation centre, an RFAI/CFI beneficiary, or a ≥50% exporter.
- Application route identified: the correct competent entity (FCT, AICEP, IAPMEI, ANI, Startup Portugal) is selected.
- Deadline: application filed by 15 January of the year following arrival.
- Annual compliance plan in place to confirm continued eligibility.
Conclusion: A more specialised, but still attractive, gateway
The shift from NHR to IFICI represents a deliberate narrowing of Portugal’s tax incentives: a move from a broad “welcome mat” to a surgical tool focused on scientific research, innovation, qualified employment and exporting activities. For retirees and passive investors, Portugal is no longer the obvious choice it was a decade ago. For researchers, startup teams, ICT specialists, engineers, physicians and executives moving into exporting groups, however, IFICI remains one of the most competitive personal-tax frameworks in Europe — provided the move is properly planned, with the right legal and tax structuring in place ahead of residency.
FAQ
Is the NHR still available in Portugal?
Not for new applicants. Only those who became Portuguese tax residents by the end of 2023 — or who qualified under the transitional rules of Article 236 of the Portuguese Tax Benefits Statute — could still register for the original NHR. Existing beneficiaries keep their status for the remainder of their 10-year period.
Is IFICI the same as NHR?
No. IFICI shares the 20% flat rate and the 10-year duration with the NHR, but it is narrower in scope, has stricter corporate requirements, and excludes foreign pensions from the exemption.
Are foreign pensions tax-free under IFICI?
No. Foreign pensions are taxed at general progressive rates. This is one of the most significant differences from the old NHR.
Can a remote worker qualify for IFICI?
Only if the activity falls within one of the eligible categories and the employer or activity meets the corporate requirements (startup, R&D, RFAI, ≥50% exporter, etc.). Working remotely from Portugal for a foreign company does not, in itself, grant access to the regime.
What is the application deadline for IFICI?
15 January of the year following the year in which the individual becomes a Portuguese tax resident.
Are foreign dividends, royalties and capital gains exempt under IFICI?
Generally yes — subject to declaration for progression purposes — provided they are not paid by entities located in jurisdictions on the Portuguese blacklist, in which case a 35% flat rate applies.
After more than twenty years of negotiations, the EU/Mercosur agreement remains in a legally incomplete but commercially relevant stage. For lawyers advising clients in the wine industry, the key issue is no longer whether the agreement will reshape trade, but how and when its provisions will begin to affect market access, regulatory compliance, and competitive positioning.
A negotiated agreement, yet without full legal effect
The trade pillar of the agreement was politically concluded in 2019, followed by ongoing revisions and additional negotiations, particularly on environmental commitments. Even though the full agreement is pending ratification processes on both sides, at this stage, the temporary agreement is already in force, producing its effects.
From a legal standpoint, this creates a hybrid scenario: (i) the text is sufficiently defined to anticipate obligations and opportunities, (ii) but not yet fully binding, (iii) with temporary measures already applicable.
This distinction is critical for legal advisors. The full agreement cannot yet be invoked as applicable law, but it already serves as a reliable roadmap for future regulatory and commercial conditions.
Why wine matters in this agreement
The wine sector sits at the intersection of several key chapters of the agreement:
- tariff liberalisation;
- sanitary and phytosanitary (SPS) measures;
- technical barriers to trade (TBT);
- intellectual property, particularly geographical indications (GIs).
This makes wine a multi-layered case study of how the agreement will operate in practice.
At the same time, the economic context reinforces its relevance. The European Union is Mercosur’s second-largest trading partner, with strong complementarities in trade flows. Mercosur’s exports are concentrated in agricultural goods, while EU exports are concentrated in higher value-added categories, where wine is positioned.
Tariffs: gradual but meaningful impact
Today, wine exports to Mercosur, especially to Brazil, face import duties combined with complex internal taxation. While the agreement does not eliminate all barriers immediately, it provides for progressive tariff reductions and improved quota conditions.
Meanwhile, the Brazilian tax system is under complete reform, which reinforces the importance of specialised legal assistance.
For legal practitioners, this raises practical issues:
- interpretation of tariff schedules and staging periods;
- interaction with domestic tax regimes;
- structuring of distribution agreements to capture tariff advantages over time.
The key point is that tariff benefits will not be uniform or immediate. They will require active legal planning to be effectively utilised.
Beyond tariffs: regulatory friction is the real battlefield
More significant than tariffs are the provisions addressing regulatory barriers.
Wine exports are heavily affected by labelling requirements, certification procedures, sanitary controls, product registration rules and geographical protections.
The agreement introduces commitments to increase transparency and reduce unnecessary barriers, particularly under the «Sanitary and Phytosanitary Measures» (SPS) and «Technical Barriers to Trade» (TBT) chapters. However, it does not create full harmonisation.
This means that regulatory compliance will remain jurisdiction-specific, but procedures should become more predictable and less discretionary.
For lawyers, this translates into a shift from navigating opaque systems to advising within a more structured, but still fragmented, regulatory framework.
Geographical indications: protection and tension
One of the most legally sensitive aspects of the agreement is the protection of geographical indications.
The EU seeks recognition and protection of a wide range of European GIs in Mercosur countries, including wine denominations. This implies stronger protection for European producers against the misuse of names and potential restrictions on local producers’ use of certain terms.
From a legal perspective, the new framework raises issues such as:
- coexistence with pre-existing trademarks;
- transition periods for local operators;
- enforcement mechanisms and litigation risks.
This is an area where disputes are likely to arise, particularly in markets with established local practices.
Services, distribution, and market structure
Although often overlooked, service provisions are highly relevant for the wine sector.
Each year, the EU exports nearly €30 billion in services to Mercosur, double the amount in the opposite direction.
The agreement aims to improve conditions for:
- logistics providers
- distribution networks
- commercial representation
- marketing and advertising agencies
For wine exporters, market access is not only about tariffs but also about how products reach consumers.
Legal advisors will need to consider:
- distribution agreements and exclusivity clauses
- regulatory requirements for importers and distributors
- compliance with competition rules
The implementation gap: where risk lies
Even after ratification, the agreement will not produce immediate uniform effects.
Its implementation will depend on phased tariff reductions, domestic regulatory adjustments and administrative practices.
This creates a gap between formal commitments and practical outcomes.
For lawyers, this is where advisory work becomes most valuable:
- managing client expectations
- identifying timing mismatches between legal changes and market reality
- mitigating risks linked to partial or inconsistent implementation
What should lawyers be doing now?
Treating the agreement as a distant political project is a mistake. The ratification is not around the corner, but it will happen.
Instead of just waiting, legal advisors should:
- analyze the relevant chapters (tariffs, SPS, TBT, GIs) from a sector-specific perspective;
- anticipate how domestic law will interact with the agreement;
- prepare contractual structures that can adapt to phased changes;
- monitor closely ratification and implementation developments.
In practical terms, the agreement should already be part of strategic legal advice, even before its formal entry into force.
Final sip
The EU/Mercosur agreement will not revolutionise the wine trade overnight. Its impact will be gradual, technical, and often subtle, but for those advising in the sector, it introduces a clear shift. We are moving from a fragmented and often opaque regulatory environment to a more structured, rule-based framework that is complex, but more predictable.
Understanding the agreement in theory is just the first step. The real challenge is to translate its provisions into practical legal strategies before competitors do.
Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.
For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.
What the EU decision does (and does not) do
The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.
At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.
In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.
The ideological paradox: a Socialist Republic on a tax-haven list
Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one.
Why Vietnam was added: the listing criteria and timeline
Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.
The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.
Vietnam’s response and the path to delisting
Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.
How different payment types are affected in practice
Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.
The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.
Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.
If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.
Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.
Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.
Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.
Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.
Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.
Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.
How European banks may respond (and what that looks like in practice)
Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.
For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.
A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.
Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.
A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.
This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.
A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.
A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.
Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.
EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.
Non-tax defensive measures and EU funding implications
Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.
DAC6 reporting and public country-by-country reporting
Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.
Country notes (alphabetical)
Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.
France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.
Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.
Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.
For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.
Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.
Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.
Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.
Practical next steps for EU companies
- Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
- Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
- DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
- Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
- Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
- Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
- Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
- Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
- Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.
Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.
Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.
Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:
- Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
- Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
- Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
- Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
- Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
- Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.
Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.
Legal Forms of Joint Ventures
Investors should understand the different corporate structures available for joint ventures:
- Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
- Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
- Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.
Foreign Investment Law
Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:
- Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
- Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.
Why is ISIC4 Relevant?
The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.
Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:
- Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
- Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
- Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
- Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
- Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
- Service Categories: Activities classified under service categories generally require significantly lower capital requirements.
Strategic Considerations
- Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
- Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.
Practical Tips
- Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
- A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
- Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.
Compliance with Local Regulations
- Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
- Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
- Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.
Conclusion
Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.
Executive Summary
The African Continental Free Trade Area (AfCFTA) remains one of the most ambitious integration projects in the world. Yet, several years into its operational phase, it has not (yet) delivered the structural shift many expected. A recent analysis underscores the gap between political momentum and economic reality: implementation remains uneven, the agreement is still used by only a portion of participating states, and non-tariff barriers and infrastructure deficits continue to dominate the cost of doing business across borders. For Egypt, the opportunity is still real — but it depends less on treaty headlines and more on enabling conditions: trade logistics, customs efficiency, regulatory convergence, and competitive industrial capacity.
Looking Back: The Promise of a Single African Market
When the AfCFTA was launched, expectations were understandably high. A continent-wide trade framework was supposed to reduce tariffs, facilitate trade in goods and services, and strengthen regional value chains — with the broader goal of moving African economies up the value ladder.
In my 2022 article, I asked whether AfCFTA could become a game changer for Egypt, given Egypt’s industrial base, strategic geography, and the potential to diversify export markets beyond traditional partners. (For background, see the earlier article here”).
The Reality Check: Intra-African Trade Remains Structurally Weak
Several years later, the interim assessment is sobering. As the Frankfurter Allgemeine Zeitung (FAZ) recently put it, AfCFTA is not a “game changer” yet, and only about half of member states currently meet the practical prerequisites to trade under the agreement.
A deeper reason is structural: no other world region trades so little with itself, and while statistics may undercount informal cross-border flows (especially in food), the overall picture remains unchanged.
Trade integration cannot deliver transformative outcomes if production, logistics, and institutions do not support scale.
Implementation Has Been Slow — and Often Symbolic
Operationalisation did not start with full-scale liberalisation. Instead, the AfCFTA began with a pilot approach: the Guided Trade Initiative (GTI) launched in October 2022, initially with eight states, later joined by additional countries, including Nigeria and South Africa by spring 2025.
The GTI created valuable learning effects, but it also underlined a key point: early progress was often presented through symbolic deals, while product coverage and volumes remained limited. FAZ highlights that only selected goods could be traded duty-free and that key sectors remained constrained for a long time due to missing or unresolved technical rules.
A pilot, however, cannot substitute for full operational certainty — the kind businesses need to restructure supply chains and invest.
Tariffs Are Not the Main Barrier — Trade Costs Are
AfCFTA is frequently discussed in terms of tariff liberalisation. Yet, evidence suggests that the largest gains do not come from tariffs but from reducing non-tariff barriers and improving trade infrastructure.
FAZ points to a central reality: tariffs tend to add around 20–30% to intra-African trade costs, whereas non-tariff costs can be far higher — driven by bureaucracy, lack of harmonised standards, inefficient border processes, and transport barriers.
This is the crux: even with reduced tariffs, trade will not expand meaningfully if goods still cannot move cheaply, quickly, and predictably.
Integration Complexity and Distributional Politics
Africa’s integration landscape is shaped by multiple overlapping regional economic communities and trade regimes. This creates legal and administrative complexity — often described as an integration “spaghetti bowl.” FAZ notes the challenge of coordination and the continued fragmentation of rules.
There is also a political economy dimension. Intra-African trade is heavily influenced by a small number of larger economies — and the distribution of benefits matters. FAZ highlights the dominance of major players (notably South Africa) and the concern that tariff liberalisation alone may entrench existing industrial advantages.
Where governments expect asymmetric outcomes, resistance often takes the form of delay, narrow implementation, or persistent non-tariff barriers.
What This Means for Egypt: The Opportunity Is Real — But Conditional
Egypt’s strategic case for AfCFTA participation remains strong: industrial potential, geographic location, and the opportunity to access and shape growing markets. But the experience so far suggests that the treaty text alone does not generate trade flows.
For Egypt’s private sector, the decisive factors are practical:
- predictable and efficient customs clearance and border procedures,
- logistics corridors and port efficiency,
- regulatory convergence (standards, certification, compliance),
- stable access to trade finance and payments,
- competitive energy and production conditions for manufacturing and processing.
AfCFTA can support these developments — but it cannot replace them.
The “Game Changer” Pathway: What Must Happen Next
FAZ concludes that AfCFTA will only become truly impactful if it is paired with the fundamentals: major infrastructure investment, stronger production and processing capacity, and a credible industrial policy.
At the same time, Africa faces a classic chicken-and-egg problem: without development there is limited investment appeal; without investment there is limited development.
For Egypt and its partners, a pragmatic strategy would be to:
- treat AfCFTA as a platform for real trade-cost reduction, not only tariff debates;
- focus on a limited number of scalable corridors and sectors where regional value chains can realistically grow;
- strengthen implementation capacity so that preferences become usable for firms — especially SMEs;
- enhance legal certainty and dispute resolution reliability for cross-border commerce.
Conclusion
AfCFTA remains a landmark achievement in terms of political commitment. But as of today, it has not yet been the “game changer” many hoped for.
For Egypt, the key question is no longer whether AfCFTA is visionary — it is. The question is whether governments and businesses can translate it into lower real trade costs, higher competitiveness, and bankable cross-border transactions. If those enabling conditions improve, AfCFTA’s promise can still become commercial reality.
This is the fourth article of a series decidated to purchasing real estate property in Spain: previously, we presented how to structure the purchase of a real estate property and what steps you must undertake to ensure the purchase is efficient and safe (you can find it here), the financial and tax information as well as practical tips related to the purchase process (here) and how to handle international inheritance tax implications (here).
How to obtain a mortgage loan when Purchasing Property in Spain
When a buyer in Spain wishes to purchase property using a mortgage loan, the financing process typically begins after selecting a specific property and signing a private purchase agreement, which is usually accompanied by a deposit payment. The entire financing process is strictly regulated under Spanish civil and banking law, offering a high degree of legal security, including foreign and non-resident buyers.
Once the private purchase contract is signed, the bank initiates an official property valuation. This is a mandatory step for determining the maximum loan amount, the financing conditions and for loan approval.
Only after the valuation is completed will the bank issue a formal mortgage offer. The entire process, from the initial application to the final offer, can take several weeks, depending on the complexity of the buyer’s financial profile and the documentation required. The final step occurs before a Spanish notary, where two deeds are signed simultaneously:
- The public deed of sale, and
- The mortgage deed.
At this stage, the bank transfers the loan amount directly to the seller, ensuring legal and financial certainty for all parties involved.
While this structure guarantees legal clarity, it also means that mortgage financing is not secured at the time the private agreement is signed. Therefore, it is strongly recommended to include a mortgage contingency clause in the private purchase contract. This clause makes the completion of the sale conditional upon obtaining financing, thereby protecting the buyer’s deposit in the event of a mortgage denial.
Key Differences for Foreign Buyers
Spanish banks do not generally issue binding pre-approvals before a specific property has been chosen. Foreign buyers, particularly non-residents, should also be aware of additional requirements, including:
- Submission of translated or apostilled foreign documents,
- More extensive due diligence and KYC (Know Your Customer) procedures, and
- Generally longer processing times.
These factors may extend the mortgage timeline and should be accounted for in the overall transaction planning.
Differences between buying a second-hand apartment/house and buying a new apartment/house directly from the developer
The main difference is that, in the case of a new home, VAT and AJD (stamp duty) are paid, and in the case of a second-hand home, only ITP (property transfer tax) is paid, as already explained in section III, paragraph 3.
In addition, in the case of new homes, a series of legal guarantees are established—for 1, 3, and 10 years—for possible construction defects that may arise in the home, for which the developer is liable. On the other hand, in the case of second-hand homes, the seller is liable for hidden defects only for a period of 6 months from delivery.
If the property is purchased from a natural person, it will generally be a second-hand home, whereas if it is purchased from a legal entity, it will normally be a new build and will be purchased from a developer.
Therefore, the fundamental differences will be those already mentioned above: different taxation and greater legal guarantees in the case of purchase from legal entities. Additionally, in the case of purchasing the property from a legal entity developer, there are enhanced documentation and reporting obligations, which do not apply in the case of sale by individuals.
Are there debts associated with the property that the buyer will be liable for?
The buyer is liable for any debts owed to the Homeowners’ Association for the three years prior to the purchase and for the outstanding portion of the current year’s dues. The buyer is also vicariously liable for any outstanding property tax (IBI) or other local taxes owed by the previous owner.
To adequately protect their interests, the buyer should, on the one hand, request a certificate of debts from the Homeowners’ Association and, on the other hand, check the status of payments of property tax and other municipal taxes.
What are the specific provions of Spanish Coastal Law (Ley De Costas)?
Properties located near the sea may fall under the Spanish Coastal Law (Ley de Costas), which regulates land use in the public maritime-terrestrial zone and its surrounding protected areas. These coastal strips are public domain, and strict limitations apply to ownership, construction, and renovation.
Even for older, long-standing buildings, it is vital to verify whether the property lies within a protection zone. Depending on the classification of the area, consequences can range from restricted use or denial of renovation permits to expiration of rights of use or, in extreme cases, administrative demolition orders.
Legal due diligence is essential to determine the status of the plot and identify any concessions or time-limited occupancy rights granted by the authorities.
What rules apply to Country Houses (Fincas Rústicas)?
Country houses (fincas rústicas) deserve special attention due to their location in rural and often protected areas, which are subject to strict urban planning and environmental regulations.
Depending on local and regional classifications, the land may be designated exclusively for agriculture, forestry, or conservation, limiting the potential for construction, expansion, or change of use.
Additionally, many rural properties have existing buildings that may never have been fully or properly legalised. As with coastal properties, buyers should review all applicable planning and environmental restrictions carefully before purchasing.
How are squatting cases (Okupas) regulated under Spanish law?
In recent years, Spain has experienced a rise in squatting cases, influenced by housing shortages, unaffordable rents, and high costs in urban or tourist areas. While the issue is complex and socio-politically sensitive, this section focuses on practical implications for property owners.
Importantly, unlawful occupation (okupación) is relatively uncommon in most parts of Spain. The majority of property owners, especially those who secure and monitor their homes properly, are unlikely to be affected.
Effective deterrents include:
- Alarm systems and surveillance cameras,
- Remote monitoring,
- Local property management services (especially for second homes).
Spanish law differentiates between:
- Intrusion into a primary residence (treated as unlawful entry),
- Occupation of vacant or second homes (classified as usurpation, requiring court action).
Recent Legal Reforms – “Anti-Squatting Law” (Ley Orgánica 1/2025): To address lengthy eviction timelines, Spain introduced reforms, which include:
- Within the first 48 hours of occupation:
Police may evict squatters without a court order if no legal proof of residence is presented. Owners must provide immediate proof of ownership. - After 48 hours: Eviction must follow a formal judicial process.
- Fast-track legal procedures: Eviction claims may now be processed in about 15 working days under accelerated procedures—though real-world implementation may vary by jurisdiction.
While these special topics may not apply to every transaction, they highlight the importance of thorough due diligence and professional legal advice when buying property in Spain. Understanding the implications of coastal laws, rural zoning, inheritance regulations, and property security helps international buyers make informed, secure, and future-proof investments.
After “Liberation Day,” many foreign companies offered discounts to American importers to help them offset the tariffs. A few months later, the US Supreme Court declared the «reciprocal» tariffs unlawful, but on the same day, President Trump announced new tariffs. In this article, we provide a practical overview of how to handle various scenarios, shifting from a reactive, unstructured approach to deliberate management of price volatility and trade flows caused by the introduction, adjustment, and removal of tariffs.
Tariff Sharing agreements
For a long time, the question has been straightforward: who absorbs the extra customs cost? The exporter? The importer? Both? The question remains important, but today it is incomplete.
The new scenario, in light of the recent ruling by the US Court of Justice on March 20, 2026, is: what happens if that duty is then canceled and refunded? If the cost was shared between the parties, the benefit of the refund must follow a consistent logic. In the absence of a clear agreement on this point, however, there is a risk of economic misalignment that could compromise the commercial relationship.
Let’s imagine an Italian winery that sells its products to a US importer. Following the introduction of reciprocal duties, the parties have decided that the exporter will grant an extraordinary discount of 7.5%, explicitly motivated by the need to share the impact of the duty. The commercial relationship continues, volumes remain stable, and the importer avoids passing on the entire increase to the end customer.
As a result of the Supreme Court ruling (or, in the future, another ruling or administrative decision), the importer obtains a refund of the duties paid during that period.
If no formal agreements have been made on this point and the documentation refers generically to a «commercial discount» and says nothing about reimbursement, the situation afterward may be difficult to reconstruct and, above all, could lead to commercial tension. As a result, a positive development (the cancellation of the duty and the right to reimbursement) becomes a problematic factor that jeopardizes the relationship.
Is the exporter entitled to a refund of the discounts granted to mitigate the duties?
In the absence of a different agreement between the parties, the right to reimbursement belongs to the party who paid the duty, i.e., in most cases, the importer. Therefore, there is a risk that the importer will enjoy a double benefit (the discount and the duty refund), while the exporter will get nothing.
For this reason, it is essential that the parties do not limit themselves to negotiating prices and discounts, but also establish the consequences of the adoption, modification, or revocation of duties on the contract, including any refunds.
To achieve this, the first step is to accurately classify and document the discounts granted. If only a «commercial discount» appears in emails, commercial orders, credit notes, and invoices, it will be harder to later argue that this discount was actually an extraordinary, temporary contribution related to the duty. Conversely, if the documentation and contract specify that it is a tariff sharing or tariff mitigation measure, identifying the amounts to be refunded after the fact becomes much simpler.
The goal is to create a clear view of the trend in discounts and payments so that, if needed, financial flows can be adjusted to align with the original terms of the agreement: if the exporter has helped cover a cost that then, in whole or in part, does not end up materializing, they will be eligible for a refund of the contribution paid.
The contract will therefore include, in addition to the Tariff Sharing clause, a Tariff Reimbursement Allocation clause, which states that if the importer receives a refund, credit, or any other economic benefit related to the duty for which the exporter has granted a discount, the importer must return the corresponding portion of the benefit to the exporter in full. or proportionally, depending on how the parties intend to distribute risk and incentive.
Importer’s responsibility to seek reimbursement
It is unclear whether, in the case of US reciprocal duties, importers can simply file an administrative claim to get a refund or if legal action will be required. The latter seems more probable.
Generally, obtaining a duty refund involves action, deadlines, documentation, and coordination with brokers and customs consultants. In most cases, the entity controlling the process is the importer (or someone acting on their behalf).
This raises a sensitive but very real issue: if the importer knows that they will have to invest time and money to obtain a refund, only to then have to share the benefit with the exporter, their incentive to take action may be reduced. To prevent this inertia the contract should contain an express obligation to take action, set out as a duty of best efforts or commercially reasonable efforts.
For example, the contract should specify that the importer must inquire about the conditions and time limits of the process, keep relevant documentation, regularly inform the exporter about the progress of the initiatives, and not unilaterally waive or reduce the claim if it affects the exporter’s economic rights.
Preventive Agreements on Litigation and Cost Allocation
When reimbursement involves a lawsuit or structured legal action, the obstacles are organizational and financial: who decides if and when to proceed, who selects the lawyers, who pays the costs upfront, how the net recovery is divided, and who has the final say on a settlement. This generally applies to all contracts, not just this case: dispute resolution methods must be addressed and agreed upon before the problem arises.
Otherwise, the dispute resolution process risks becoming a secondary improvised negotiation at the worst time — when the parties are already under pressure from margins, cash flow, and regulatory uncertainty. As a result, it becomes much harder to reach an agreement.
How to handle new tariffs and their potential cancellation
To safeguard against uncertainty, the agreement should be organized into two stages.
- The first stage regulates the immediate impact of the change in scenario, for example, the introduction of a new tariff or its increase (renegotiation, cost sharing, automatic adjustment : I discussed this in this article).
- The second stage manages the possible «rollback» (right to reimbursement, process, allocation criteria).
This approach has a clear benefit: it does not force the parties to discuss every time the tariff regime changes or a decision to cancel tariffs is made. Instead of reacting to market changes, a tool is adopted to manage potential scenarios, which is much more resilient commercially and easier to oversee, as the rules have already been agreed upon.
This allows the impact of duties to be regulated not as an extraordinary variable, to be agreed upon on a one-time basis, but as a structural, adaptable phenomenon that could last a long time.
This is why it is crucial to know how to draft contracts that cover both the current situation and potential changes, including any refunds.
Conclusion: Three practical steps for companies exporting to the US
The first is to agree on the consequences for the contract of the introduction of a new duty, increasing it, or revoking it (renegotiation, cost sharing, automatic price adjustment, right to share the refund).
The second is to clearly document any discount granted to offset a duty. If it remains a generic «commercial discount,» the right to a refund if reimbursement occurs will be much harder to enforce.
The third step is to determine what happens if the duty is canceled or revoked: the importer’s responsibility to take action to get a refund, manage the administrative process or litigation, how to divide costs, who oversees the activities of consultants and lawyers, and how the recovered funds will be allocated.
Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.
Where this new duty comes from
The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”
Companies involved in the investigation
The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.
U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.
Next steps in the procedure
Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.
The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.
The preliminary nature of this determination means there is still room to change the decision before it becomes final.
Possible effective date
The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.
If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.
What to do between now and January 1, 2026?
At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.
So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:
- Some rushed to ship as many products as possible before the potential effective date of the duty;
- Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
- Some suspended orders, pending definitive news on the impact of the duties.
These are all valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.
The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.
The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.
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For over a decade, Portugal’s Non-Habitual Resident (NHR) regime was the country’s flagship tool to attract international talent — a broad tax gateway that turned Lisbon, Porto and the Algarve into a top destination for retirees, investors and a wide range of professionals. Since the 2024 State Budget, that gateway has been closed to new applicants and replaced by a more specialised and technically demanding framework: the Tax Incentive for Scientific Research and Innovation (IFICI), commonly branded as “NHR 2.0”.
This article explains, from a Portuguese tax-law perspective, what changed, who can still qualify, and how the new application cycle works in practice.
What is the IFICI regime (NHR 2.0)?
IFICI was created by Law 82/2023 (the 2024 State Budget), which inserted Article 58-A in the Portuguese Tax Benefits Statute (EBF — Estatuto dos Benefícios Fiscais). After almost a year of regulatory limbo, the regime was finally implemented by Ordinance no. 352/2024/1, with retroactive effects to 1 January 2024.
In essence, IFICI offers, for a non-renewable 10-year period:
- A 20% flat personal income tax rate on employment (Category A) and self-employment (Category B) income derived from eligible activities; and
- A general exemption (with progression) on most foreign-source income — Categories A, B, E (capital), F (rental) and G (capital gains) — provided the income is not paid by entities based in blacklisted jurisdictions (in which case a 35% flat rate applies).
Crucially — and this is one of the biggest differences from the old NHR — foreign pensions (Category H) are excluded from the new regime and are taxed at standard progressive rates.
What happened to the “old” NHR?
The original NHR has been revoked for new applicants, but it is not gone overnight:
- Individuals who already held NHR status on 31 December 2023 keep their benefits until the end of their 10-year period.
- A transitional regime under Article 236 of the 2024 State Budget allowed certain individuals with prior ties to Portugal (employment contracts, lease agreements, school enrolment of dependants, residence-permit procedures already underway) to still apply for the original NHR in 2024 — in some cases with the registration deadline extended to 31 March 2025.
All other inbound taxpayers must now look at IFICI, not the old NHR.
Who qualifies for IFICI in Portugal?
To benefit, two cumulative conditions must be met:
- Personal eligibility: the individual becomes a Portuguese tax resident and was not a tax resident in any of the previous five years, and has not previously benefited from the NHR or the IRS Jovem regime.
- Professional eligibility: the activity falls within one of the categories listed in Article 58-A of the Portuguese Tax Benefits Statute and detailed in Ordinance 352/2024/1. The main eligibility routes are:
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- Scientific research and higher education — teaching positions at higher-education institutions and research within the national science and technology system.
- Certified startups — employment, self-employment or board positions in entities certified under the Portuguese Startup Law (Law. 21/2023).
- R&D centres and recognised innovation centres.
- Highly qualified professionals — roles listed in Annex I of Ordinance 352/2024/1 by reference to the Portuguese Classification of Occupations (CPP), such as the following ones: 112 — CEOs and executive managers; 12 — Directors of administrative and commercial services; 13 — Directors of production and specialised services; 21 — Specialists in physical sciences, mathematics, engineering and related areas; 2163.1 — Industrial product or equipment designers; 221 — Physicians; 231 — University professors; 25 — ICT specialists;
- Industrial and service exporters — qualified jobs in companies whose main activity falls under specific CAE codes (Annex II of the Ordinance) and that export at least 50% of their turnover in the year the position starts or in either of the two preceding years.
- Activities under contractual investment incentives (CFI/RFAI) and roles in entities recognised by AICEP or IAPMEI as relevant to the national economy.
A minimum academic qualification is also required for highly qualified professions: a PhD, or a bachelor’s/master’s degree combined with at least three years of professional experience.
IFICI vs NHR: key differences at a glance
Scope of beneficiaries:
- Original NHR: broad, including retirees, investors and “high-value” professionals.
- IFICI / NHR 2.0: narrow, including researchers, startup staff, ICT, engineers and exporters.
Flat tax on qualifying income:
- Original NHR: 20%.
- IFICI / NHR 2.0: 20%.
Foreign-source income:
- Original NHR: broad exemption, including pensions.
- IFICI / NHR 2.0: exemption for categories A, B, E, F and G; pensions taxed at progressive rates; 35% on blacklisted jurisdictions.
Duration:
- Original NHR: 10 consecutive years.
- IFICI / NHR 2.0: 10 consecutive years.
Corporate substance:
- Original NHR: minimal requirements for the employer.
- IFICI / NHR 2.0: strict — startup, R&D, RFAI or 50% exporter.
Application channel:
- Original NHR: Portal das Finanças, in one step.
- IFICI / NHR 2.0: competent entity — FCT, AICEP, IAPMEI, ANI or Startup Portugal — plus Portal das Finanças.
Registration deadline;
- Original NHR: 31 March of the following year.
- IFICI / NHR 2.0: 15 January of the following year.
Compliance:
- Original NHR: generally one-off.
- IFICI / NHR 2.0: annual verification of ongoing eligibility.
How to apply for IFICI: deadlines and competent authorities
Unlike the NHR, IFICI is not registered directly with the Portuguese Tax Authority (AT). The process runs through sectoral authorities, each handling a different eligibility route:
- FCT (Fundação para a Ciência e a Tecnologia) — research and higher-education roles.
- AICEP and IAPMEI — qualified jobs and corporate-body positions in entities recognised as relevant to the national economy.
- ANI (Agência Nacional de Inovação) — R&D personnel whose costs qualify under the SIFIDE II tax credit.
- Startup Portugal — positions in certified startups.
- Tax Authority (AT) — final registration via the Portal das Finanças.
The compliance calendar is now an annual cycle:
- 15 January — deadline to file the IFICI application for the previous year of residence.
- 15 February — competent entities communicate the taxpayer’s compliance status to the AT.
- 31 March — taxpayers can obtain confirmation of their registration status on the Portal das Finanças.
A failure to confirm continued eligibility — for example, if the employer ceases to meet the export threshold or the startup loses certification — can result in suspension of the regime for that year, although the underlying 10-year window keeps running.
IFICI Eligibility Checklist
Before finalising a move or filing a Portuguese tax return, candidates should be able to tick all of the following:
- 5-year rule: not a Portuguese tax resident in any of the five years preceding the year of arrival.
- No prior NHR / IRS Jovem: the regime is not available to those who already benefited from those frameworks.
- Activity alignment: professional role explicitly covered by Article 58-A of Portuguese Tax Benefits Statute and Annexes I/II of Ordinance 352/2024/1.
- Employer filter: for highly qualified roles, the employer is a startup, an R&D/innovation centre, an RFAI/CFI beneficiary, or a ≥50% exporter.
- Application route identified: the correct competent entity (FCT, AICEP, IAPMEI, ANI, Startup Portugal) is selected.
- Deadline: application filed by 15 January of the year following arrival.
- Annual compliance plan in place to confirm continued eligibility.
Conclusion: A more specialised, but still attractive, gateway
The shift from NHR to IFICI represents a deliberate narrowing of Portugal’s tax incentives: a move from a broad “welcome mat” to a surgical tool focused on scientific research, innovation, qualified employment and exporting activities. For retirees and passive investors, Portugal is no longer the obvious choice it was a decade ago. For researchers, startup teams, ICT specialists, engineers, physicians and executives moving into exporting groups, however, IFICI remains one of the most competitive personal-tax frameworks in Europe — provided the move is properly planned, with the right legal and tax structuring in place ahead of residency.
FAQ
Is the NHR still available in Portugal?
Not for new applicants. Only those who became Portuguese tax residents by the end of 2023 — or who qualified under the transitional rules of Article 236 of the Portuguese Tax Benefits Statute — could still register for the original NHR. Existing beneficiaries keep their status for the remainder of their 10-year period.
Is IFICI the same as NHR?
No. IFICI shares the 20% flat rate and the 10-year duration with the NHR, but it is narrower in scope, has stricter corporate requirements, and excludes foreign pensions from the exemption.
Are foreign pensions tax-free under IFICI?
No. Foreign pensions are taxed at general progressive rates. This is one of the most significant differences from the old NHR.
Can a remote worker qualify for IFICI?
Only if the activity falls within one of the eligible categories and the employer or activity meets the corporate requirements (startup, R&D, RFAI, ≥50% exporter, etc.). Working remotely from Portugal for a foreign company does not, in itself, grant access to the regime.
What is the application deadline for IFICI?
15 January of the year following the year in which the individual becomes a Portuguese tax resident.
Are foreign dividends, royalties and capital gains exempt under IFICI?
Generally yes — subject to declaration for progression purposes — provided they are not paid by entities located in jurisdictions on the Portuguese blacklist, in which case a 35% flat rate applies.
After more than twenty years of negotiations, the EU/Mercosur agreement remains in a legally incomplete but commercially relevant stage. For lawyers advising clients in the wine industry, the key issue is no longer whether the agreement will reshape trade, but how and when its provisions will begin to affect market access, regulatory compliance, and competitive positioning.
A negotiated agreement, yet without full legal effect
The trade pillar of the agreement was politically concluded in 2019, followed by ongoing revisions and additional negotiations, particularly on environmental commitments. Even though the full agreement is pending ratification processes on both sides, at this stage, the temporary agreement is already in force, producing its effects.
From a legal standpoint, this creates a hybrid scenario: (i) the text is sufficiently defined to anticipate obligations and opportunities, (ii) but not yet fully binding, (iii) with temporary measures already applicable.
This distinction is critical for legal advisors. The full agreement cannot yet be invoked as applicable law, but it already serves as a reliable roadmap for future regulatory and commercial conditions.
Why wine matters in this agreement
The wine sector sits at the intersection of several key chapters of the agreement:
- tariff liberalisation;
- sanitary and phytosanitary (SPS) measures;
- technical barriers to trade (TBT);
- intellectual property, particularly geographical indications (GIs).
This makes wine a multi-layered case study of how the agreement will operate in practice.
At the same time, the economic context reinforces its relevance. The European Union is Mercosur’s second-largest trading partner, with strong complementarities in trade flows. Mercosur’s exports are concentrated in agricultural goods, while EU exports are concentrated in higher value-added categories, where wine is positioned.
Tariffs: gradual but meaningful impact
Today, wine exports to Mercosur, especially to Brazil, face import duties combined with complex internal taxation. While the agreement does not eliminate all barriers immediately, it provides for progressive tariff reductions and improved quota conditions.
Meanwhile, the Brazilian tax system is under complete reform, which reinforces the importance of specialised legal assistance.
For legal practitioners, this raises practical issues:
- interpretation of tariff schedules and staging periods;
- interaction with domestic tax regimes;
- structuring of distribution agreements to capture tariff advantages over time.
The key point is that tariff benefits will not be uniform or immediate. They will require active legal planning to be effectively utilised.
Beyond tariffs: regulatory friction is the real battlefield
More significant than tariffs are the provisions addressing regulatory barriers.
Wine exports are heavily affected by labelling requirements, certification procedures, sanitary controls, product registration rules and geographical protections.
The agreement introduces commitments to increase transparency and reduce unnecessary barriers, particularly under the «Sanitary and Phytosanitary Measures» (SPS) and «Technical Barriers to Trade» (TBT) chapters. However, it does not create full harmonisation.
This means that regulatory compliance will remain jurisdiction-specific, but procedures should become more predictable and less discretionary.
For lawyers, this translates into a shift from navigating opaque systems to advising within a more structured, but still fragmented, regulatory framework.
Geographical indications: protection and tension
One of the most legally sensitive aspects of the agreement is the protection of geographical indications.
The EU seeks recognition and protection of a wide range of European GIs in Mercosur countries, including wine denominations. This implies stronger protection for European producers against the misuse of names and potential restrictions on local producers’ use of certain terms.
From a legal perspective, the new framework raises issues such as:
- coexistence with pre-existing trademarks;
- transition periods for local operators;
- enforcement mechanisms and litigation risks.
This is an area where disputes are likely to arise, particularly in markets with established local practices.
Services, distribution, and market structure
Although often overlooked, service provisions are highly relevant for the wine sector.
Each year, the EU exports nearly €30 billion in services to Mercosur, double the amount in the opposite direction.
The agreement aims to improve conditions for:
- logistics providers
- distribution networks
- commercial representation
- marketing and advertising agencies
For wine exporters, market access is not only about tariffs but also about how products reach consumers.
Legal advisors will need to consider:
- distribution agreements and exclusivity clauses
- regulatory requirements for importers and distributors
- compliance with competition rules
The implementation gap: where risk lies
Even after ratification, the agreement will not produce immediate uniform effects.
Its implementation will depend on phased tariff reductions, domestic regulatory adjustments and administrative practices.
This creates a gap between formal commitments and practical outcomes.
For lawyers, this is where advisory work becomes most valuable:
- managing client expectations
- identifying timing mismatches between legal changes and market reality
- mitigating risks linked to partial or inconsistent implementation
What should lawyers be doing now?
Treating the agreement as a distant political project is a mistake. The ratification is not around the corner, but it will happen.
Instead of just waiting, legal advisors should:
- analyze the relevant chapters (tariffs, SPS, TBT, GIs) from a sector-specific perspective;
- anticipate how domestic law will interact with the agreement;
- prepare contractual structures that can adapt to phased changes;
- monitor closely ratification and implementation developments.
In practical terms, the agreement should already be part of strategic legal advice, even before its formal entry into force.
Final sip
The EU/Mercosur agreement will not revolutionise the wine trade overnight. Its impact will be gradual, technical, and often subtle, but for those advising in the sector, it introduces a clear shift. We are moving from a fragmented and often opaque regulatory environment to a more structured, rule-based framework that is complex, but more predictable.
Understanding the agreement in theory is just the first step. The real challenge is to translate its provisions into practical legal strategies before competitors do.
Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.
For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.
What the EU decision does (and does not) do
The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.
At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.
In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.
The ideological paradox: a Socialist Republic on a tax-haven list
Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one.
Why Vietnam was added: the listing criteria and timeline
Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.
The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.
Vietnam’s response and the path to delisting
Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.
How different payment types are affected in practice
Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.
The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.
Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.
If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.
Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.
Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.
Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.
Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.
Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.
Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.
How European banks may respond (and what that looks like in practice)
Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.
For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.
A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.
Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.
A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.
This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.
A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.
A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.
Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.
EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.
Non-tax defensive measures and EU funding implications
Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.
DAC6 reporting and public country-by-country reporting
Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.
Country notes (alphabetical)
Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.
France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.
Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.
Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.
For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.
Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.
Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.
Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.
Practical next steps for EU companies
- Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
- Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
- DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
- Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
- Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
- Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
- Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
- Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
- Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.
Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.
Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.
Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:
- Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
- Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
- Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
- Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
- Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
- Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.
Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.
Legal Forms of Joint Ventures
Investors should understand the different corporate structures available for joint ventures:
- Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
- Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
- Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.
Foreign Investment Law
Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:
- Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
- Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.
Why is ISIC4 Relevant?
The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.
Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:
- Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
- Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
- Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
- Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
- Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
- Service Categories: Activities classified under service categories generally require significantly lower capital requirements.
Strategic Considerations
- Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
- Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.
Practical Tips
- Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
- A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
- Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.
Compliance with Local Regulations
- Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
- Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
- Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.
Conclusion
Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.
Executive Summary
The African Continental Free Trade Area (AfCFTA) remains one of the most ambitious integration projects in the world. Yet, several years into its operational phase, it has not (yet) delivered the structural shift many expected. A recent analysis underscores the gap between political momentum and economic reality: implementation remains uneven, the agreement is still used by only a portion of participating states, and non-tariff barriers and infrastructure deficits continue to dominate the cost of doing business across borders. For Egypt, the opportunity is still real — but it depends less on treaty headlines and more on enabling conditions: trade logistics, customs efficiency, regulatory convergence, and competitive industrial capacity.
Looking Back: The Promise of a Single African Market
When the AfCFTA was launched, expectations were understandably high. A continent-wide trade framework was supposed to reduce tariffs, facilitate trade in goods and services, and strengthen regional value chains — with the broader goal of moving African economies up the value ladder.
In my 2022 article, I asked whether AfCFTA could become a game changer for Egypt, given Egypt’s industrial base, strategic geography, and the potential to diversify export markets beyond traditional partners. (For background, see the earlier article here”).
The Reality Check: Intra-African Trade Remains Structurally Weak
Several years later, the interim assessment is sobering. As the Frankfurter Allgemeine Zeitung (FAZ) recently put it, AfCFTA is not a “game changer” yet, and only about half of member states currently meet the practical prerequisites to trade under the agreement.
A deeper reason is structural: no other world region trades so little with itself, and while statistics may undercount informal cross-border flows (especially in food), the overall picture remains unchanged.
Trade integration cannot deliver transformative outcomes if production, logistics, and institutions do not support scale.
Implementation Has Been Slow — and Often Symbolic
Operationalisation did not start with full-scale liberalisation. Instead, the AfCFTA began with a pilot approach: the Guided Trade Initiative (GTI) launched in October 2022, initially with eight states, later joined by additional countries, including Nigeria and South Africa by spring 2025.
The GTI created valuable learning effects, but it also underlined a key point: early progress was often presented through symbolic deals, while product coverage and volumes remained limited. FAZ highlights that only selected goods could be traded duty-free and that key sectors remained constrained for a long time due to missing or unresolved technical rules.
A pilot, however, cannot substitute for full operational certainty — the kind businesses need to restructure supply chains and invest.
Tariffs Are Not the Main Barrier — Trade Costs Are
AfCFTA is frequently discussed in terms of tariff liberalisation. Yet, evidence suggests that the largest gains do not come from tariffs but from reducing non-tariff barriers and improving trade infrastructure.
FAZ points to a central reality: tariffs tend to add around 20–30% to intra-African trade costs, whereas non-tariff costs can be far higher — driven by bureaucracy, lack of harmonised standards, inefficient border processes, and transport barriers.
This is the crux: even with reduced tariffs, trade will not expand meaningfully if goods still cannot move cheaply, quickly, and predictably.
Integration Complexity and Distributional Politics
Africa’s integration landscape is shaped by multiple overlapping regional economic communities and trade regimes. This creates legal and administrative complexity — often described as an integration “spaghetti bowl.” FAZ notes the challenge of coordination and the continued fragmentation of rules.
There is also a political economy dimension. Intra-African trade is heavily influenced by a small number of larger economies — and the distribution of benefits matters. FAZ highlights the dominance of major players (notably South Africa) and the concern that tariff liberalisation alone may entrench existing industrial advantages.
Where governments expect asymmetric outcomes, resistance often takes the form of delay, narrow implementation, or persistent non-tariff barriers.
What This Means for Egypt: The Opportunity Is Real — But Conditional
Egypt’s strategic case for AfCFTA participation remains strong: industrial potential, geographic location, and the opportunity to access and shape growing markets. But the experience so far suggests that the treaty text alone does not generate trade flows.
For Egypt’s private sector, the decisive factors are practical:
- predictable and efficient customs clearance and border procedures,
- logistics corridors and port efficiency,
- regulatory convergence (standards, certification, compliance),
- stable access to trade finance and payments,
- competitive energy and production conditions for manufacturing and processing.
AfCFTA can support these developments — but it cannot replace them.
The “Game Changer” Pathway: What Must Happen Next
FAZ concludes that AfCFTA will only become truly impactful if it is paired with the fundamentals: major infrastructure investment, stronger production and processing capacity, and a credible industrial policy.
At the same time, Africa faces a classic chicken-and-egg problem: without development there is limited investment appeal; without investment there is limited development.
For Egypt and its partners, a pragmatic strategy would be to:
- treat AfCFTA as a platform for real trade-cost reduction, not only tariff debates;
- focus on a limited number of scalable corridors and sectors where regional value chains can realistically grow;
- strengthen implementation capacity so that preferences become usable for firms — especially SMEs;
- enhance legal certainty and dispute resolution reliability for cross-border commerce.
Conclusion
AfCFTA remains a landmark achievement in terms of political commitment. But as of today, it has not yet been the “game changer” many hoped for.
For Egypt, the key question is no longer whether AfCFTA is visionary — it is. The question is whether governments and businesses can translate it into lower real trade costs, higher competitiveness, and bankable cross-border transactions. If those enabling conditions improve, AfCFTA’s promise can still become commercial reality.
This is the fourth article of a series decidated to purchasing real estate property in Spain: previously, we presented how to structure the purchase of a real estate property and what steps you must undertake to ensure the purchase is efficient and safe (you can find it here), the financial and tax information as well as practical tips related to the purchase process (here) and how to handle international inheritance tax implications (here).
How to obtain a mortgage loan when Purchasing Property in Spain
When a buyer in Spain wishes to purchase property using a mortgage loan, the financing process typically begins after selecting a specific property and signing a private purchase agreement, which is usually accompanied by a deposit payment. The entire financing process is strictly regulated under Spanish civil and banking law, offering a high degree of legal security, including foreign and non-resident buyers.
Once the private purchase contract is signed, the bank initiates an official property valuation. This is a mandatory step for determining the maximum loan amount, the financing conditions and for loan approval.
Only after the valuation is completed will the bank issue a formal mortgage offer. The entire process, from the initial application to the final offer, can take several weeks, depending on the complexity of the buyer’s financial profile and the documentation required. The final step occurs before a Spanish notary, where two deeds are signed simultaneously:
- The public deed of sale, and
- The mortgage deed.
At this stage, the bank transfers the loan amount directly to the seller, ensuring legal and financial certainty for all parties involved.
While this structure guarantees legal clarity, it also means that mortgage financing is not secured at the time the private agreement is signed. Therefore, it is strongly recommended to include a mortgage contingency clause in the private purchase contract. This clause makes the completion of the sale conditional upon obtaining financing, thereby protecting the buyer’s deposit in the event of a mortgage denial.
Key Differences for Foreign Buyers
Spanish banks do not generally issue binding pre-approvals before a specific property has been chosen. Foreign buyers, particularly non-residents, should also be aware of additional requirements, including:
- Submission of translated or apostilled foreign documents,
- More extensive due diligence and KYC (Know Your Customer) procedures, and
- Generally longer processing times.
These factors may extend the mortgage timeline and should be accounted for in the overall transaction planning.
Differences between buying a second-hand apartment/house and buying a new apartment/house directly from the developer
The main difference is that, in the case of a new home, VAT and AJD (stamp duty) are paid, and in the case of a second-hand home, only ITP (property transfer tax) is paid, as already explained in section III, paragraph 3.
In addition, in the case of new homes, a series of legal guarantees are established—for 1, 3, and 10 years—for possible construction defects that may arise in the home, for which the developer is liable. On the other hand, in the case of second-hand homes, the seller is liable for hidden defects only for a period of 6 months from delivery.
If the property is purchased from a natural person, it will generally be a second-hand home, whereas if it is purchased from a legal entity, it will normally be a new build and will be purchased from a developer.
Therefore, the fundamental differences will be those already mentioned above: different taxation and greater legal guarantees in the case of purchase from legal entities. Additionally, in the case of purchasing the property from a legal entity developer, there are enhanced documentation and reporting obligations, which do not apply in the case of sale by individuals.
Are there debts associated with the property that the buyer will be liable for?
The buyer is liable for any debts owed to the Homeowners’ Association for the three years prior to the purchase and for the outstanding portion of the current year’s dues. The buyer is also vicariously liable for any outstanding property tax (IBI) or other local taxes owed by the previous owner.
To adequately protect their interests, the buyer should, on the one hand, request a certificate of debts from the Homeowners’ Association and, on the other hand, check the status of payments of property tax and other municipal taxes.
What are the specific provions of Spanish Coastal Law (Ley De Costas)?
Properties located near the sea may fall under the Spanish Coastal Law (Ley de Costas), which regulates land use in the public maritime-terrestrial zone and its surrounding protected areas. These coastal strips are public domain, and strict limitations apply to ownership, construction, and renovation.
Even for older, long-standing buildings, it is vital to verify whether the property lies within a protection zone. Depending on the classification of the area, consequences can range from restricted use or denial of renovation permits to expiration of rights of use or, in extreme cases, administrative demolition orders.
Legal due diligence is essential to determine the status of the plot and identify any concessions or time-limited occupancy rights granted by the authorities.
What rules apply to Country Houses (Fincas Rústicas)?
Country houses (fincas rústicas) deserve special attention due to their location in rural and often protected areas, which are subject to strict urban planning and environmental regulations.
Depending on local and regional classifications, the land may be designated exclusively for agriculture, forestry, or conservation, limiting the potential for construction, expansion, or change of use.
Additionally, many rural properties have existing buildings that may never have been fully or properly legalised. As with coastal properties, buyers should review all applicable planning and environmental restrictions carefully before purchasing.
How are squatting cases (Okupas) regulated under Spanish law?
In recent years, Spain has experienced a rise in squatting cases, influenced by housing shortages, unaffordable rents, and high costs in urban or tourist areas. While the issue is complex and socio-politically sensitive, this section focuses on practical implications for property owners.
Importantly, unlawful occupation (okupación) is relatively uncommon in most parts of Spain. The majority of property owners, especially those who secure and monitor their homes properly, are unlikely to be affected.
Effective deterrents include:
- Alarm systems and surveillance cameras,
- Remote monitoring,
- Local property management services (especially for second homes).
Spanish law differentiates between:
- Intrusion into a primary residence (treated as unlawful entry),
- Occupation of vacant or second homes (classified as usurpation, requiring court action).
Recent Legal Reforms – “Anti-Squatting Law” (Ley Orgánica 1/2025): To address lengthy eviction timelines, Spain introduced reforms, which include:
- Within the first 48 hours of occupation:
Police may evict squatters without a court order if no legal proof of residence is presented. Owners must provide immediate proof of ownership. - After 48 hours: Eviction must follow a formal judicial process.
- Fast-track legal procedures: Eviction claims may now be processed in about 15 working days under accelerated procedures—though real-world implementation may vary by jurisdiction.
While these special topics may not apply to every transaction, they highlight the importance of thorough due diligence and professional legal advice when buying property in Spain. Understanding the implications of coastal laws, rural zoning, inheritance regulations, and property security helps international buyers make informed, secure, and future-proof investments.
After “Liberation Day,” many foreign companies offered discounts to American importers to help them offset the tariffs. A few months later, the US Supreme Court declared the «reciprocal» tariffs unlawful, but on the same day, President Trump announced new tariffs. In this article, we provide a practical overview of how to handle various scenarios, shifting from a reactive, unstructured approach to deliberate management of price volatility and trade flows caused by the introduction, adjustment, and removal of tariffs.
Tariff Sharing agreements
For a long time, the question has been straightforward: who absorbs the extra customs cost? The exporter? The importer? Both? The question remains important, but today it is incomplete.
The new scenario, in light of the recent ruling by the US Court of Justice on March 20, 2026, is: what happens if that duty is then canceled and refunded? If the cost was shared between the parties, the benefit of the refund must follow a consistent logic. In the absence of a clear agreement on this point, however, there is a risk of economic misalignment that could compromise the commercial relationship.
Let’s imagine an Italian winery that sells its products to a US importer. Following the introduction of reciprocal duties, the parties have decided that the exporter will grant an extraordinary discount of 7.5%, explicitly motivated by the need to share the impact of the duty. The commercial relationship continues, volumes remain stable, and the importer avoids passing on the entire increase to the end customer.
As a result of the Supreme Court ruling (or, in the future, another ruling or administrative decision), the importer obtains a refund of the duties paid during that period.
If no formal agreements have been made on this point and the documentation refers generically to a «commercial discount» and says nothing about reimbursement, the situation afterward may be difficult to reconstruct and, above all, could lead to commercial tension. As a result, a positive development (the cancellation of the duty and the right to reimbursement) becomes a problematic factor that jeopardizes the relationship.
Is the exporter entitled to a refund of the discounts granted to mitigate the duties?
In the absence of a different agreement between the parties, the right to reimbursement belongs to the party who paid the duty, i.e., in most cases, the importer. Therefore, there is a risk that the importer will enjoy a double benefit (the discount and the duty refund), while the exporter will get nothing.
For this reason, it is essential that the parties do not limit themselves to negotiating prices and discounts, but also establish the consequences of the adoption, modification, or revocation of duties on the contract, including any refunds.
To achieve this, the first step is to accurately classify and document the discounts granted. If only a «commercial discount» appears in emails, commercial orders, credit notes, and invoices, it will be harder to later argue that this discount was actually an extraordinary, temporary contribution related to the duty. Conversely, if the documentation and contract specify that it is a tariff sharing or tariff mitigation measure, identifying the amounts to be refunded after the fact becomes much simpler.
The goal is to create a clear view of the trend in discounts and payments so that, if needed, financial flows can be adjusted to align with the original terms of the agreement: if the exporter has helped cover a cost that then, in whole or in part, does not end up materializing, they will be eligible for a refund of the contribution paid.
The contract will therefore include, in addition to the Tariff Sharing clause, a Tariff Reimbursement Allocation clause, which states that if the importer receives a refund, credit, or any other economic benefit related to the duty for which the exporter has granted a discount, the importer must return the corresponding portion of the benefit to the exporter in full. or proportionally, depending on how the parties intend to distribute risk and incentive.
Importer’s responsibility to seek reimbursement
It is unclear whether, in the case of US reciprocal duties, importers can simply file an administrative claim to get a refund or if legal action will be required. The latter seems more probable.
Generally, obtaining a duty refund involves action, deadlines, documentation, and coordination with brokers and customs consultants. In most cases, the entity controlling the process is the importer (or someone acting on their behalf).
This raises a sensitive but very real issue: if the importer knows that they will have to invest time and money to obtain a refund, only to then have to share the benefit with the exporter, their incentive to take action may be reduced. To prevent this inertia the contract should contain an express obligation to take action, set out as a duty of best efforts or commercially reasonable efforts.
For example, the contract should specify that the importer must inquire about the conditions and time limits of the process, keep relevant documentation, regularly inform the exporter about the progress of the initiatives, and not unilaterally waive or reduce the claim if it affects the exporter’s economic rights.
Preventive Agreements on Litigation and Cost Allocation
When reimbursement involves a lawsuit or structured legal action, the obstacles are organizational and financial: who decides if and when to proceed, who selects the lawyers, who pays the costs upfront, how the net recovery is divided, and who has the final say on a settlement. This generally applies to all contracts, not just this case: dispute resolution methods must be addressed and agreed upon before the problem arises.
Otherwise, the dispute resolution process risks becoming a secondary improvised negotiation at the worst time — when the parties are already under pressure from margins, cash flow, and regulatory uncertainty. As a result, it becomes much harder to reach an agreement.
How to handle new tariffs and their potential cancellation
To safeguard against uncertainty, the agreement should be organized into two stages.
- The first stage regulates the immediate impact of the change in scenario, for example, the introduction of a new tariff or its increase (renegotiation, cost sharing, automatic adjustment : I discussed this in this article).
- The second stage manages the possible «rollback» (right to reimbursement, process, allocation criteria).
This approach has a clear benefit: it does not force the parties to discuss every time the tariff regime changes or a decision to cancel tariffs is made. Instead of reacting to market changes, a tool is adopted to manage potential scenarios, which is much more resilient commercially and easier to oversee, as the rules have already been agreed upon.
This allows the impact of duties to be regulated not as an extraordinary variable, to be agreed upon on a one-time basis, but as a structural, adaptable phenomenon that could last a long time.
This is why it is crucial to know how to draft contracts that cover both the current situation and potential changes, including any refunds.
Conclusion: Three practical steps for companies exporting to the US
The first is to agree on the consequences for the contract of the introduction of a new duty, increasing it, or revoking it (renegotiation, cost sharing, automatic price adjustment, right to share the refund).
The second is to clearly document any discount granted to offset a duty. If it remains a generic «commercial discount,» the right to a refund if reimbursement occurs will be much harder to enforce.
The third step is to determine what happens if the duty is canceled or revoked: the importer’s responsibility to take action to get a refund, manage the administrative process or litigation, how to divide costs, who oversees the activities of consultants and lawyers, and how the recovered funds will be allocated.
Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.
Where this new duty comes from
The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”
Companies involved in the investigation
The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.
U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.
Next steps in the procedure
Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.
The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.
The preliminary nature of this determination means there is still room to change the decision before it becomes final.
Possible effective date
The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.
If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.
What to do between now and January 1, 2026?
At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.
So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:
- Some rushed to ship as many products as possible before the potential effective date of the duty;
- Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
- Some suspended orders, pending definitive news on the impact of the duties.
These are all valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.
The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.
The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.
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For over a decade, Portugal’s Non-Habitual Resident (NHR) regime was the country’s flagship tool to attract international talent — a broad tax gateway that turned Lisbon, Porto and the Algarve into a top destination for retirees, investors and a wide range of professionals. Since the 2024 State Budget, that gateway has been closed to new applicants and replaced by a more specialised and technically demanding framework: the Tax Incentive for Scientific Research and Innovation (IFICI), commonly branded as “NHR 2.0”.
This article explains, from a Portuguese tax-law perspective, what changed, who can still qualify, and how the new application cycle works in practice.
What is the IFICI regime (NHR 2.0)?
IFICI was created by Law 82/2023 (the 2024 State Budget), which inserted Article 58-A in the Portuguese Tax Benefits Statute (EBF — Estatuto dos Benefícios Fiscais). After almost a year of regulatory limbo, the regime was finally implemented by Ordinance no. 352/2024/1, with retroactive effects to 1 January 2024.
In essence, IFICI offers, for a non-renewable 10-year period:
- A 20% flat personal income tax rate on employment (Category A) and self-employment (Category B) income derived from eligible activities; and
- A general exemption (with progression) on most foreign-source income — Categories A, B, E (capital), F (rental) and G (capital gains) — provided the income is not paid by entities based in blacklisted jurisdictions (in which case a 35% flat rate applies).
Crucially — and this is one of the biggest differences from the old NHR — foreign pensions (Category H) are excluded from the new regime and are taxed at standard progressive rates.
What happened to the “old” NHR?
The original NHR has been revoked for new applicants, but it is not gone overnight:
- Individuals who already held NHR status on 31 December 2023 keep their benefits until the end of their 10-year period.
- A transitional regime under Article 236 of the 2024 State Budget allowed certain individuals with prior ties to Portugal (employment contracts, lease agreements, school enrolment of dependants, residence-permit procedures already underway) to still apply for the original NHR in 2024 — in some cases with the registration deadline extended to 31 March 2025.
All other inbound taxpayers must now look at IFICI, not the old NHR.
Who qualifies for IFICI in Portugal?
To benefit, two cumulative conditions must be met:
- Personal eligibility: the individual becomes a Portuguese tax resident and was not a tax resident in any of the previous five years, and has not previously benefited from the NHR or the IRS Jovem regime.
- Professional eligibility: the activity falls within one of the categories listed in Article 58-A of the Portuguese Tax Benefits Statute and detailed in Ordinance 352/2024/1. The main eligibility routes are:
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- Scientific research and higher education — teaching positions at higher-education institutions and research within the national science and technology system.
- Certified startups — employment, self-employment or board positions in entities certified under the Portuguese Startup Law (Law. 21/2023).
- R&D centres and recognised innovation centres.
- Highly qualified professionals — roles listed in Annex I of Ordinance 352/2024/1 by reference to the Portuguese Classification of Occupations (CPP), such as the following ones: 112 — CEOs and executive managers; 12 — Directors of administrative and commercial services; 13 — Directors of production and specialised services; 21 — Specialists in physical sciences, mathematics, engineering and related areas; 2163.1 — Industrial product or equipment designers; 221 — Physicians; 231 — University professors; 25 — ICT specialists;
- Industrial and service exporters — qualified jobs in companies whose main activity falls under specific CAE codes (Annex II of the Ordinance) and that export at least 50% of their turnover in the year the position starts or in either of the two preceding years.
- Activities under contractual investment incentives (CFI/RFAI) and roles in entities recognised by AICEP or IAPMEI as relevant to the national economy.
A minimum academic qualification is also required for highly qualified professions: a PhD, or a bachelor’s/master’s degree combined with at least three years of professional experience.
IFICI vs NHR: key differences at a glance
Scope of beneficiaries:
- Original NHR: broad, including retirees, investors and “high-value” professionals.
- IFICI / NHR 2.0: narrow, including researchers, startup staff, ICT, engineers and exporters.
Flat tax on qualifying income:
- Original NHR: 20%.
- IFICI / NHR 2.0: 20%.
Foreign-source income:
- Original NHR: broad exemption, including pensions.
- IFICI / NHR 2.0: exemption for categories A, B, E, F and G; pensions taxed at progressive rates; 35% on blacklisted jurisdictions.
Duration:
- Original NHR: 10 consecutive years.
- IFICI / NHR 2.0: 10 consecutive years.
Corporate substance:
- Original NHR: minimal requirements for the employer.
- IFICI / NHR 2.0: strict — startup, R&D, RFAI or 50% exporter.
Application channel:
- Original NHR: Portal das Finanças, in one step.
- IFICI / NHR 2.0: competent entity — FCT, AICEP, IAPMEI, ANI or Startup Portugal — plus Portal das Finanças.
Registration deadline;
- Original NHR: 31 March of the following year.
- IFICI / NHR 2.0: 15 January of the following year.
Compliance:
- Original NHR: generally one-off.
- IFICI / NHR 2.0: annual verification of ongoing eligibility.
How to apply for IFICI: deadlines and competent authorities
Unlike the NHR, IFICI is not registered directly with the Portuguese Tax Authority (AT). The process runs through sectoral authorities, each handling a different eligibility route:
- FCT (Fundação para a Ciência e a Tecnologia) — research and higher-education roles.
- AICEP and IAPMEI — qualified jobs and corporate-body positions in entities recognised as relevant to the national economy.
- ANI (Agência Nacional de Inovação) — R&D personnel whose costs qualify under the SIFIDE II tax credit.
- Startup Portugal — positions in certified startups.
- Tax Authority (AT) — final registration via the Portal das Finanças.
The compliance calendar is now an annual cycle:
- 15 January — deadline to file the IFICI application for the previous year of residence.
- 15 February — competent entities communicate the taxpayer’s compliance status to the AT.
- 31 March — taxpayers can obtain confirmation of their registration status on the Portal das Finanças.
A failure to confirm continued eligibility — for example, if the employer ceases to meet the export threshold or the startup loses certification — can result in suspension of the regime for that year, although the underlying 10-year window keeps running.
IFICI Eligibility Checklist
Before finalising a move or filing a Portuguese tax return, candidates should be able to tick all of the following:
- 5-year rule: not a Portuguese tax resident in any of the five years preceding the year of arrival.
- No prior NHR / IRS Jovem: the regime is not available to those who already benefited from those frameworks.
- Activity alignment: professional role explicitly covered by Article 58-A of Portuguese Tax Benefits Statute and Annexes I/II of Ordinance 352/2024/1.
- Employer filter: for highly qualified roles, the employer is a startup, an R&D/innovation centre, an RFAI/CFI beneficiary, or a ≥50% exporter.
- Application route identified: the correct competent entity (FCT, AICEP, IAPMEI, ANI, Startup Portugal) is selected.
- Deadline: application filed by 15 January of the year following arrival.
- Annual compliance plan in place to confirm continued eligibility.
Conclusion: A more specialised, but still attractive, gateway
The shift from NHR to IFICI represents a deliberate narrowing of Portugal’s tax incentives: a move from a broad “welcome mat” to a surgical tool focused on scientific research, innovation, qualified employment and exporting activities. For retirees and passive investors, Portugal is no longer the obvious choice it was a decade ago. For researchers, startup teams, ICT specialists, engineers, physicians and executives moving into exporting groups, however, IFICI remains one of the most competitive personal-tax frameworks in Europe — provided the move is properly planned, with the right legal and tax structuring in place ahead of residency.
FAQ
Is the NHR still available in Portugal?
Not for new applicants. Only those who became Portuguese tax residents by the end of 2023 — or who qualified under the transitional rules of Article 236 of the Portuguese Tax Benefits Statute — could still register for the original NHR. Existing beneficiaries keep their status for the remainder of their 10-year period.
Is IFICI the same as NHR?
No. IFICI shares the 20% flat rate and the 10-year duration with the NHR, but it is narrower in scope, has stricter corporate requirements, and excludes foreign pensions from the exemption.
Are foreign pensions tax-free under IFICI?
No. Foreign pensions are taxed at general progressive rates. This is one of the most significant differences from the old NHR.
Can a remote worker qualify for IFICI?
Only if the activity falls within one of the eligible categories and the employer or activity meets the corporate requirements (startup, R&D, RFAI, ≥50% exporter, etc.). Working remotely from Portugal for a foreign company does not, in itself, grant access to the regime.
What is the application deadline for IFICI?
15 January of the year following the year in which the individual becomes a Portuguese tax resident.
Are foreign dividends, royalties and capital gains exempt under IFICI?
Generally yes — subject to declaration for progression purposes — provided they are not paid by entities located in jurisdictions on the Portuguese blacklist, in which case a 35% flat rate applies.
After more than twenty years of negotiations, the EU/Mercosur agreement remains in a legally incomplete but commercially relevant stage. For lawyers advising clients in the wine industry, the key issue is no longer whether the agreement will reshape trade, but how and when its provisions will begin to affect market access, regulatory compliance, and competitive positioning.
A negotiated agreement, yet without full legal effect
The trade pillar of the agreement was politically concluded in 2019, followed by ongoing revisions and additional negotiations, particularly on environmental commitments. Even though the full agreement is pending ratification processes on both sides, at this stage, the temporary agreement is already in force, producing its effects.
From a legal standpoint, this creates a hybrid scenario: (i) the text is sufficiently defined to anticipate obligations and opportunities, (ii) but not yet fully binding, (iii) with temporary measures already applicable.
This distinction is critical for legal advisors. The full agreement cannot yet be invoked as applicable law, but it already serves as a reliable roadmap for future regulatory and commercial conditions.
Why wine matters in this agreement
The wine sector sits at the intersection of several key chapters of the agreement:
- tariff liberalisation;
- sanitary and phytosanitary (SPS) measures;
- technical barriers to trade (TBT);
- intellectual property, particularly geographical indications (GIs).
This makes wine a multi-layered case study of how the agreement will operate in practice.
At the same time, the economic context reinforces its relevance. The European Union is Mercosur’s second-largest trading partner, with strong complementarities in trade flows. Mercosur’s exports are concentrated in agricultural goods, while EU exports are concentrated in higher value-added categories, where wine is positioned.
Tariffs: gradual but meaningful impact
Today, wine exports to Mercosur, especially to Brazil, face import duties combined with complex internal taxation. While the agreement does not eliminate all barriers immediately, it provides for progressive tariff reductions and improved quota conditions.
Meanwhile, the Brazilian tax system is under complete reform, which reinforces the importance of specialised legal assistance.
For legal practitioners, this raises practical issues:
- interpretation of tariff schedules and staging periods;
- interaction with domestic tax regimes;
- structuring of distribution agreements to capture tariff advantages over time.
The key point is that tariff benefits will not be uniform or immediate. They will require active legal planning to be effectively utilised.
Beyond tariffs: regulatory friction is the real battlefield
More significant than tariffs are the provisions addressing regulatory barriers.
Wine exports are heavily affected by labelling requirements, certification procedures, sanitary controls, product registration rules and geographical protections.
The agreement introduces commitments to increase transparency and reduce unnecessary barriers, particularly under the «Sanitary and Phytosanitary Measures» (SPS) and «Technical Barriers to Trade» (TBT) chapters. However, it does not create full harmonisation.
This means that regulatory compliance will remain jurisdiction-specific, but procedures should become more predictable and less discretionary.
For lawyers, this translates into a shift from navigating opaque systems to advising within a more structured, but still fragmented, regulatory framework.
Geographical indications: protection and tension
One of the most legally sensitive aspects of the agreement is the protection of geographical indications.
The EU seeks recognition and protection of a wide range of European GIs in Mercosur countries, including wine denominations. This implies stronger protection for European producers against the misuse of names and potential restrictions on local producers’ use of certain terms.
From a legal perspective, the new framework raises issues such as:
- coexistence with pre-existing trademarks;
- transition periods for local operators;
- enforcement mechanisms and litigation risks.
This is an area where disputes are likely to arise, particularly in markets with established local practices.
Services, distribution, and market structure
Although often overlooked, service provisions are highly relevant for the wine sector.
Each year, the EU exports nearly €30 billion in services to Mercosur, double the amount in the opposite direction.
The agreement aims to improve conditions for:
- logistics providers
- distribution networks
- commercial representation
- marketing and advertising agencies
For wine exporters, market access is not only about tariffs but also about how products reach consumers.
Legal advisors will need to consider:
- distribution agreements and exclusivity clauses
- regulatory requirements for importers and distributors
- compliance with competition rules
The implementation gap: where risk lies
Even after ratification, the agreement will not produce immediate uniform effects.
Its implementation will depend on phased tariff reductions, domestic regulatory adjustments and administrative practices.
This creates a gap between formal commitments and practical outcomes.
For lawyers, this is where advisory work becomes most valuable:
- managing client expectations
- identifying timing mismatches between legal changes and market reality
- mitigating risks linked to partial or inconsistent implementation
What should lawyers be doing now?
Treating the agreement as a distant political project is a mistake. The ratification is not around the corner, but it will happen.
Instead of just waiting, legal advisors should:
- analyze the relevant chapters (tariffs, SPS, TBT, GIs) from a sector-specific perspective;
- anticipate how domestic law will interact with the agreement;
- prepare contractual structures that can adapt to phased changes;
- monitor closely ratification and implementation developments.
In practical terms, the agreement should already be part of strategic legal advice, even before its formal entry into force.
Final sip
The EU/Mercosur agreement will not revolutionise the wine trade overnight. Its impact will be gradual, technical, and often subtle, but for those advising in the sector, it introduces a clear shift. We are moving from a fragmented and often opaque regulatory environment to a more structured, rule-based framework that is complex, but more predictable.
Understanding the agreement in theory is just the first step. The real challenge is to translate its provisions into practical legal strategies before competitors do.
Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.
For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.
What the EU decision does (and does not) do
The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.
At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.
In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.
The ideological paradox: a Socialist Republic on a tax-haven list
Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one.
Why Vietnam was added: the listing criteria and timeline
Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.
The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.
Vietnam’s response and the path to delisting
Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.
How different payment types are affected in practice
Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.
The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.
Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.
If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.
Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.
Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.
Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.
Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.
Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.
Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.
How European banks may respond (and what that looks like in practice)
Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.
For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.
A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.
Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.
A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.
This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.
A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.
A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.
Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.
EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.
Non-tax defensive measures and EU funding implications
Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.
DAC6 reporting and public country-by-country reporting
Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.
Country notes (alphabetical)
Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.
France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.
Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.
Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.
For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.
Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.
Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.
Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.
Practical next steps for EU companies
- Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
- Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
- DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
- Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
- Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
- Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
- Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
- Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
- Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.
Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.
Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.
Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:
- Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
- Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
- Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
- Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
- Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
- Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.
Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.
Legal Forms of Joint Ventures
Investors should understand the different corporate structures available for joint ventures:
- Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
- Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
- Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.
Foreign Investment Law
Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:
- Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
- Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.
Why is ISIC4 Relevant?
The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.
Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:
- Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
- Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
- Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
- Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
- Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
- Service Categories: Activities classified under service categories generally require significantly lower capital requirements.
Strategic Considerations
- Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
- Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.
Practical Tips
- Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
- A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
- Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.
Compliance with Local Regulations
- Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
- Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
- Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.
Conclusion
Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.
Executive Summary
The African Continental Free Trade Area (AfCFTA) remains one of the most ambitious integration projects in the world. Yet, several years into its operational phase, it has not (yet) delivered the structural shift many expected. A recent analysis underscores the gap between political momentum and economic reality: implementation remains uneven, the agreement is still used by only a portion of participating states, and non-tariff barriers and infrastructure deficits continue to dominate the cost of doing business across borders. For Egypt, the opportunity is still real — but it depends less on treaty headlines and more on enabling conditions: trade logistics, customs efficiency, regulatory convergence, and competitive industrial capacity.
Looking Back: The Promise of a Single African Market
When the AfCFTA was launched, expectations were understandably high. A continent-wide trade framework was supposed to reduce tariffs, facilitate trade in goods and services, and strengthen regional value chains — with the broader goal of moving African economies up the value ladder.
In my 2022 article, I asked whether AfCFTA could become a game changer for Egypt, given Egypt’s industrial base, strategic geography, and the potential to diversify export markets beyond traditional partners. (For background, see the earlier article here”).
The Reality Check: Intra-African Trade Remains Structurally Weak
Several years later, the interim assessment is sobering. As the Frankfurter Allgemeine Zeitung (FAZ) recently put it, AfCFTA is not a “game changer” yet, and only about half of member states currently meet the practical prerequisites to trade under the agreement.
A deeper reason is structural: no other world region trades so little with itself, and while statistics may undercount informal cross-border flows (especially in food), the overall picture remains unchanged.
Trade integration cannot deliver transformative outcomes if production, logistics, and institutions do not support scale.
Implementation Has Been Slow — and Often Symbolic
Operationalisation did not start with full-scale liberalisation. Instead, the AfCFTA began with a pilot approach: the Guided Trade Initiative (GTI) launched in October 2022, initially with eight states, later joined by additional countries, including Nigeria and South Africa by spring 2025.
The GTI created valuable learning effects, but it also underlined a key point: early progress was often presented through symbolic deals, while product coverage and volumes remained limited. FAZ highlights that only selected goods could be traded duty-free and that key sectors remained constrained for a long time due to missing or unresolved technical rules.
A pilot, however, cannot substitute for full operational certainty — the kind businesses need to restructure supply chains and invest.
Tariffs Are Not the Main Barrier — Trade Costs Are
AfCFTA is frequently discussed in terms of tariff liberalisation. Yet, evidence suggests that the largest gains do not come from tariffs but from reducing non-tariff barriers and improving trade infrastructure.
FAZ points to a central reality: tariffs tend to add around 20–30% to intra-African trade costs, whereas non-tariff costs can be far higher — driven by bureaucracy, lack of harmonised standards, inefficient border processes, and transport barriers.
This is the crux: even with reduced tariffs, trade will not expand meaningfully if goods still cannot move cheaply, quickly, and predictably.
Integration Complexity and Distributional Politics
Africa’s integration landscape is shaped by multiple overlapping regional economic communities and trade regimes. This creates legal and administrative complexity — often described as an integration “spaghetti bowl.” FAZ notes the challenge of coordination and the continued fragmentation of rules.
There is also a political economy dimension. Intra-African trade is heavily influenced by a small number of larger economies — and the distribution of benefits matters. FAZ highlights the dominance of major players (notably South Africa) and the concern that tariff liberalisation alone may entrench existing industrial advantages.
Where governments expect asymmetric outcomes, resistance often takes the form of delay, narrow implementation, or persistent non-tariff barriers.
What This Means for Egypt: The Opportunity Is Real — But Conditional
Egypt’s strategic case for AfCFTA participation remains strong: industrial potential, geographic location, and the opportunity to access and shape growing markets. But the experience so far suggests that the treaty text alone does not generate trade flows.
For Egypt’s private sector, the decisive factors are practical:
- predictable and efficient customs clearance and border procedures,
- logistics corridors and port efficiency,
- regulatory convergence (standards, certification, compliance),
- stable access to trade finance and payments,
- competitive energy and production conditions for manufacturing and processing.
AfCFTA can support these developments — but it cannot replace them.
The “Game Changer” Pathway: What Must Happen Next
FAZ concludes that AfCFTA will only become truly impactful if it is paired with the fundamentals: major infrastructure investment, stronger production and processing capacity, and a credible industrial policy.
At the same time, Africa faces a classic chicken-and-egg problem: without development there is limited investment appeal; without investment there is limited development.
For Egypt and its partners, a pragmatic strategy would be to:
- treat AfCFTA as a platform for real trade-cost reduction, not only tariff debates;
- focus on a limited number of scalable corridors and sectors where regional value chains can realistically grow;
- strengthen implementation capacity so that preferences become usable for firms — especially SMEs;
- enhance legal certainty and dispute resolution reliability for cross-border commerce.
Conclusion
AfCFTA remains a landmark achievement in terms of political commitment. But as of today, it has not yet been the “game changer” many hoped for.
For Egypt, the key question is no longer whether AfCFTA is visionary — it is. The question is whether governments and businesses can translate it into lower real trade costs, higher competitiveness, and bankable cross-border transactions. If those enabling conditions improve, AfCFTA’s promise can still become commercial reality.
This is the fourth article of a series decidated to purchasing real estate property in Spain: previously, we presented how to structure the purchase of a real estate property and what steps you must undertake to ensure the purchase is efficient and safe (you can find it here), the financial and tax information as well as practical tips related to the purchase process (here) and how to handle international inheritance tax implications (here).
How to obtain a mortgage loan when Purchasing Property in Spain
When a buyer in Spain wishes to purchase property using a mortgage loan, the financing process typically begins after selecting a specific property and signing a private purchase agreement, which is usually accompanied by a deposit payment. The entire financing process is strictly regulated under Spanish civil and banking law, offering a high degree of legal security, including foreign and non-resident buyers.
Once the private purchase contract is signed, the bank initiates an official property valuation. This is a mandatory step for determining the maximum loan amount, the financing conditions and for loan approval.
Only after the valuation is completed will the bank issue a formal mortgage offer. The entire process, from the initial application to the final offer, can take several weeks, depending on the complexity of the buyer’s financial profile and the documentation required. The final step occurs before a Spanish notary, where two deeds are signed simultaneously:
- The public deed of sale, and
- The mortgage deed.
At this stage, the bank transfers the loan amount directly to the seller, ensuring legal and financial certainty for all parties involved.
While this structure guarantees legal clarity, it also means that mortgage financing is not secured at the time the private agreement is signed. Therefore, it is strongly recommended to include a mortgage contingency clause in the private purchase contract. This clause makes the completion of the sale conditional upon obtaining financing, thereby protecting the buyer’s deposit in the event of a mortgage denial.
Key Differences for Foreign Buyers
Spanish banks do not generally issue binding pre-approvals before a specific property has been chosen. Foreign buyers, particularly non-residents, should also be aware of additional requirements, including:
- Submission of translated or apostilled foreign documents,
- More extensive due diligence and KYC (Know Your Customer) procedures, and
- Generally longer processing times.
These factors may extend the mortgage timeline and should be accounted for in the overall transaction planning.
Differences between buying a second-hand apartment/house and buying a new apartment/house directly from the developer
The main difference is that, in the case of a new home, VAT and AJD (stamp duty) are paid, and in the case of a second-hand home, only ITP (property transfer tax) is paid, as already explained in section III, paragraph 3.
In addition, in the case of new homes, a series of legal guarantees are established—for 1, 3, and 10 years—for possible construction defects that may arise in the home, for which the developer is liable. On the other hand, in the case of second-hand homes, the seller is liable for hidden defects only for a period of 6 months from delivery.
If the property is purchased from a natural person, it will generally be a second-hand home, whereas if it is purchased from a legal entity, it will normally be a new build and will be purchased from a developer.
Therefore, the fundamental differences will be those already mentioned above: different taxation and greater legal guarantees in the case of purchase from legal entities. Additionally, in the case of purchasing the property from a legal entity developer, there are enhanced documentation and reporting obligations, which do not apply in the case of sale by individuals.
Are there debts associated with the property that the buyer will be liable for?
The buyer is liable for any debts owed to the Homeowners’ Association for the three years prior to the purchase and for the outstanding portion of the current year’s dues. The buyer is also vicariously liable for any outstanding property tax (IBI) or other local taxes owed by the previous owner.
To adequately protect their interests, the buyer should, on the one hand, request a certificate of debts from the Homeowners’ Association and, on the other hand, check the status of payments of property tax and other municipal taxes.
What are the specific provions of Spanish Coastal Law (Ley De Costas)?
Properties located near the sea may fall under the Spanish Coastal Law (Ley de Costas), which regulates land use in the public maritime-terrestrial zone and its surrounding protected areas. These coastal strips are public domain, and strict limitations apply to ownership, construction, and renovation.
Even for older, long-standing buildings, it is vital to verify whether the property lies within a protection zone. Depending on the classification of the area, consequences can range from restricted use or denial of renovation permits to expiration of rights of use or, in extreme cases, administrative demolition orders.
Legal due diligence is essential to determine the status of the plot and identify any concessions or time-limited occupancy rights granted by the authorities.
What rules apply to Country Houses (Fincas Rústicas)?
Country houses (fincas rústicas) deserve special attention due to their location in rural and often protected areas, which are subject to strict urban planning and environmental regulations.
Depending on local and regional classifications, the land may be designated exclusively for agriculture, forestry, or conservation, limiting the potential for construction, expansion, or change of use.
Additionally, many rural properties have existing buildings that may never have been fully or properly legalised. As with coastal properties, buyers should review all applicable planning and environmental restrictions carefully before purchasing.
How are squatting cases (Okupas) regulated under Spanish law?
In recent years, Spain has experienced a rise in squatting cases, influenced by housing shortages, unaffordable rents, and high costs in urban or tourist areas. While the issue is complex and socio-politically sensitive, this section focuses on practical implications for property owners.
Importantly, unlawful occupation (okupación) is relatively uncommon in most parts of Spain. The majority of property owners, especially those who secure and monitor their homes properly, are unlikely to be affected.
Effective deterrents include:
- Alarm systems and surveillance cameras,
- Remote monitoring,
- Local property management services (especially for second homes).
Spanish law differentiates between:
- Intrusion into a primary residence (treated as unlawful entry),
- Occupation of vacant or second homes (classified as usurpation, requiring court action).
Recent Legal Reforms – “Anti-Squatting Law” (Ley Orgánica 1/2025): To address lengthy eviction timelines, Spain introduced reforms, which include:
- Within the first 48 hours of occupation:
Police may evict squatters without a court order if no legal proof of residence is presented. Owners must provide immediate proof of ownership. - After 48 hours: Eviction must follow a formal judicial process.
- Fast-track legal procedures: Eviction claims may now be processed in about 15 working days under accelerated procedures—though real-world implementation may vary by jurisdiction.
While these special topics may not apply to every transaction, they highlight the importance of thorough due diligence and professional legal advice when buying property in Spain. Understanding the implications of coastal laws, rural zoning, inheritance regulations, and property security helps international buyers make informed, secure, and future-proof investments.
After “Liberation Day,” many foreign companies offered discounts to American importers to help them offset the tariffs. A few months later, the US Supreme Court declared the «reciprocal» tariffs unlawful, but on the same day, President Trump announced new tariffs. In this article, we provide a practical overview of how to handle various scenarios, shifting from a reactive, unstructured approach to deliberate management of price volatility and trade flows caused by the introduction, adjustment, and removal of tariffs.
Tariff Sharing agreements
For a long time, the question has been straightforward: who absorbs the extra customs cost? The exporter? The importer? Both? The question remains important, but today it is incomplete.
The new scenario, in light of the recent ruling by the US Court of Justice on March 20, 2026, is: what happens if that duty is then canceled and refunded? If the cost was shared between the parties, the benefit of the refund must follow a consistent logic. In the absence of a clear agreement on this point, however, there is a risk of economic misalignment that could compromise the commercial relationship.
Let’s imagine an Italian winery that sells its products to a US importer. Following the introduction of reciprocal duties, the parties have decided that the exporter will grant an extraordinary discount of 7.5%, explicitly motivated by the need to share the impact of the duty. The commercial relationship continues, volumes remain stable, and the importer avoids passing on the entire increase to the end customer.
As a result of the Supreme Court ruling (or, in the future, another ruling or administrative decision), the importer obtains a refund of the duties paid during that period.
If no formal agreements have been made on this point and the documentation refers generically to a «commercial discount» and says nothing about reimbursement, the situation afterward may be difficult to reconstruct and, above all, could lead to commercial tension. As a result, a positive development (the cancellation of the duty and the right to reimbursement) becomes a problematic factor that jeopardizes the relationship.
Is the exporter entitled to a refund of the discounts granted to mitigate the duties?
In the absence of a different agreement between the parties, the right to reimbursement belongs to the party who paid the duty, i.e., in most cases, the importer. Therefore, there is a risk that the importer will enjoy a double benefit (the discount and the duty refund), while the exporter will get nothing.
For this reason, it is essential that the parties do not limit themselves to negotiating prices and discounts, but also establish the consequences of the adoption, modification, or revocation of duties on the contract, including any refunds.
To achieve this, the first step is to accurately classify and document the discounts granted. If only a «commercial discount» appears in emails, commercial orders, credit notes, and invoices, it will be harder to later argue that this discount was actually an extraordinary, temporary contribution related to the duty. Conversely, if the documentation and contract specify that it is a tariff sharing or tariff mitigation measure, identifying the amounts to be refunded after the fact becomes much simpler.
The goal is to create a clear view of the trend in discounts and payments so that, if needed, financial flows can be adjusted to align with the original terms of the agreement: if the exporter has helped cover a cost that then, in whole or in part, does not end up materializing, they will be eligible for a refund of the contribution paid.
The contract will therefore include, in addition to the Tariff Sharing clause, a Tariff Reimbursement Allocation clause, which states that if the importer receives a refund, credit, or any other economic benefit related to the duty for which the exporter has granted a discount, the importer must return the corresponding portion of the benefit to the exporter in full. or proportionally, depending on how the parties intend to distribute risk and incentive.
Importer’s responsibility to seek reimbursement
It is unclear whether, in the case of US reciprocal duties, importers can simply file an administrative claim to get a refund or if legal action will be required. The latter seems more probable.
Generally, obtaining a duty refund involves action, deadlines, documentation, and coordination with brokers and customs consultants. In most cases, the entity controlling the process is the importer (or someone acting on their behalf).
This raises a sensitive but very real issue: if the importer knows that they will have to invest time and money to obtain a refund, only to then have to share the benefit with the exporter, their incentive to take action may be reduced. To prevent this inertia the contract should contain an express obligation to take action, set out as a duty of best efforts or commercially reasonable efforts.
For example, the contract should specify that the importer must inquire about the conditions and time limits of the process, keep relevant documentation, regularly inform the exporter about the progress of the initiatives, and not unilaterally waive or reduce the claim if it affects the exporter’s economic rights.
Preventive Agreements on Litigation and Cost Allocation
When reimbursement involves a lawsuit or structured legal action, the obstacles are organizational and financial: who decides if and when to proceed, who selects the lawyers, who pays the costs upfront, how the net recovery is divided, and who has the final say on a settlement. This generally applies to all contracts, not just this case: dispute resolution methods must be addressed and agreed upon before the problem arises.
Otherwise, the dispute resolution process risks becoming a secondary improvised negotiation at the worst time — when the parties are already under pressure from margins, cash flow, and regulatory uncertainty. As a result, it becomes much harder to reach an agreement.
How to handle new tariffs and their potential cancellation
To safeguard against uncertainty, the agreement should be organized into two stages.
- The first stage regulates the immediate impact of the change in scenario, for example, the introduction of a new tariff or its increase (renegotiation, cost sharing, automatic adjustment : I discussed this in this article).
- The second stage manages the possible «rollback» (right to reimbursement, process, allocation criteria).
This approach has a clear benefit: it does not force the parties to discuss every time the tariff regime changes or a decision to cancel tariffs is made. Instead of reacting to market changes, a tool is adopted to manage potential scenarios, which is much more resilient commercially and easier to oversee, as the rules have already been agreed upon.
This allows the impact of duties to be regulated not as an extraordinary variable, to be agreed upon on a one-time basis, but as a structural, adaptable phenomenon that could last a long time.
This is why it is crucial to know how to draft contracts that cover both the current situation and potential changes, including any refunds.
Conclusion: Three practical steps for companies exporting to the US
The first is to agree on the consequences for the contract of the introduction of a new duty, increasing it, or revoking it (renegotiation, cost sharing, automatic price adjustment, right to share the refund).
The second is to clearly document any discount granted to offset a duty. If it remains a generic «commercial discount,» the right to a refund if reimbursement occurs will be much harder to enforce.
The third step is to determine what happens if the duty is canceled or revoked: the importer’s responsibility to take action to get a refund, manage the administrative process or litigation, how to divide costs, who oversees the activities of consultants and lawyers, and how the recovered funds will be allocated.
Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.
Where this new duty comes from
The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”
Companies involved in the investigation
The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.
U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.
Next steps in the procedure
Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.
The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.
The preliminary nature of this determination means there is still room to change the decision before it becomes final.
Possible effective date
The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.
If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.
What to do between now and January 1, 2026?
At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.
So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:
- Some rushed to ship as many products as possible before the potential effective date of the duty;
- Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
- Some suspended orders, pending definitive news on the impact of the duties.
These are all valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.
The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.
The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.
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U.S. Tariffs at 107% on Italian Pasta? Another episode in the saga of exporting to the United States
08.10.2025
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Италия
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For over a decade, Portugal’s Non-Habitual Resident (NHR) regime was the country’s flagship tool to attract international talent — a broad tax gateway that turned Lisbon, Porto and the Algarve into a top destination for retirees, investors and a wide range of professionals. Since the 2024 State Budget, that gateway has been closed to new applicants and replaced by a more specialised and technically demanding framework: the Tax Incentive for Scientific Research and Innovation (IFICI), commonly branded as “NHR 2.0”.
This article explains, from a Portuguese tax-law perspective, what changed, who can still qualify, and how the new application cycle works in practice.
What is the IFICI regime (NHR 2.0)?
IFICI was created by Law 82/2023 (the 2024 State Budget), which inserted Article 58-A in the Portuguese Tax Benefits Statute (EBF — Estatuto dos Benefícios Fiscais). After almost a year of regulatory limbo, the regime was finally implemented by Ordinance no. 352/2024/1, with retroactive effects to 1 January 2024.
In essence, IFICI offers, for a non-renewable 10-year period:
- A 20% flat personal income tax rate on employment (Category A) and self-employment (Category B) income derived from eligible activities; and
- A general exemption (with progression) on most foreign-source income — Categories A, B, E (capital), F (rental) and G (capital gains) — provided the income is not paid by entities based in blacklisted jurisdictions (in which case a 35% flat rate applies).
Crucially — and this is one of the biggest differences from the old NHR — foreign pensions (Category H) are excluded from the new regime and are taxed at standard progressive rates.
What happened to the “old” NHR?
The original NHR has been revoked for new applicants, but it is not gone overnight:
- Individuals who already held NHR status on 31 December 2023 keep their benefits until the end of their 10-year period.
- A transitional regime under Article 236 of the 2024 State Budget allowed certain individuals with prior ties to Portugal (employment contracts, lease agreements, school enrolment of dependants, residence-permit procedures already underway) to still apply for the original NHR in 2024 — in some cases with the registration deadline extended to 31 March 2025.
All other inbound taxpayers must now look at IFICI, not the old NHR.
Who qualifies for IFICI in Portugal?
To benefit, two cumulative conditions must be met:
- Personal eligibility: the individual becomes a Portuguese tax resident and was not a tax resident in any of the previous five years, and has not previously benefited from the NHR or the IRS Jovem regime.
- Professional eligibility: the activity falls within one of the categories listed in Article 58-A of the Portuguese Tax Benefits Statute and detailed in Ordinance 352/2024/1. The main eligibility routes are:
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- Scientific research and higher education — teaching positions at higher-education institutions and research within the national science and technology system.
- Certified startups — employment, self-employment or board positions in entities certified under the Portuguese Startup Law (Law. 21/2023).
- R&D centres and recognised innovation centres.
- Highly qualified professionals — roles listed in Annex I of Ordinance 352/2024/1 by reference to the Portuguese Classification of Occupations (CPP), such as the following ones: 112 — CEOs and executive managers; 12 — Directors of administrative and commercial services; 13 — Directors of production and specialised services; 21 — Specialists in physical sciences, mathematics, engineering and related areas; 2163.1 — Industrial product or equipment designers; 221 — Physicians; 231 — University professors; 25 — ICT specialists;
- Industrial and service exporters — qualified jobs in companies whose main activity falls under specific CAE codes (Annex II of the Ordinance) and that export at least 50% of their turnover in the year the position starts or in either of the two preceding years.
- Activities under contractual investment incentives (CFI/RFAI) and roles in entities recognised by AICEP or IAPMEI as relevant to the national economy.
A minimum academic qualification is also required for highly qualified professions: a PhD, or a bachelor’s/master’s degree combined with at least three years of professional experience.
IFICI vs NHR: key differences at a glance
Scope of beneficiaries:
- Original NHR: broad, including retirees, investors and “high-value” professionals.
- IFICI / NHR 2.0: narrow, including researchers, startup staff, ICT, engineers and exporters.
Flat tax on qualifying income:
- Original NHR: 20%.
- IFICI / NHR 2.0: 20%.
Foreign-source income:
- Original NHR: broad exemption, including pensions.
- IFICI / NHR 2.0: exemption for categories A, B, E, F and G; pensions taxed at progressive rates; 35% on blacklisted jurisdictions.
Duration:
- Original NHR: 10 consecutive years.
- IFICI / NHR 2.0: 10 consecutive years.
Corporate substance:
- Original NHR: minimal requirements for the employer.
- IFICI / NHR 2.0: strict — startup, R&D, RFAI or 50% exporter.
Application channel:
- Original NHR: Portal das Finanças, in one step.
- IFICI / NHR 2.0: competent entity — FCT, AICEP, IAPMEI, ANI or Startup Portugal — plus Portal das Finanças.
Registration deadline;
- Original NHR: 31 March of the following year.
- IFICI / NHR 2.0: 15 January of the following year.
Compliance:
- Original NHR: generally one-off.
- IFICI / NHR 2.0: annual verification of ongoing eligibility.
How to apply for IFICI: deadlines and competent authorities
Unlike the NHR, IFICI is not registered directly with the Portuguese Tax Authority (AT). The process runs through sectoral authorities, each handling a different eligibility route:
- FCT (Fundação para a Ciência e a Tecnologia) — research and higher-education roles.
- AICEP and IAPMEI — qualified jobs and corporate-body positions in entities recognised as relevant to the national economy.
- ANI (Agência Nacional de Inovação) — R&D personnel whose costs qualify under the SIFIDE II tax credit.
- Startup Portugal — positions in certified startups.
- Tax Authority (AT) — final registration via the Portal das Finanças.
The compliance calendar is now an annual cycle:
- 15 January — deadline to file the IFICI application for the previous year of residence.
- 15 February — competent entities communicate the taxpayer’s compliance status to the AT.
- 31 March — taxpayers can obtain confirmation of their registration status on the Portal das Finanças.
A failure to confirm continued eligibility — for example, if the employer ceases to meet the export threshold or the startup loses certification — can result in suspension of the regime for that year, although the underlying 10-year window keeps running.
IFICI Eligibility Checklist
Before finalising a move or filing a Portuguese tax return, candidates should be able to tick all of the following:
- 5-year rule: not a Portuguese tax resident in any of the five years preceding the year of arrival.
- No prior NHR / IRS Jovem: the regime is not available to those who already benefited from those frameworks.
- Activity alignment: professional role explicitly covered by Article 58-A of Portuguese Tax Benefits Statute and Annexes I/II of Ordinance 352/2024/1.
- Employer filter: for highly qualified roles, the employer is a startup, an R&D/innovation centre, an RFAI/CFI beneficiary, or a ≥50% exporter.
- Application route identified: the correct competent entity (FCT, AICEP, IAPMEI, ANI, Startup Portugal) is selected.
- Deadline: application filed by 15 January of the year following arrival.
- Annual compliance plan in place to confirm continued eligibility.
Conclusion: A more specialised, but still attractive, gateway
The shift from NHR to IFICI represents a deliberate narrowing of Portugal’s tax incentives: a move from a broad “welcome mat” to a surgical tool focused on scientific research, innovation, qualified employment and exporting activities. For retirees and passive investors, Portugal is no longer the obvious choice it was a decade ago. For researchers, startup teams, ICT specialists, engineers, physicians and executives moving into exporting groups, however, IFICI remains one of the most competitive personal-tax frameworks in Europe — provided the move is properly planned, with the right legal and tax structuring in place ahead of residency.
FAQ
Is the NHR still available in Portugal?
Not for new applicants. Only those who became Portuguese tax residents by the end of 2023 — or who qualified under the transitional rules of Article 236 of the Portuguese Tax Benefits Statute — could still register for the original NHR. Existing beneficiaries keep their status for the remainder of their 10-year period.
Is IFICI the same as NHR?
No. IFICI shares the 20% flat rate and the 10-year duration with the NHR, but it is narrower in scope, has stricter corporate requirements, and excludes foreign pensions from the exemption.
Are foreign pensions tax-free under IFICI?
No. Foreign pensions are taxed at general progressive rates. This is one of the most significant differences from the old NHR.
Can a remote worker qualify for IFICI?
Only if the activity falls within one of the eligible categories and the employer or activity meets the corporate requirements (startup, R&D, RFAI, ≥50% exporter, etc.). Working remotely from Portugal for a foreign company does not, in itself, grant access to the regime.
What is the application deadline for IFICI?
15 January of the year following the year in which the individual becomes a Portuguese tax resident.
Are foreign dividends, royalties and capital gains exempt under IFICI?
Generally yes — subject to declaration for progression purposes — provided they are not paid by entities located in jurisdictions on the Portuguese blacklist, in which case a 35% flat rate applies.
After more than twenty years of negotiations, the EU/Mercosur agreement remains in a legally incomplete but commercially relevant stage. For lawyers advising clients in the wine industry, the key issue is no longer whether the agreement will reshape trade, but how and when its provisions will begin to affect market access, regulatory compliance, and competitive positioning.
A negotiated agreement, yet without full legal effect
The trade pillar of the agreement was politically concluded in 2019, followed by ongoing revisions and additional negotiations, particularly on environmental commitments. Even though the full agreement is pending ratification processes on both sides, at this stage, the temporary agreement is already in force, producing its effects.
From a legal standpoint, this creates a hybrid scenario: (i) the text is sufficiently defined to anticipate obligations and opportunities, (ii) but not yet fully binding, (iii) with temporary measures already applicable.
This distinction is critical for legal advisors. The full agreement cannot yet be invoked as applicable law, but it already serves as a reliable roadmap for future regulatory and commercial conditions.
Why wine matters in this agreement
The wine sector sits at the intersection of several key chapters of the agreement:
- tariff liberalisation;
- sanitary and phytosanitary (SPS) measures;
- technical barriers to trade (TBT);
- intellectual property, particularly geographical indications (GIs).
This makes wine a multi-layered case study of how the agreement will operate in practice.
At the same time, the economic context reinforces its relevance. The European Union is Mercosur’s second-largest trading partner, with strong complementarities in trade flows. Mercosur’s exports are concentrated in agricultural goods, while EU exports are concentrated in higher value-added categories, where wine is positioned.
Tariffs: gradual but meaningful impact
Today, wine exports to Mercosur, especially to Brazil, face import duties combined with complex internal taxation. While the agreement does not eliminate all barriers immediately, it provides for progressive tariff reductions and improved quota conditions.
Meanwhile, the Brazilian tax system is under complete reform, which reinforces the importance of specialised legal assistance.
For legal practitioners, this raises practical issues:
- interpretation of tariff schedules and staging periods;
- interaction with domestic tax regimes;
- structuring of distribution agreements to capture tariff advantages over time.
The key point is that tariff benefits will not be uniform or immediate. They will require active legal planning to be effectively utilised.
Beyond tariffs: regulatory friction is the real battlefield
More significant than tariffs are the provisions addressing regulatory barriers.
Wine exports are heavily affected by labelling requirements, certification procedures, sanitary controls, product registration rules and geographical protections.
The agreement introduces commitments to increase transparency and reduce unnecessary barriers, particularly under the «Sanitary and Phytosanitary Measures» (SPS) and «Technical Barriers to Trade» (TBT) chapters. However, it does not create full harmonisation.
This means that regulatory compliance will remain jurisdiction-specific, but procedures should become more predictable and less discretionary.
For lawyers, this translates into a shift from navigating opaque systems to advising within a more structured, but still fragmented, regulatory framework.
Geographical indications: protection and tension
One of the most legally sensitive aspects of the agreement is the protection of geographical indications.
The EU seeks recognition and protection of a wide range of European GIs in Mercosur countries, including wine denominations. This implies stronger protection for European producers against the misuse of names and potential restrictions on local producers’ use of certain terms.
From a legal perspective, the new framework raises issues such as:
- coexistence with pre-existing trademarks;
- transition periods for local operators;
- enforcement mechanisms and litigation risks.
This is an area where disputes are likely to arise, particularly in markets with established local practices.
Services, distribution, and market structure
Although often overlooked, service provisions are highly relevant for the wine sector.
Each year, the EU exports nearly €30 billion in services to Mercosur, double the amount in the opposite direction.
The agreement aims to improve conditions for:
- logistics providers
- distribution networks
- commercial representation
- marketing and advertising agencies
For wine exporters, market access is not only about tariffs but also about how products reach consumers.
Legal advisors will need to consider:
- distribution agreements and exclusivity clauses
- regulatory requirements for importers and distributors
- compliance with competition rules
The implementation gap: where risk lies
Even after ratification, the agreement will not produce immediate uniform effects.
Its implementation will depend on phased tariff reductions, domestic regulatory adjustments and administrative practices.
This creates a gap between formal commitments and practical outcomes.
For lawyers, this is where advisory work becomes most valuable:
- managing client expectations
- identifying timing mismatches between legal changes and market reality
- mitigating risks linked to partial or inconsistent implementation
What should lawyers be doing now?
Treating the agreement as a distant political project is a mistake. The ratification is not around the corner, but it will happen.
Instead of just waiting, legal advisors should:
- analyze the relevant chapters (tariffs, SPS, TBT, GIs) from a sector-specific perspective;
- anticipate how domestic law will interact with the agreement;
- prepare contractual structures that can adapt to phased changes;
- monitor closely ratification and implementation developments.
In practical terms, the agreement should already be part of strategic legal advice, even before its formal entry into force.
Final sip
The EU/Mercosur agreement will not revolutionise the wine trade overnight. Its impact will be gradual, technical, and often subtle, but for those advising in the sector, it introduces a clear shift. We are moving from a fragmented and often opaque regulatory environment to a more structured, rule-based framework that is complex, but more predictable.
Understanding the agreement in theory is just the first step. The real challenge is to translate its provisions into practical legal strategies before competitors do.
Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.
For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.
What the EU decision does (and does not) do
The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.
At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.
In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.
The ideological paradox: a Socialist Republic on a tax-haven list
Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one.
Why Vietnam was added: the listing criteria and timeline
Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.
The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.
Vietnam’s response and the path to delisting
Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.
How different payment types are affected in practice
Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.
The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.
Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.
If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.
Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.
Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.
Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.
Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.
Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.
Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.
How European banks may respond (and what that looks like in practice)
Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.
For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.
A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.
Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.
A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.
This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.
A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.
A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.
Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.
EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.
Non-tax defensive measures and EU funding implications
Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.
DAC6 reporting and public country-by-country reporting
Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.
Country notes (alphabetical)
Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.
France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.
Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.
Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.
For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.
Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.
Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.
Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.
Practical next steps for EU companies
- Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
- Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
- DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
- Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
- Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
- Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
- Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
- Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
- Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.
Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.
Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.
Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:
- Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
- Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
- Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
- Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
- Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
- Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.
Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.
Legal Forms of Joint Ventures
Investors should understand the different corporate structures available for joint ventures:
- Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
- Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
- Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.
Foreign Investment Law
Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:
- Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
- Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.
Why is ISIC4 Relevant?
The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.
Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:
- Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
- Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
- Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
- Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
- Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
- Service Categories: Activities classified under service categories generally require significantly lower capital requirements.
Strategic Considerations
- Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
- Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.
Practical Tips
- Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
- A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
- Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.
Compliance with Local Regulations
- Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
- Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
- Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.
Conclusion
Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.
Executive Summary
The African Continental Free Trade Area (AfCFTA) remains one of the most ambitious integration projects in the world. Yet, several years into its operational phase, it has not (yet) delivered the structural shift many expected. A recent analysis underscores the gap between political momentum and economic reality: implementation remains uneven, the agreement is still used by only a portion of participating states, and non-tariff barriers and infrastructure deficits continue to dominate the cost of doing business across borders. For Egypt, the opportunity is still real — but it depends less on treaty headlines and more on enabling conditions: trade logistics, customs efficiency, regulatory convergence, and competitive industrial capacity.
Looking Back: The Promise of a Single African Market
When the AfCFTA was launched, expectations were understandably high. A continent-wide trade framework was supposed to reduce tariffs, facilitate trade in goods and services, and strengthen regional value chains — with the broader goal of moving African economies up the value ladder.
In my 2022 article, I asked whether AfCFTA could become a game changer for Egypt, given Egypt’s industrial base, strategic geography, and the potential to diversify export markets beyond traditional partners. (For background, see the earlier article here”).
The Reality Check: Intra-African Trade Remains Structurally Weak
Several years later, the interim assessment is sobering. As the Frankfurter Allgemeine Zeitung (FAZ) recently put it, AfCFTA is not a “game changer” yet, and only about half of member states currently meet the practical prerequisites to trade under the agreement.
A deeper reason is structural: no other world region trades so little with itself, and while statistics may undercount informal cross-border flows (especially in food), the overall picture remains unchanged.
Trade integration cannot deliver transformative outcomes if production, logistics, and institutions do not support scale.
Implementation Has Been Slow — and Often Symbolic
Operationalisation did not start with full-scale liberalisation. Instead, the AfCFTA began with a pilot approach: the Guided Trade Initiative (GTI) launched in October 2022, initially with eight states, later joined by additional countries, including Nigeria and South Africa by spring 2025.
The GTI created valuable learning effects, but it also underlined a key point: early progress was often presented through symbolic deals, while product coverage and volumes remained limited. FAZ highlights that only selected goods could be traded duty-free and that key sectors remained constrained for a long time due to missing or unresolved technical rules.
A pilot, however, cannot substitute for full operational certainty — the kind businesses need to restructure supply chains and invest.
Tariffs Are Not the Main Barrier — Trade Costs Are
AfCFTA is frequently discussed in terms of tariff liberalisation. Yet, evidence suggests that the largest gains do not come from tariffs but from reducing non-tariff barriers and improving trade infrastructure.
FAZ points to a central reality: tariffs tend to add around 20–30% to intra-African trade costs, whereas non-tariff costs can be far higher — driven by bureaucracy, lack of harmonised standards, inefficient border processes, and transport barriers.
This is the crux: even with reduced tariffs, trade will not expand meaningfully if goods still cannot move cheaply, quickly, and predictably.
Integration Complexity and Distributional Politics
Africa’s integration landscape is shaped by multiple overlapping regional economic communities and trade regimes. This creates legal and administrative complexity — often described as an integration “spaghetti bowl.” FAZ notes the challenge of coordination and the continued fragmentation of rules.
There is also a political economy dimension. Intra-African trade is heavily influenced by a small number of larger economies — and the distribution of benefits matters. FAZ highlights the dominance of major players (notably South Africa) and the concern that tariff liberalisation alone may entrench existing industrial advantages.
Where governments expect asymmetric outcomes, resistance often takes the form of delay, narrow implementation, or persistent non-tariff barriers.
What This Means for Egypt: The Opportunity Is Real — But Conditional
Egypt’s strategic case for AfCFTA participation remains strong: industrial potential, geographic location, and the opportunity to access and shape growing markets. But the experience so far suggests that the treaty text alone does not generate trade flows.
For Egypt’s private sector, the decisive factors are practical:
- predictable and efficient customs clearance and border procedures,
- logistics corridors and port efficiency,
- regulatory convergence (standards, certification, compliance),
- stable access to trade finance and payments,
- competitive energy and production conditions for manufacturing and processing.
AfCFTA can support these developments — but it cannot replace them.
The “Game Changer” Pathway: What Must Happen Next
FAZ concludes that AfCFTA will only become truly impactful if it is paired with the fundamentals: major infrastructure investment, stronger production and processing capacity, and a credible industrial policy.
At the same time, Africa faces a classic chicken-and-egg problem: without development there is limited investment appeal; without investment there is limited development.
For Egypt and its partners, a pragmatic strategy would be to:
- treat AfCFTA as a platform for real trade-cost reduction, not only tariff debates;
- focus on a limited number of scalable corridors and sectors where regional value chains can realistically grow;
- strengthen implementation capacity so that preferences become usable for firms — especially SMEs;
- enhance legal certainty and dispute resolution reliability for cross-border commerce.
Conclusion
AfCFTA remains a landmark achievement in terms of political commitment. But as of today, it has not yet been the “game changer” many hoped for.
For Egypt, the key question is no longer whether AfCFTA is visionary — it is. The question is whether governments and businesses can translate it into lower real trade costs, higher competitiveness, and bankable cross-border transactions. If those enabling conditions improve, AfCFTA’s promise can still become commercial reality.
This is the fourth article of a series decidated to purchasing real estate property in Spain: previously, we presented how to structure the purchase of a real estate property and what steps you must undertake to ensure the purchase is efficient and safe (you can find it here), the financial and tax information as well as practical tips related to the purchase process (here) and how to handle international inheritance tax implications (here).
How to obtain a mortgage loan when Purchasing Property in Spain
When a buyer in Spain wishes to purchase property using a mortgage loan, the financing process typically begins after selecting a specific property and signing a private purchase agreement, which is usually accompanied by a deposit payment. The entire financing process is strictly regulated under Spanish civil and banking law, offering a high degree of legal security, including foreign and non-resident buyers.
Once the private purchase contract is signed, the bank initiates an official property valuation. This is a mandatory step for determining the maximum loan amount, the financing conditions and for loan approval.
Only after the valuation is completed will the bank issue a formal mortgage offer. The entire process, from the initial application to the final offer, can take several weeks, depending on the complexity of the buyer’s financial profile and the documentation required. The final step occurs before a Spanish notary, where two deeds are signed simultaneously:
- The public deed of sale, and
- The mortgage deed.
At this stage, the bank transfers the loan amount directly to the seller, ensuring legal and financial certainty for all parties involved.
While this structure guarantees legal clarity, it also means that mortgage financing is not secured at the time the private agreement is signed. Therefore, it is strongly recommended to include a mortgage contingency clause in the private purchase contract. This clause makes the completion of the sale conditional upon obtaining financing, thereby protecting the buyer’s deposit in the event of a mortgage denial.
Key Differences for Foreign Buyers
Spanish banks do not generally issue binding pre-approvals before a specific property has been chosen. Foreign buyers, particularly non-residents, should also be aware of additional requirements, including:
- Submission of translated or apostilled foreign documents,
- More extensive due diligence and KYC (Know Your Customer) procedures, and
- Generally longer processing times.
These factors may extend the mortgage timeline and should be accounted for in the overall transaction planning.
Differences between buying a second-hand apartment/house and buying a new apartment/house directly from the developer
The main difference is that, in the case of a new home, VAT and AJD (stamp duty) are paid, and in the case of a second-hand home, only ITP (property transfer tax) is paid, as already explained in section III, paragraph 3.
In addition, in the case of new homes, a series of legal guarantees are established—for 1, 3, and 10 years—for possible construction defects that may arise in the home, for which the developer is liable. On the other hand, in the case of second-hand homes, the seller is liable for hidden defects only for a period of 6 months from delivery.
If the property is purchased from a natural person, it will generally be a second-hand home, whereas if it is purchased from a legal entity, it will normally be a new build and will be purchased from a developer.
Therefore, the fundamental differences will be those already mentioned above: different taxation and greater legal guarantees in the case of purchase from legal entities. Additionally, in the case of purchasing the property from a legal entity developer, there are enhanced documentation and reporting obligations, which do not apply in the case of sale by individuals.
Are there debts associated with the property that the buyer will be liable for?
The buyer is liable for any debts owed to the Homeowners’ Association for the three years prior to the purchase and for the outstanding portion of the current year’s dues. The buyer is also vicariously liable for any outstanding property tax (IBI) or other local taxes owed by the previous owner.
To adequately protect their interests, the buyer should, on the one hand, request a certificate of debts from the Homeowners’ Association and, on the other hand, check the status of payments of property tax and other municipal taxes.
What are the specific provions of Spanish Coastal Law (Ley De Costas)?
Properties located near the sea may fall under the Spanish Coastal Law (Ley de Costas), which regulates land use in the public maritime-terrestrial zone and its surrounding protected areas. These coastal strips are public domain, and strict limitations apply to ownership, construction, and renovation.
Even for older, long-standing buildings, it is vital to verify whether the property lies within a protection zone. Depending on the classification of the area, consequences can range from restricted use or denial of renovation permits to expiration of rights of use or, in extreme cases, administrative demolition orders.
Legal due diligence is essential to determine the status of the plot and identify any concessions or time-limited occupancy rights granted by the authorities.
What rules apply to Country Houses (Fincas Rústicas)?
Country houses (fincas rústicas) deserve special attention due to their location in rural and often protected areas, which are subject to strict urban planning and environmental regulations.
Depending on local and regional classifications, the land may be designated exclusively for agriculture, forestry, or conservation, limiting the potential for construction, expansion, or change of use.
Additionally, many rural properties have existing buildings that may never have been fully or properly legalised. As with coastal properties, buyers should review all applicable planning and environmental restrictions carefully before purchasing.
How are squatting cases (Okupas) regulated under Spanish law?
In recent years, Spain has experienced a rise in squatting cases, influenced by housing shortages, unaffordable rents, and high costs in urban or tourist areas. While the issue is complex and socio-politically sensitive, this section focuses on practical implications for property owners.
Importantly, unlawful occupation (okupación) is relatively uncommon in most parts of Spain. The majority of property owners, especially those who secure and monitor their homes properly, are unlikely to be affected.
Effective deterrents include:
- Alarm systems and surveillance cameras,
- Remote monitoring,
- Local property management services (especially for second homes).
Spanish law differentiates between:
- Intrusion into a primary residence (treated as unlawful entry),
- Occupation of vacant or second homes (classified as usurpation, requiring court action).
Recent Legal Reforms – “Anti-Squatting Law” (Ley Orgánica 1/2025): To address lengthy eviction timelines, Spain introduced reforms, which include:
- Within the first 48 hours of occupation:
Police may evict squatters without a court order if no legal proof of residence is presented. Owners must provide immediate proof of ownership. - After 48 hours: Eviction must follow a formal judicial process.
- Fast-track legal procedures: Eviction claims may now be processed in about 15 working days under accelerated procedures—though real-world implementation may vary by jurisdiction.
While these special topics may not apply to every transaction, they highlight the importance of thorough due diligence and professional legal advice when buying property in Spain. Understanding the implications of coastal laws, rural zoning, inheritance regulations, and property security helps international buyers make informed, secure, and future-proof investments.
After “Liberation Day,” many foreign companies offered discounts to American importers to help them offset the tariffs. A few months later, the US Supreme Court declared the «reciprocal» tariffs unlawful, but on the same day, President Trump announced new tariffs. In this article, we provide a practical overview of how to handle various scenarios, shifting from a reactive, unstructured approach to deliberate management of price volatility and trade flows caused by the introduction, adjustment, and removal of tariffs.
Tariff Sharing agreements
For a long time, the question has been straightforward: who absorbs the extra customs cost? The exporter? The importer? Both? The question remains important, but today it is incomplete.
The new scenario, in light of the recent ruling by the US Court of Justice on March 20, 2026, is: what happens if that duty is then canceled and refunded? If the cost was shared between the parties, the benefit of the refund must follow a consistent logic. In the absence of a clear agreement on this point, however, there is a risk of economic misalignment that could compromise the commercial relationship.
Let’s imagine an Italian winery that sells its products to a US importer. Following the introduction of reciprocal duties, the parties have decided that the exporter will grant an extraordinary discount of 7.5%, explicitly motivated by the need to share the impact of the duty. The commercial relationship continues, volumes remain stable, and the importer avoids passing on the entire increase to the end customer.
As a result of the Supreme Court ruling (or, in the future, another ruling or administrative decision), the importer obtains a refund of the duties paid during that period.
If no formal agreements have been made on this point and the documentation refers generically to a «commercial discount» and says nothing about reimbursement, the situation afterward may be difficult to reconstruct and, above all, could lead to commercial tension. As a result, a positive development (the cancellation of the duty and the right to reimbursement) becomes a problematic factor that jeopardizes the relationship.
Is the exporter entitled to a refund of the discounts granted to mitigate the duties?
In the absence of a different agreement between the parties, the right to reimbursement belongs to the party who paid the duty, i.e., in most cases, the importer. Therefore, there is a risk that the importer will enjoy a double benefit (the discount and the duty refund), while the exporter will get nothing.
For this reason, it is essential that the parties do not limit themselves to negotiating prices and discounts, but also establish the consequences of the adoption, modification, or revocation of duties on the contract, including any refunds.
To achieve this, the first step is to accurately classify and document the discounts granted. If only a «commercial discount» appears in emails, commercial orders, credit notes, and invoices, it will be harder to later argue that this discount was actually an extraordinary, temporary contribution related to the duty. Conversely, if the documentation and contract specify that it is a tariff sharing or tariff mitigation measure, identifying the amounts to be refunded after the fact becomes much simpler.
The goal is to create a clear view of the trend in discounts and payments so that, if needed, financial flows can be adjusted to align with the original terms of the agreement: if the exporter has helped cover a cost that then, in whole or in part, does not end up materializing, they will be eligible for a refund of the contribution paid.
The contract will therefore include, in addition to the Tariff Sharing clause, a Tariff Reimbursement Allocation clause, which states that if the importer receives a refund, credit, or any other economic benefit related to the duty for which the exporter has granted a discount, the importer must return the corresponding portion of the benefit to the exporter in full. or proportionally, depending on how the parties intend to distribute risk and incentive.
Importer’s responsibility to seek reimbursement
It is unclear whether, in the case of US reciprocal duties, importers can simply file an administrative claim to get a refund or if legal action will be required. The latter seems more probable.
Generally, obtaining a duty refund involves action, deadlines, documentation, and coordination with brokers and customs consultants. In most cases, the entity controlling the process is the importer (or someone acting on their behalf).
This raises a sensitive but very real issue: if the importer knows that they will have to invest time and money to obtain a refund, only to then have to share the benefit with the exporter, their incentive to take action may be reduced. To prevent this inertia the contract should contain an express obligation to take action, set out as a duty of best efforts or commercially reasonable efforts.
For example, the contract should specify that the importer must inquire about the conditions and time limits of the process, keep relevant documentation, regularly inform the exporter about the progress of the initiatives, and not unilaterally waive or reduce the claim if it affects the exporter’s economic rights.
Preventive Agreements on Litigation and Cost Allocation
When reimbursement involves a lawsuit or structured legal action, the obstacles are organizational and financial: who decides if and when to proceed, who selects the lawyers, who pays the costs upfront, how the net recovery is divided, and who has the final say on a settlement. This generally applies to all contracts, not just this case: dispute resolution methods must be addressed and agreed upon before the problem arises.
Otherwise, the dispute resolution process risks becoming a secondary improvised negotiation at the worst time — when the parties are already under pressure from margins, cash flow, and regulatory uncertainty. As a result, it becomes much harder to reach an agreement.
How to handle new tariffs and their potential cancellation
To safeguard against uncertainty, the agreement should be organized into two stages.
- The first stage regulates the immediate impact of the change in scenario, for example, the introduction of a new tariff or its increase (renegotiation, cost sharing, automatic adjustment : I discussed this in this article).
- The second stage manages the possible «rollback» (right to reimbursement, process, allocation criteria).
This approach has a clear benefit: it does not force the parties to discuss every time the tariff regime changes or a decision to cancel tariffs is made. Instead of reacting to market changes, a tool is adopted to manage potential scenarios, which is much more resilient commercially and easier to oversee, as the rules have already been agreed upon.
This allows the impact of duties to be regulated not as an extraordinary variable, to be agreed upon on a one-time basis, but as a structural, adaptable phenomenon that could last a long time.
This is why it is crucial to know how to draft contracts that cover both the current situation and potential changes, including any refunds.
Conclusion: Three practical steps for companies exporting to the US
The first is to agree on the consequences for the contract of the introduction of a new duty, increasing it, or revoking it (renegotiation, cost sharing, automatic price adjustment, right to share the refund).
The second is to clearly document any discount granted to offset a duty. If it remains a generic «commercial discount,» the right to a refund if reimbursement occurs will be much harder to enforce.
The third step is to determine what happens if the duty is canceled or revoked: the importer’s responsibility to take action to get a refund, manage the administrative process or litigation, how to divide costs, who oversees the activities of consultants and lawyers, and how the recovered funds will be allocated.
Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.
Where this new duty comes from
The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”
Companies involved in the investigation
The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.
U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.
Next steps in the procedure
Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.
The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.
The preliminary nature of this determination means there is still room to change the decision before it becomes final.
Possible effective date
The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.
If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.
What to do between now and January 1, 2026?
At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.
So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:
- Some rushed to ship as many products as possible before the potential effective date of the duty;
- Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
- Some suspended orders, pending definitive news on the impact of the duties.
These are all valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.
The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.
The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.
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For over a decade, Portugal’s Non-Habitual Resident (NHR) regime was the country’s flagship tool to attract international talent — a broad tax gateway that turned Lisbon, Porto and the Algarve into a top destination for retirees, investors and a wide range of professionals. Since the 2024 State Budget, that gateway has been closed to new applicants and replaced by a more specialised and technically demanding framework: the Tax Incentive for Scientific Research and Innovation (IFICI), commonly branded as “NHR 2.0”.
This article explains, from a Portuguese tax-law perspective, what changed, who can still qualify, and how the new application cycle works in practice.
What is the IFICI regime (NHR 2.0)?
IFICI was created by Law 82/2023 (the 2024 State Budget), which inserted Article 58-A in the Portuguese Tax Benefits Statute (EBF — Estatuto dos Benefícios Fiscais). After almost a year of regulatory limbo, the regime was finally implemented by Ordinance no. 352/2024/1, with retroactive effects to 1 January 2024.
In essence, IFICI offers, for a non-renewable 10-year period:
- A 20% flat personal income tax rate on employment (Category A) and self-employment (Category B) income derived from eligible activities; and
- A general exemption (with progression) on most foreign-source income — Categories A, B, E (capital), F (rental) and G (capital gains) — provided the income is not paid by entities based in blacklisted jurisdictions (in which case a 35% flat rate applies).
Crucially — and this is one of the biggest differences from the old NHR — foreign pensions (Category H) are excluded from the new regime and are taxed at standard progressive rates.
What happened to the “old” NHR?
The original NHR has been revoked for new applicants, but it is not gone overnight:
- Individuals who already held NHR status on 31 December 2023 keep their benefits until the end of their 10-year period.
- A transitional regime under Article 236 of the 2024 State Budget allowed certain individuals with prior ties to Portugal (employment contracts, lease agreements, school enrolment of dependants, residence-permit procedures already underway) to still apply for the original NHR in 2024 — in some cases with the registration deadline extended to 31 March 2025.
All other inbound taxpayers must now look at IFICI, not the old NHR.
Who qualifies for IFICI in Portugal?
To benefit, two cumulative conditions must be met:
- Personal eligibility: the individual becomes a Portuguese tax resident and was not a tax resident in any of the previous five years, and has not previously benefited from the NHR or the IRS Jovem regime.
- Professional eligibility: the activity falls within one of the categories listed in Article 58-A of the Portuguese Tax Benefits Statute and detailed in Ordinance 352/2024/1. The main eligibility routes are:
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- Scientific research and higher education — teaching positions at higher-education institutions and research within the national science and technology system.
- Certified startups — employment, self-employment or board positions in entities certified under the Portuguese Startup Law (Law. 21/2023).
- R&D centres and recognised innovation centres.
- Highly qualified professionals — roles listed in Annex I of Ordinance 352/2024/1 by reference to the Portuguese Classification of Occupations (CPP), such as the following ones: 112 — CEOs and executive managers; 12 — Directors of administrative and commercial services; 13 — Directors of production and specialised services; 21 — Specialists in physical sciences, mathematics, engineering and related areas; 2163.1 — Industrial product or equipment designers; 221 — Physicians; 231 — University professors; 25 — ICT specialists;
- Industrial and service exporters — qualified jobs in companies whose main activity falls under specific CAE codes (Annex II of the Ordinance) and that export at least 50% of their turnover in the year the position starts or in either of the two preceding years.
- Activities under contractual investment incentives (CFI/RFAI) and roles in entities recognised by AICEP or IAPMEI as relevant to the national economy.
A minimum academic qualification is also required for highly qualified professions: a PhD, or a bachelor’s/master’s degree combined with at least three years of professional experience.
IFICI vs NHR: key differences at a glance
Scope of beneficiaries:
- Original NHR: broad, including retirees, investors and “high-value” professionals.
- IFICI / NHR 2.0: narrow, including researchers, startup staff, ICT, engineers and exporters.
Flat tax on qualifying income:
- Original NHR: 20%.
- IFICI / NHR 2.0: 20%.
Foreign-source income:
- Original NHR: broad exemption, including pensions.
- IFICI / NHR 2.0: exemption for categories A, B, E, F and G; pensions taxed at progressive rates; 35% on blacklisted jurisdictions.
Duration:
- Original NHR: 10 consecutive years.
- IFICI / NHR 2.0: 10 consecutive years.
Corporate substance:
- Original NHR: minimal requirements for the employer.
- IFICI / NHR 2.0: strict — startup, R&D, RFAI or 50% exporter.
Application channel:
- Original NHR: Portal das Finanças, in one step.
- IFICI / NHR 2.0: competent entity — FCT, AICEP, IAPMEI, ANI or Startup Portugal — plus Portal das Finanças.
Registration deadline;
- Original NHR: 31 March of the following year.
- IFICI / NHR 2.0: 15 January of the following year.
Compliance:
- Original NHR: generally one-off.
- IFICI / NHR 2.0: annual verification of ongoing eligibility.
How to apply for IFICI: deadlines and competent authorities
Unlike the NHR, IFICI is not registered directly with the Portuguese Tax Authority (AT). The process runs through sectoral authorities, each handling a different eligibility route:
- FCT (Fundação para a Ciência e a Tecnologia) — research and higher-education roles.
- AICEP and IAPMEI — qualified jobs and corporate-body positions in entities recognised as relevant to the national economy.
- ANI (Agência Nacional de Inovação) — R&D personnel whose costs qualify under the SIFIDE II tax credit.
- Startup Portugal — positions in certified startups.
- Tax Authority (AT) — final registration via the Portal das Finanças.
The compliance calendar is now an annual cycle:
- 15 January — deadline to file the IFICI application for the previous year of residence.
- 15 February — competent entities communicate the taxpayer’s compliance status to the AT.
- 31 March — taxpayers can obtain confirmation of their registration status on the Portal das Finanças.
A failure to confirm continued eligibility — for example, if the employer ceases to meet the export threshold or the startup loses certification — can result in suspension of the regime for that year, although the underlying 10-year window keeps running.
IFICI Eligibility Checklist
Before finalising a move or filing a Portuguese tax return, candidates should be able to tick all of the following:
- 5-year rule: not a Portuguese tax resident in any of the five years preceding the year of arrival.
- No prior NHR / IRS Jovem: the regime is not available to those who already benefited from those frameworks.
- Activity alignment: professional role explicitly covered by Article 58-A of Portuguese Tax Benefits Statute and Annexes I/II of Ordinance 352/2024/1.
- Employer filter: for highly qualified roles, the employer is a startup, an R&D/innovation centre, an RFAI/CFI beneficiary, or a ≥50% exporter.
- Application route identified: the correct competent entity (FCT, AICEP, IAPMEI, ANI, Startup Portugal) is selected.
- Deadline: application filed by 15 January of the year following arrival.
- Annual compliance plan in place to confirm continued eligibility.
Conclusion: A more specialised, but still attractive, gateway
The shift from NHR to IFICI represents a deliberate narrowing of Portugal’s tax incentives: a move from a broad “welcome mat” to a surgical tool focused on scientific research, innovation, qualified employment and exporting activities. For retirees and passive investors, Portugal is no longer the obvious choice it was a decade ago. For researchers, startup teams, ICT specialists, engineers, physicians and executives moving into exporting groups, however, IFICI remains one of the most competitive personal-tax frameworks in Europe — provided the move is properly planned, with the right legal and tax structuring in place ahead of residency.
FAQ
Is the NHR still available in Portugal?
Not for new applicants. Only those who became Portuguese tax residents by the end of 2023 — or who qualified under the transitional rules of Article 236 of the Portuguese Tax Benefits Statute — could still register for the original NHR. Existing beneficiaries keep their status for the remainder of their 10-year period.
Is IFICI the same as NHR?
No. IFICI shares the 20% flat rate and the 10-year duration with the NHR, but it is narrower in scope, has stricter corporate requirements, and excludes foreign pensions from the exemption.
Are foreign pensions tax-free under IFICI?
No. Foreign pensions are taxed at general progressive rates. This is one of the most significant differences from the old NHR.
Can a remote worker qualify for IFICI?
Only if the activity falls within one of the eligible categories and the employer or activity meets the corporate requirements (startup, R&D, RFAI, ≥50% exporter, etc.). Working remotely from Portugal for a foreign company does not, in itself, grant access to the regime.
What is the application deadline for IFICI?
15 January of the year following the year in which the individual becomes a Portuguese tax resident.
Are foreign dividends, royalties and capital gains exempt under IFICI?
Generally yes — subject to declaration for progression purposes — provided they are not paid by entities located in jurisdictions on the Portuguese blacklist, in which case a 35% flat rate applies.
After more than twenty years of negotiations, the EU/Mercosur agreement remains in a legally incomplete but commercially relevant stage. For lawyers advising clients in the wine industry, the key issue is no longer whether the agreement will reshape trade, but how and when its provisions will begin to affect market access, regulatory compliance, and competitive positioning.
A negotiated agreement, yet without full legal effect
The trade pillar of the agreement was politically concluded in 2019, followed by ongoing revisions and additional negotiations, particularly on environmental commitments. Even though the full agreement is pending ratification processes on both sides, at this stage, the temporary agreement is already in force, producing its effects.
From a legal standpoint, this creates a hybrid scenario: (i) the text is sufficiently defined to anticipate obligations and opportunities, (ii) but not yet fully binding, (iii) with temporary measures already applicable.
This distinction is critical for legal advisors. The full agreement cannot yet be invoked as applicable law, but it already serves as a reliable roadmap for future regulatory and commercial conditions.
Why wine matters in this agreement
The wine sector sits at the intersection of several key chapters of the agreement:
- tariff liberalisation;
- sanitary and phytosanitary (SPS) measures;
- technical barriers to trade (TBT);
- intellectual property, particularly geographical indications (GIs).
This makes wine a multi-layered case study of how the agreement will operate in practice.
At the same time, the economic context reinforces its relevance. The European Union is Mercosur’s second-largest trading partner, with strong complementarities in trade flows. Mercosur’s exports are concentrated in agricultural goods, while EU exports are concentrated in higher value-added categories, where wine is positioned.
Tariffs: gradual but meaningful impact
Today, wine exports to Mercosur, especially to Brazil, face import duties combined with complex internal taxation. While the agreement does not eliminate all barriers immediately, it provides for progressive tariff reductions and improved quota conditions.
Meanwhile, the Brazilian tax system is under complete reform, which reinforces the importance of specialised legal assistance.
For legal practitioners, this raises practical issues:
- interpretation of tariff schedules and staging periods;
- interaction with domestic tax regimes;
- structuring of distribution agreements to capture tariff advantages over time.
The key point is that tariff benefits will not be uniform or immediate. They will require active legal planning to be effectively utilised.
Beyond tariffs: regulatory friction is the real battlefield
More significant than tariffs are the provisions addressing regulatory barriers.
Wine exports are heavily affected by labelling requirements, certification procedures, sanitary controls, product registration rules and geographical protections.
The agreement introduces commitments to increase transparency and reduce unnecessary barriers, particularly under the «Sanitary and Phytosanitary Measures» (SPS) and «Technical Barriers to Trade» (TBT) chapters. However, it does not create full harmonisation.
This means that regulatory compliance will remain jurisdiction-specific, but procedures should become more predictable and less discretionary.
For lawyers, this translates into a shift from navigating opaque systems to advising within a more structured, but still fragmented, regulatory framework.
Geographical indications: protection and tension
One of the most legally sensitive aspects of the agreement is the protection of geographical indications.
The EU seeks recognition and protection of a wide range of European GIs in Mercosur countries, including wine denominations. This implies stronger protection for European producers against the misuse of names and potential restrictions on local producers’ use of certain terms.
From a legal perspective, the new framework raises issues such as:
- coexistence with pre-existing trademarks;
- transition periods for local operators;
- enforcement mechanisms and litigation risks.
This is an area where disputes are likely to arise, particularly in markets with established local practices.
Services, distribution, and market structure
Although often overlooked, service provisions are highly relevant for the wine sector.
Each year, the EU exports nearly €30 billion in services to Mercosur, double the amount in the opposite direction.
The agreement aims to improve conditions for:
- logistics providers
- distribution networks
- commercial representation
- marketing and advertising agencies
For wine exporters, market access is not only about tariffs but also about how products reach consumers.
Legal advisors will need to consider:
- distribution agreements and exclusivity clauses
- regulatory requirements for importers and distributors
- compliance with competition rules
The implementation gap: where risk lies
Even after ratification, the agreement will not produce immediate uniform effects.
Its implementation will depend on phased tariff reductions, domestic regulatory adjustments and administrative practices.
This creates a gap between formal commitments and practical outcomes.
For lawyers, this is where advisory work becomes most valuable:
- managing client expectations
- identifying timing mismatches between legal changes and market reality
- mitigating risks linked to partial or inconsistent implementation
What should lawyers be doing now?
Treating the agreement as a distant political project is a mistake. The ratification is not around the corner, but it will happen.
Instead of just waiting, legal advisors should:
- analyze the relevant chapters (tariffs, SPS, TBT, GIs) from a sector-specific perspective;
- anticipate how domestic law will interact with the agreement;
- prepare contractual structures that can adapt to phased changes;
- monitor closely ratification and implementation developments.
In practical terms, the agreement should already be part of strategic legal advice, even before its formal entry into force.
Final sip
The EU/Mercosur agreement will not revolutionise the wine trade overnight. Its impact will be gradual, technical, and often subtle, but for those advising in the sector, it introduces a clear shift. We are moving from a fragmented and often opaque regulatory environment to a more structured, rule-based framework that is complex, but more predictable.
Understanding the agreement in theory is just the first step. The real challenge is to translate its provisions into practical legal strategies before competitors do.
Vietnam has been added to the EU list of non‑cooperative jurisdictions for tax purposes (Annex I), following the Council’s update of 17 February 2026.
For EU companies buying goods and services from Vietnam, this is not an outright ban on trade, but rather a signal that substantially heightened tax governance scrutiny, documentation expectations, and (in some cases) more demanding payment execution will follow in the months ahead. The EU listing process is designed less to “name and shame” and more to encourage positive change through cooperation and dialogue, but once a jurisdiction is placed on Annex I, EU Member States implement “defensive measures” that can materially affect tax treatment, withholding obligations, and audit intensity for Vietnam-linked transactions.
What the EU decision does (and does not) do
The EU blacklist is a tax‑governance instrument: it does not prohibit EU businesses from importing goods from Vietnam or procuring Vietnamese services, and it does not alter Vietnam’s domestic tax regime, corporate income tax rules, withholding tax framework, or investment policies.
At the same time, the EU can deepen cooperation with Vietnam on the political and economic track while still applying tax‑governance pressure through listing mechanisms, so businesses should be prepared for a “partnership plus scrutiny” environment rather than expecting the two to be perfectly aligned.
In January 2026, the EU and Vietnam upgraded their relations to a Comprehensive Strategic Partnership, framed as a platform to strengthen cooperation across areas such as trade and investment, climate/energy, sustainable development and digital transformation-a signal that the blacklisting is a technical compliance tool, not a diplomatic rupture.
The ideological paradox: a Socialist Republic on a tax-haven list
Vietnam’s presence on the blacklist is striking when viewed in its broader political context. The EU blacklist was conceived after major tax-transparency scandals (the Panama Papers and LuxLeaks) to address jurisdictions that facilitate offshore structures or fail to meet information-exchange standards. In the Western imagination, “tax haven” connotes liberal microstates or offshore centres, yet Vietnam, governed by a Communist Party, now sits on the same list. This reflects the reality of Vietnam’s hybrid economic model: politically socialist, but economically pragmatic since the Đổi Mới reforms of the late 1980s, with selective tax incentives for special economic zones, high-tech investments and priority sectors that, in certain cases, can significantly reduce the effective tax burden for foreign investors. The EU’s concern is not Vietnam’s headline corporate tax rate but rather-at this stage-the absence of adequate exchange-of-information infrastructure, though the architecture of its preferential regimes has also attracted scrutiny in the past. The listing is a technical compliance issue, not an ideological one.
Why Vietnam was added: the listing criteria and timeline
Vietnam has been subject to EU scrutiny since the very first iteration of the EU list in December 2017, when it was placed in Annex II (the “grey list”) alongside jurisdictions that have committed to reform but are not yet fully compliant. In October 2025, Vietnam was removed from Annex II after fulfilling its commitments on country-by-country reporting (CbCR), and appeared, at that point, to be on the path to full compliance. However, shortly afterwards-in November 2025-the OECD Global Forum published its peer review and rated Vietnam “Non-Compliant” with respect to the standard on Exchange of Information on Request (EOIR), a separate compliance area from CbCR, finding that further reforms remained outstanding and that improvements in the CbCR exchange framework were not expected before 2027. This OECD finding directly triggered the February 2026 move to Annex I-an escalation from the grey list to the blacklist, bypassing any intervening period of full compliance.
The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), The three core listing criteria against which Vietnam was assessed are: Criterion 1 (Tax transparency), requiring compliance with AEOI and EOIR standards and membership of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.; Criterion 2 (Fair taxation), requiring no harmful preferential tax regimes and adequate economic substance rules; and Criterion 3 (Anti-BEPS measures), requiring implementation of OECD anti-BEPS minimum standards including country-by-country reporting. Vietnam’s shortfall was concentrated in Criterion 1, specifically the EOIR standard, which concerns the country’s practical capacity and procedural framework for responding to foreign tax authorities’ requests for information.
Vietnam’s response and the path to delisting
Vietnam’s Ministry of Foreign Affairs responded publicly within days of the listing, defending the country’s tax transparency record and stating that the government is implementing a national action plan to follow OECD recommendations and expand tax cooperation with partners including the EU. Vietnam expressed readiness to engage with European authorities to ensure more objective and comprehensive assessments, and to promote cooperation for shared development and prosperity. Practitioner commentary suggests a concrete roadmap is achievable: with legislative amendments (decrees and circulars on EOIR procedures), the establishment of a dedicated EOIR unit, publication of enforcement statistics, and active technical engagement with the EU Code of Conduct Group from now through September 2026, Vietnam could realistically target removal from Annex I at the next EU review cycle in October 2026, although this timeline is ambitious and delisting is by no means guaranteed. The key point for EU businesses is that, while the listing may be relatively short-lived if Vietnam acts decisively, companies should not delay compliance preparations in reliance on early delisting-a proportionate, risk-based response is more appropriate than a wholesale restructuring of Vietnam-linked supply chains.
How different payment types are affected in practice
Goods (imports) are often the most straightforward in substance terms because there is usually a clear chain of documents: purchase orders, shipping documents, customs import paperwork, delivery notes, inspection/acceptance records and matching invoices.
The risk uplift for goods is typically not about whether the purchase is real, but whether the overall supply chain and pricing remain coherent under scrutiny-for example, whether margins and intercompany arrangements around the import flow make commercial sense and are consistently documented.
Services (outsourcing, consulting, IT development, marketing, support) tend to attract more questions because “what was delivered” is harder to evidence than a shipped product.
If your EU entity pays a Vietnamese provider for services, expect to need a well‑organised evidence pack: a clear scope of work, time records or milestones, deliverables (reports, code repositories, tickets), acceptance sign‑offs, and a pricing rationale that matches the level of skill and effort involved.
Royalties and IP-related payments (software licences, trademarks, know‑how, technology access) are particularly sensitive because they combine valuation complexity with cross‑border tax characterisation questions.
Expect pressure-testing of (i) who truly owns and controls the IP, (ii) the contract chain and sublicensing rights, (iii) how the royalty rate was set using benchmarking or comparable arrangements, and (iv) whether the payment is genuinely for IP rather than a disguised service fee.
Intragroup charges (management fees, shared services, cost recharges) are commonly the first area where tax authorities and counterparties ask for “benefit” evidence and allocation logic.
Where Vietnam sits inside a group value chain, be ready to show why a charge exists, how it was calculated, how the recipient benefited, plus consistent intercompany agreements and transfer pricing support.
Financing and treasury flows (interest, guarantees, cash pooling, factoring, trade finance) trigger the most intensive technical review because they involve both tax outcomes and financial crime/compliance sensitivities.
Even where the structure is legitimate, these flows are more likely to be escalated internally for enhanced review and may require more supporting documentation before execution.
How European banks may respond (and what that looks like in practice)
Banks in the EU operate under a risk‑based approach to financial crime and compliance, and they may apply de-risking decisions, meaning they can choose to restrict or exit relationships or transaction types they view as exceeding their risk appetite or being operationally too costly to monitor. EU supervisory frameworks acknowledge that de-risking exists and call for proportionate, evidence-based risk assessments rather than indiscriminate blanket exclusions, but in practice banks have significant discretion.
For an EU company initiating a bank transfer to a Vietnamese counterparty, the following discretionary measures can arise in practice, even where the payment is entirely lawful and commercially routine.
A bank can pause execution and request additional documents before releasing funds, seeking comfort on the purpose and legitimacy of the transaction under its internal controls.
Typical requests include the underlying contract or statement of work, invoices, proof of delivery or performance, an explanation of business purpose, and information on the beneficiary’s beneficial ownership or corporate structure.
A bank can route the payment through manual review queues rather than straight-through processing, particularly for first-time beneficiaries, unusually large amounts, or payments with vague narratives that do not clearly describe the purpose.
This creates operational knock-ons: late supplier settlement, goods held pending payment confirmation, or service suspension where the vendor operates on strict payment triggers.
A bank can impose internal conditions as part of its customer-specific risk controls-for example requiring richer payment details, stricter invoice descriptors, or pre-approval workflows for Vietnam-corridor payments.
A bank can decline to process specific transactions or decide to exit certain corridors, client types, or business models entirely as a risk-management choice. German financial institutions are described as applying enhanced due diligence, requiring full transparency of transaction purpose and ownership for Vietnam-linked payments.
Where a payment is declined, the practical solution is often to adjust the execution setup-alternative banking channel, revised documentation pack, or modified payment mechanics-while keeping the underlying commercial relationship intact.
EU companies are advised to develop a “Banking Compliance Pack” for Vietnam-corridor payments: a pre-assembled set of documents (contract, invoice, proof of delivery/performance, business rationale memo, and beneficial ownership information) that can be submitted proactively or in response to bank queries within hours rather than days.
Non-tax defensive measures and EU funding implications
Beyond tax measures, being on the EU blacklist triggers non-tax consequences that affect Vietnam’s economic relationship with the EU more broadly. EU investment programmes cannot channel funding through entities located in Vietnam, because using such an entity contradicts the core legal purpose of these funds, which are designed to promote good governance, transparency, and the fight against illicit financial flows. Affected funds include the European Fund for Sustainable Development (EFSD/NDICI), which de-risks major investments in areas like energy and digital; the InvestEU programme (which replaced the former EFSI); and the External Lending Mandate (ELM), which provides EIB loans for major infrastructure outside the EU. In addition, the General Framework for STS securitisation imposes separate restrictions on the use of entities in blacklisted jurisdictions within securitisation structures. For Vietnamese entities and their EU partners working on donor-funded or ESG-driven projects, this can be a significant constraint, as subsidiaries and other businesses in Vietnam may be cut off from these sources of EU financing.
DAC6 reporting and public country-by-country reporting
Cross-border arrangements involving Vietnam are now subject to heightened DAC6 scrutiny. In particular, Hallmark C.1(b)(ii) may be triggered where a deductible cross-border payment is made by an EU-based associated enterprise to a tax resident in Vietnam, subject to Member State-specific implementation of the main benefit test and other conditions. Large multinationals (consolidated revenue of EUR 750 million or more in each of the last two fiscal years) must also prepare and publicly disclose a Public Country-by-Country Report. Under the EU Public CbCR Directive, Vietnam activities must be reported separately-not aggregated as “Rest of the World”-disclosing a list of all consolidated subsidiaries, description of activities, number of full-time equivalent employees, revenues (including related-party revenue), profit or loss before tax, income tax accrued and paid, and accumulated earnings. For FY 2025 and FY 2026, Vietnam information is already reportable separately by affected multinationals.
Country notes (alphabetical)
Belgium: Belgium applies non-deductibility of costs, CFC rules, and participation exemption limitations linked to both the EU list and certain domestic criteria. A critical Belgian-specific rule is the reporting obligation for payments made to entities in blacklisted jurisdictions where the aggregate of such payments exceeds EUR 100,000 in the taxable period; once this threshold is met, each such payment must be reported in the annual tax return, and any payment that is not reported, or that cannot be justified on specific grounds, is not deductible. Belgium follows a dynamic approach to the EU list, meaning EU list updates take effect automatically without a further domestic step. For Belgian payers, immediate practical priorities are: (i) identifying all Vietnam-linked payment streams above EUR 100,000, (ii) ensuring the reporting mechanism in the annual tax return is in place, and (iii) building the justification file for each reported payment.
France: France applies all four defensive measures-non-deductibility of costs, CFC rules, withholding tax, and participation exemption limitation-but via a national decree-based list that refers to the EU list while also applying additional French domestic criteria. France follows a static approach, updating its domestic non-cooperative state list through an annual Decree in the Official Journal, with tax consequences applying from the first day of the third month following publication. The last French update took place in April 2025, and at the time of writing (May 2026) no subsequent decree incorporating Vietnam has been published. A further update is expected imminently and will likely include Vietnam. Once Vietnam appears on the French list, key measures include: a 75% withholding tax on interest, royalties, dividends and service fees (counterevidence possible); denial of the participation exemption (counterevidence possible for jurisdictions meeting certain criteria); denial of deductibility of interest, royalties and service fees (counterevidence possible); and a stricter CFC rule under which the burden of proof is reversed and foreign withholding taxes cannot be credited against French CFC income. French payers should monitor the next French decree closely and prepare counterevidence files now so they are ready the moment the decree is published.
Germany: Germany applies all four defensive measures through the Tax Haven Defence Act (Steueroasen-Abwehrgesetz, StAbwG), linked to the EU list via a Tax Haven Defence Ordinance that is updated once per year, typically at year-end taking into account the October EU list update. The expected sequence for Vietnam is: December 2026-amendment to the Tax Haven Defence Ordinance to incorporate Vietnam; from 2027 (Year 1)-stricter CFC rules and extended withholding tax of 15% (plus a 5.5% solidarity surcharge) apply to income from financing relationships, insurance or reinsurance services, legal and advisory services, and trading of goods and services; from 2029 (Year 3)-denial of the participation exemption activates; from 2030 (Year 4)-denial of deductible business expenses activates. Importantly, Germany’s extended withholding tax can override double tax treaties. The multi-year ramp-up means that immediate German impacts are CFC scrutiny and withholding tax friction on specific payment types, while the broader expense deduction denial will only bite from 2030 onwards-giving German payers time to prepare, but making early documentation investment worthwhile.
Italy: Italy uses the EU list for monitoring and deductibility purposes under Article 110 TUIR: costs connected with counterparties in Annex I jurisdictions are generally deductible up to “normal value,” while amounts above normal value require evidence of an effective economic interest, and all such costs must be separately indicated in the annual income tax return (Modello REDDITI). Italy’s framework is directly triggered by the EU list, meaning Vietnam’s Annex I status is effective for Italian purposes from the publication of the Council conclusions in the EU Official Journal, without any further domestic implementing step being required.
For Italian payers, service costs, royalties, and intragroup charges to Vietnam are the most sensitive categories: robust documentation of deliverables, pricing and economic rationale is essential, and accounting teams need to ensure they can cleanly isolate Vietnam-linked costs in the year-end reporting workflow.
Malta: Malta follows a dynamic approach to the EU list, meaning Vietnam’s Annex I status takes effect automatically in Malta’s tax framework. Malta applies a limitation of the participation exemption on dividend income derived from a participating holding in a body of persons that has been resident in a jurisdiction on the EU list for a minimum period of three months during the year immediately preceding the year of assessment, subject to a counter-evidence exception based on “people functions.” Malta does not apply non-deductibility, CFC, or withholding tax defensive measures against EU-listed jurisdictions as primary tools, so the main Malta-specific concern for holding and investment structures is participation exemption eligibility and substance evidence. For Malta-based groups, the practical response is to keep board materials, contracts, and commercial rationale tightly aligned, and to prepare for more intensive counterparty due diligence (beneficial ownership, substance, and tax residency) from EU customers and financial institutions.
Netherlands: The Netherlands applies a 25.8% conditional withholding tax on interest, royalties, and (since 1 January 2024) dividends paid to related entities in EU-listed jurisdictions or low-tax jurisdictions, as well as CFC rules with counterevidence possible. The Netherlands follows a static approach: the list applicable for a tax year is based on the EU list as it stood at the end of the preceding year, using the October update as the reference. This means the Dutch 2027 Regulation will include Vietnam only if Vietnam remains on the EU list after the October 2026 review cycle. No withholding tax consequences arise for Dutch payers immediately in 2026 as a direct result of Vietnam’s February 2026 listing, but the October 2026 review date is critical: if Vietnam remains listed, Dutch conditional withholding tax obligations will activate from 1 January 2027. Dutch payers with intragroup dividend, interest, and royalty flows to Vietnam should use the current window to restructure documentation and pricing support and to assess whether existing double tax treaty protections remain effective in light of the conditional WHT mechanics.
Spain: Spain does not mechanically mirror the EU list, but operates its own domestic list of non-cooperative jurisdictions, which is updated separately and can include or exclude jurisdictions differently from Annex I. Spain applies a static approach, with the list specified in law. The practical implication is that the Spanish domestic tax consequences of Vietnam’s listing depend on whether and when Spain updates its domestic list to include Vietnam, rather than arising automatically from the EU Council’s February 2026 decision. For Spain-based procurement and finance teams, do not assume a one-to-one mapping between EU-list status and Spanish domestic tax outcomes, but do treat Vietnam-linked transactions as higher-scrutiny items from an audit and counterparty due diligence perspective, and invest in cleaner contracting, invoice narratives, and performance evidence for services, royalties, and intragroup charges.
Practical next steps for EU companies
- Map exposures: Identify and quantify all payment streams relating to Vietnamese entities, broken down by payment type (goods, services, royalties, intragroup charges, financing).
- Understand your Member State’s rules: Confirm which defensive measures apply in the relevant EU payer jurisdiction, when they take effect (immediately or staged), whether the jurisdiction follows the EU list dynamically or statically, what relief conditions exist, and what documentation is required.
- DAC6 readiness: Assess whether Vietnam-linked arrangements trigger DAC6 reporting obligations (particularly deductible cross-border payments between associated enterprises) and ensure reporting infrastructure is in place.
- Transfer pricing and substance: Validate intercompany services, royalties and financing arrangements by reassessing pricing, benefit tests and contractual terms; strengthen contemporaneous documentation before year-end.
- Public CbCR messaging: If within scope, assess public CbCR disclosure implications for Vietnam operations and align tax, legal, ESG and investor-relations communications accordingly.
- Vendor due diligence: Implement or strengthen due diligence on Vietnamese counterparties, including tax residence evidence, beneficial ownership documentation, and substance and economic activity confirmation.
- Banking compliance pack: Build a pre-assembled documentation pack for Vietnam-corridor payments (contract, invoice, proof of delivery/performance, business rationale, beneficial ownership information) to address bank queries within hours rather than days.
- Monitor the October 2026 review: Track Vietnam’s progress on EOIR reforms and the EU Code of Conduct Group’s October 2026 review cycle. If Vietnam is removed from Annex I in October 2026, Member States that follow a static approach (Germany, Netherlands) will not apply defensive measures to Vietnam in their 2027 rules; France, which also follows a static approach but applies additional domestic criteria, may nonetheless retain Vietnam on its own non-cooperative state list even after EU delisting. The October 2026 outcome is therefore commercially significant for medium-term planning.
- Embed internal governance: Install jurisdiction-risk gateways in approval workflows for new entities, contracts, loans, and IP arrangements involving Vietnam, to ensure proper sign-off and documentation from inception.
Establishing a joint venture in Saudi Arabia can be an extremely attractive option for foreign investors. It provides access to local expertise, market knowledge, business networks, and the financial strength of a Saudi partner. Additionally, potential economies of scale can be leveraged through such a partnership.
Despite the clear advantages of forming a joint venture in Saudi Arabia, foreign investors should undertake thorough planning that focuses on financial, legal, and strategic aspects. This article provides a practical guide to the key considerations.
Foreign investors must familiarize themselves with the local tax and financial framework to optimize their chances of success. Contractual agreements with local partners should clearly regulate the following key points:
- Capital Contribution: The parties should clearly define what assets (e.g., cash, intellectual property, know-how) and in what amounts they contribute to the joint venture. A realistic valuation of the contributed tangible and intangible assets is required.
- Profit Distribution: It must be determined when, how often, and in what proportion the profits generated by the joint venture will be distributed to the partners.
- Loss Allocation: The parties should agree on how potential losses of the joint venture will be borne.
- Financing Arrangements: Various financing options should be considered to cover the joint venture’s operational and investment capital needs. These include shareholder loans as well as Sharia-compliant financing models such as .
- Tax Regulations: The tax obligations of the parties must be clearly defined. Foreign investors are subject to a corporate tax rate of 20%, while Saudi partners pay a Zakat levy of 2.5% on their net income. Foreign investors should also examine whether double taxation agreements (DTAs) provide benefits such as tax exemptions or deductions. Notably, Germany has not concluded a DTA with Saudi Arabia. Moreover, companies operating in newly established Special Economic Zones (SEZs) can benefit from significant tax advantages.
- Exit Strategies: It is advisable to include clear exit strategies in the contract. These may include clauses regarding the purchase or sale of shares, as well as valuation methods for situations where a party wishes to exit the joint venture.
Foreign investors should familiarize themselves with the relevant legal framework in Saudi Arabia. This includes Saudi corporate law, the Foreign Investment Law and its implementing regulations, the Arbitration Law and commercial courts, as well as labor law.
Legal Forms of Joint Ventures
Investors should understand the different corporate structures available for joint ventures:
- Limited Liability Company (LLC): The most common structure for joint ventures, offering a flexible framework and limited liability.
- Joint Stock Company (JSC): Often used for large projects and ventures requiring significant capital.
- Simplified Joint Stock Company (SJSC): A new structure combining elements of LLCs and JSCs, providing greater flexibility in corporate governance.
Foreign Investment Law
Foreign investors should be aware of the key provisions of Saudi Arabia’s investment law, which governs their business activities in the Kingdom. The most important aspects include:
- Approval by the Ministry of Investment (MISA): Every foreign investment must be approved by MISA, which acts as a one-stop-shop for all necessary formalities, from company registration to obtaining licenses and permits. Notably, the previous licensing system will soon be replaced by a registration system, with detailed regulations expected in February 2025.
- Liberalization of Investment Restrictions: Saudi Arabia has significantly eased foreign investment restrictions and now allows up to 100% foreign ownership in most sectors, except for strategic areas such as oil and gas, media, security, and defense, which remain restricted.
Why is ISIC4 Relevant?
The classification of investment activities under the International Standard Industrial Classification (ISIC), Version 4 (ISIC4), is a key consideration for foreign investors in Saudi Arabia. ISIC4 is an internationally recognized system for categorizing economic activities, developed by the United Nations.
Correct classification of an investment activity under ISIC4 is crucial, as it directly impacts approval and regulation by MISA. The choice of the appropriate classification affects:
- Approval Procedures: MISA uses ISIC4 as a reference for categorizing investment projects, but responsible officials are often not sufficiently familiar with the classification details. Incorrect classification can therefore lead to delays or unnecessary restrictions.
- Permitted Activities: Certain sectors are subject to regulatory restrictions or specific requirements. A precise ISIC4 classification helps avoid unclear or incorrect restrictions.
- Investment Incentives: Tax benefits and incentives often depend on correct industry classification. Choosing an ISIC4 category that best matches the joint venture’s business activity can provide financial advantages.
- Minimum Capital Requirements: The choice of ISIC4 classification can have direct implications on the required minimum capital. For example, an industrial license for a business activity involving production requires a minimum capitalization of SAR 1,000,000.
- Trade/Distribution Licenses: Any sales activity, whether following a production phase or through resale, may require a trade or distribution license with significant capital requirements (at least SAR 26,667,000 with Saudi participation and SAR 30 million for 100% foreign ownership). Therefore, classification under certain trade categories should be avoided if the goal is to minimize capital requirements.
- Service Categories: Activities classified under service categories generally require significantly lower capital requirements.
Strategic Considerations
- Understanding local business culture and etiquette is crucial for the success of a joint venture in Saudi Arabia. Personal relationships and trust-building play a central role in business interactions.
- Investors should conduct thorough due diligence on potential local partners, including financial audits and assessments of market reputation. Ensuring that both partners share similar business goals can prevent conflicts. A deep understanding of the business and social environment is essential to avoid misunderstandings or negative consequences arising from disregard for prevailing business, social, and religious norms.
Practical Tips
- Business agreements should be documented in a comprehensive joint venture contract and a detailed business plan that allows for flexible adaptation.
- A well-structured joint venture should include a Matrix of Authority, defining roles, responsibilities, and decision-making powers. Critical decisions should be classified as Reserved Matters, requiring the approval of all partners.
- Investors should establish robust licensing agreements to protect intellectual property when contributing technology or know-how to the joint venture. Confidentiality agreements and regular audits can provide additional security.
Compliance with Local Regulations
- Anti-Money Laundering & Anti-Corruption Laws: Investors must ensure compliance with Saudi regulations on money laundering and corruption by conducting due diligence and implementing internal compliance programs.
- Labor Law & Saudization Requirements: Foreign companies must comply with the Nitaqat system, which mandates quotas for employing Saudi nationals. Non-compliance can lead to sanctions or restrictions on work permits for foreign employees.
- Dispute Resolution: A dispute resolution clause is essential in joint venture agreements. Saudi arbitration law, based on the UNCITRAL model, provides an effective dispute resolution mechanism. The Riyadh Commercial Arbitration Center and the International Chamber of Commerce (ICC) are widely recognized arbitration institutions.
Conclusion
Setting up a joint venture in Saudi Arabia presents substantial business opportunities but requires careful financial, legal, and strategic planning. Foreign investors can maximise their success by understanding local regulations and cultural nuances. Partnering with experienced legal advisors familiar with Saudi laws and business practices is essential to navigate the complexity of the establishment process and ensure long-term success.
Executive Summary
The African Continental Free Trade Area (AfCFTA) remains one of the most ambitious integration projects in the world. Yet, several years into its operational phase, it has not (yet) delivered the structural shift many expected. A recent analysis underscores the gap between political momentum and economic reality: implementation remains uneven, the agreement is still used by only a portion of participating states, and non-tariff barriers and infrastructure deficits continue to dominate the cost of doing business across borders. For Egypt, the opportunity is still real — but it depends less on treaty headlines and more on enabling conditions: trade logistics, customs efficiency, regulatory convergence, and competitive industrial capacity.
Looking Back: The Promise of a Single African Market
When the AfCFTA was launched, expectations were understandably high. A continent-wide trade framework was supposed to reduce tariffs, facilitate trade in goods and services, and strengthen regional value chains — with the broader goal of moving African economies up the value ladder.
In my 2022 article, I asked whether AfCFTA could become a game changer for Egypt, given Egypt’s industrial base, strategic geography, and the potential to diversify export markets beyond traditional partners. (For background, see the earlier article here”).
The Reality Check: Intra-African Trade Remains Structurally Weak
Several years later, the interim assessment is sobering. As the Frankfurter Allgemeine Zeitung (FAZ) recently put it, AfCFTA is not a “game changer” yet, and only about half of member states currently meet the practical prerequisites to trade under the agreement.
A deeper reason is structural: no other world region trades so little with itself, and while statistics may undercount informal cross-border flows (especially in food), the overall picture remains unchanged.
Trade integration cannot deliver transformative outcomes if production, logistics, and institutions do not support scale.
Implementation Has Been Slow — and Often Symbolic
Operationalisation did not start with full-scale liberalisation. Instead, the AfCFTA began with a pilot approach: the Guided Trade Initiative (GTI) launched in October 2022, initially with eight states, later joined by additional countries, including Nigeria and South Africa by spring 2025.
The GTI created valuable learning effects, but it also underlined a key point: early progress was often presented through symbolic deals, while product coverage and volumes remained limited. FAZ highlights that only selected goods could be traded duty-free and that key sectors remained constrained for a long time due to missing or unresolved technical rules.
A pilot, however, cannot substitute for full operational certainty — the kind businesses need to restructure supply chains and invest.
Tariffs Are Not the Main Barrier — Trade Costs Are
AfCFTA is frequently discussed in terms of tariff liberalisation. Yet, evidence suggests that the largest gains do not come from tariffs but from reducing non-tariff barriers and improving trade infrastructure.
FAZ points to a central reality: tariffs tend to add around 20–30% to intra-African trade costs, whereas non-tariff costs can be far higher — driven by bureaucracy, lack of harmonised standards, inefficient border processes, and transport barriers.
This is the crux: even with reduced tariffs, trade will not expand meaningfully if goods still cannot move cheaply, quickly, and predictably.
Integration Complexity and Distributional Politics
Africa’s integration landscape is shaped by multiple overlapping regional economic communities and trade regimes. This creates legal and administrative complexity — often described as an integration “spaghetti bowl.” FAZ notes the challenge of coordination and the continued fragmentation of rules.
There is also a political economy dimension. Intra-African trade is heavily influenced by a small number of larger economies — and the distribution of benefits matters. FAZ highlights the dominance of major players (notably South Africa) and the concern that tariff liberalisation alone may entrench existing industrial advantages.
Where governments expect asymmetric outcomes, resistance often takes the form of delay, narrow implementation, or persistent non-tariff barriers.
What This Means for Egypt: The Opportunity Is Real — But Conditional
Egypt’s strategic case for AfCFTA participation remains strong: industrial potential, geographic location, and the opportunity to access and shape growing markets. But the experience so far suggests that the treaty text alone does not generate trade flows.
For Egypt’s private sector, the decisive factors are practical:
- predictable and efficient customs clearance and border procedures,
- logistics corridors and port efficiency,
- regulatory convergence (standards, certification, compliance),
- stable access to trade finance and payments,
- competitive energy and production conditions for manufacturing and processing.
AfCFTA can support these developments — but it cannot replace them.
The “Game Changer” Pathway: What Must Happen Next
FAZ concludes that AfCFTA will only become truly impactful if it is paired with the fundamentals: major infrastructure investment, stronger production and processing capacity, and a credible industrial policy.
At the same time, Africa faces a classic chicken-and-egg problem: without development there is limited investment appeal; without investment there is limited development.
For Egypt and its partners, a pragmatic strategy would be to:
- treat AfCFTA as a platform for real trade-cost reduction, not only tariff debates;
- focus on a limited number of scalable corridors and sectors where regional value chains can realistically grow;
- strengthen implementation capacity so that preferences become usable for firms — especially SMEs;
- enhance legal certainty and dispute resolution reliability for cross-border commerce.
Conclusion
AfCFTA remains a landmark achievement in terms of political commitment. But as of today, it has not yet been the “game changer” many hoped for.
For Egypt, the key question is no longer whether AfCFTA is visionary — it is. The question is whether governments and businesses can translate it into lower real trade costs, higher competitiveness, and bankable cross-border transactions. If those enabling conditions improve, AfCFTA’s promise can still become commercial reality.
This is the fourth article of a series decidated to purchasing real estate property in Spain: previously, we presented how to structure the purchase of a real estate property and what steps you must undertake to ensure the purchase is efficient and safe (you can find it here), the financial and tax information as well as practical tips related to the purchase process (here) and how to handle international inheritance tax implications (here).
How to obtain a mortgage loan when Purchasing Property in Spain
When a buyer in Spain wishes to purchase property using a mortgage loan, the financing process typically begins after selecting a specific property and signing a private purchase agreement, which is usually accompanied by a deposit payment. The entire financing process is strictly regulated under Spanish civil and banking law, offering a high degree of legal security, including foreign and non-resident buyers.
Once the private purchase contract is signed, the bank initiates an official property valuation. This is a mandatory step for determining the maximum loan amount, the financing conditions and for loan approval.
Only after the valuation is completed will the bank issue a formal mortgage offer. The entire process, from the initial application to the final offer, can take several weeks, depending on the complexity of the buyer’s financial profile and the documentation required. The final step occurs before a Spanish notary, where two deeds are signed simultaneously:
- The public deed of sale, and
- The mortgage deed.
At this stage, the bank transfers the loan amount directly to the seller, ensuring legal and financial certainty for all parties involved.
While this structure guarantees legal clarity, it also means that mortgage financing is not secured at the time the private agreement is signed. Therefore, it is strongly recommended to include a mortgage contingency clause in the private purchase contract. This clause makes the completion of the sale conditional upon obtaining financing, thereby protecting the buyer’s deposit in the event of a mortgage denial.
Key Differences for Foreign Buyers
Spanish banks do not generally issue binding pre-approvals before a specific property has been chosen. Foreign buyers, particularly non-residents, should also be aware of additional requirements, including:
- Submission of translated or apostilled foreign documents,
- More extensive due diligence and KYC (Know Your Customer) procedures, and
- Generally longer processing times.
These factors may extend the mortgage timeline and should be accounted for in the overall transaction planning.
Differences between buying a second-hand apartment/house and buying a new apartment/house directly from the developer
The main difference is that, in the case of a new home, VAT and AJD (stamp duty) are paid, and in the case of a second-hand home, only ITP (property transfer tax) is paid, as already explained in section III, paragraph 3.
In addition, in the case of new homes, a series of legal guarantees are established—for 1, 3, and 10 years—for possible construction defects that may arise in the home, for which the developer is liable. On the other hand, in the case of second-hand homes, the seller is liable for hidden defects only for a period of 6 months from delivery.
If the property is purchased from a natural person, it will generally be a second-hand home, whereas if it is purchased from a legal entity, it will normally be a new build and will be purchased from a developer.
Therefore, the fundamental differences will be those already mentioned above: different taxation and greater legal guarantees in the case of purchase from legal entities. Additionally, in the case of purchasing the property from a legal entity developer, there are enhanced documentation and reporting obligations, which do not apply in the case of sale by individuals.
Are there debts associated with the property that the buyer will be liable for?
The buyer is liable for any debts owed to the Homeowners’ Association for the three years prior to the purchase and for the outstanding portion of the current year’s dues. The buyer is also vicariously liable for any outstanding property tax (IBI) or other local taxes owed by the previous owner.
To adequately protect their interests, the buyer should, on the one hand, request a certificate of debts from the Homeowners’ Association and, on the other hand, check the status of payments of property tax and other municipal taxes.
What are the specific provions of Spanish Coastal Law (Ley De Costas)?
Properties located near the sea may fall under the Spanish Coastal Law (Ley de Costas), which regulates land use in the public maritime-terrestrial zone and its surrounding protected areas. These coastal strips are public domain, and strict limitations apply to ownership, construction, and renovation.
Even for older, long-standing buildings, it is vital to verify whether the property lies within a protection zone. Depending on the classification of the area, consequences can range from restricted use or denial of renovation permits to expiration of rights of use or, in extreme cases, administrative demolition orders.
Legal due diligence is essential to determine the status of the plot and identify any concessions or time-limited occupancy rights granted by the authorities.
What rules apply to Country Houses (Fincas Rústicas)?
Country houses (fincas rústicas) deserve special attention due to their location in rural and often protected areas, which are subject to strict urban planning and environmental regulations.
Depending on local and regional classifications, the land may be designated exclusively for agriculture, forestry, or conservation, limiting the potential for construction, expansion, or change of use.
Additionally, many rural properties have existing buildings that may never have been fully or properly legalised. As with coastal properties, buyers should review all applicable planning and environmental restrictions carefully before purchasing.
How are squatting cases (Okupas) regulated under Spanish law?
In recent years, Spain has experienced a rise in squatting cases, influenced by housing shortages, unaffordable rents, and high costs in urban or tourist areas. While the issue is complex and socio-politically sensitive, this section focuses on practical implications for property owners.
Importantly, unlawful occupation (okupación) is relatively uncommon in most parts of Spain. The majority of property owners, especially those who secure and monitor their homes properly, are unlikely to be affected.
Effective deterrents include:
- Alarm systems and surveillance cameras,
- Remote monitoring,
- Local property management services (especially for second homes).
Spanish law differentiates between:
- Intrusion into a primary residence (treated as unlawful entry),
- Occupation of vacant or second homes (classified as usurpation, requiring court action).
Recent Legal Reforms – “Anti-Squatting Law” (Ley Orgánica 1/2025): To address lengthy eviction timelines, Spain introduced reforms, which include:
- Within the first 48 hours of occupation:
Police may evict squatters without a court order if no legal proof of residence is presented. Owners must provide immediate proof of ownership. - After 48 hours: Eviction must follow a formal judicial process.
- Fast-track legal procedures: Eviction claims may now be processed in about 15 working days under accelerated procedures—though real-world implementation may vary by jurisdiction.
While these special topics may not apply to every transaction, they highlight the importance of thorough due diligence and professional legal advice when buying property in Spain. Understanding the implications of coastal laws, rural zoning, inheritance regulations, and property security helps international buyers make informed, secure, and future-proof investments.
After “Liberation Day,” many foreign companies offered discounts to American importers to help them offset the tariffs. A few months later, the US Supreme Court declared the «reciprocal» tariffs unlawful, but on the same day, President Trump announced new tariffs. In this article, we provide a practical overview of how to handle various scenarios, shifting from a reactive, unstructured approach to deliberate management of price volatility and trade flows caused by the introduction, adjustment, and removal of tariffs.
Tariff Sharing agreements
For a long time, the question has been straightforward: who absorbs the extra customs cost? The exporter? The importer? Both? The question remains important, but today it is incomplete.
The new scenario, in light of the recent ruling by the US Court of Justice on March 20, 2026, is: what happens if that duty is then canceled and refunded? If the cost was shared between the parties, the benefit of the refund must follow a consistent logic. In the absence of a clear agreement on this point, however, there is a risk of economic misalignment that could compromise the commercial relationship.
Let’s imagine an Italian winery that sells its products to a US importer. Following the introduction of reciprocal duties, the parties have decided that the exporter will grant an extraordinary discount of 7.5%, explicitly motivated by the need to share the impact of the duty. The commercial relationship continues, volumes remain stable, and the importer avoids passing on the entire increase to the end customer.
As a result of the Supreme Court ruling (or, in the future, another ruling or administrative decision), the importer obtains a refund of the duties paid during that period.
If no formal agreements have been made on this point and the documentation refers generically to a «commercial discount» and says nothing about reimbursement, the situation afterward may be difficult to reconstruct and, above all, could lead to commercial tension. As a result, a positive development (the cancellation of the duty and the right to reimbursement) becomes a problematic factor that jeopardizes the relationship.
Is the exporter entitled to a refund of the discounts granted to mitigate the duties?
In the absence of a different agreement between the parties, the right to reimbursement belongs to the party who paid the duty, i.e., in most cases, the importer. Therefore, there is a risk that the importer will enjoy a double benefit (the discount and the duty refund), while the exporter will get nothing.
For this reason, it is essential that the parties do not limit themselves to negotiating prices and discounts, but also establish the consequences of the adoption, modification, or revocation of duties on the contract, including any refunds.
To achieve this, the first step is to accurately classify and document the discounts granted. If only a «commercial discount» appears in emails, commercial orders, credit notes, and invoices, it will be harder to later argue that this discount was actually an extraordinary, temporary contribution related to the duty. Conversely, if the documentation and contract specify that it is a tariff sharing or tariff mitigation measure, identifying the amounts to be refunded after the fact becomes much simpler.
The goal is to create a clear view of the trend in discounts and payments so that, if needed, financial flows can be adjusted to align with the original terms of the agreement: if the exporter has helped cover a cost that then, in whole or in part, does not end up materializing, they will be eligible for a refund of the contribution paid.
The contract will therefore include, in addition to the Tariff Sharing clause, a Tariff Reimbursement Allocation clause, which states that if the importer receives a refund, credit, or any other economic benefit related to the duty for which the exporter has granted a discount, the importer must return the corresponding portion of the benefit to the exporter in full. or proportionally, depending on how the parties intend to distribute risk and incentive.
Importer’s responsibility to seek reimbursement
It is unclear whether, in the case of US reciprocal duties, importers can simply file an administrative claim to get a refund or if legal action will be required. The latter seems more probable.
Generally, obtaining a duty refund involves action, deadlines, documentation, and coordination with brokers and customs consultants. In most cases, the entity controlling the process is the importer (or someone acting on their behalf).
This raises a sensitive but very real issue: if the importer knows that they will have to invest time and money to obtain a refund, only to then have to share the benefit with the exporter, their incentive to take action may be reduced. To prevent this inertia the contract should contain an express obligation to take action, set out as a duty of best efforts or commercially reasonable efforts.
For example, the contract should specify that the importer must inquire about the conditions and time limits of the process, keep relevant documentation, regularly inform the exporter about the progress of the initiatives, and not unilaterally waive or reduce the claim if it affects the exporter’s economic rights.
Preventive Agreements on Litigation and Cost Allocation
When reimbursement involves a lawsuit or structured legal action, the obstacles are organizational and financial: who decides if and when to proceed, who selects the lawyers, who pays the costs upfront, how the net recovery is divided, and who has the final say on a settlement. This generally applies to all contracts, not just this case: dispute resolution methods must be addressed and agreed upon before the problem arises.
Otherwise, the dispute resolution process risks becoming a secondary improvised negotiation at the worst time — when the parties are already under pressure from margins, cash flow, and regulatory uncertainty. As a result, it becomes much harder to reach an agreement.
How to handle new tariffs and their potential cancellation
To safeguard against uncertainty, the agreement should be organized into two stages.
- The first stage regulates the immediate impact of the change in scenario, for example, the introduction of a new tariff or its increase (renegotiation, cost sharing, automatic adjustment : I discussed this in this article).
- The second stage manages the possible «rollback» (right to reimbursement, process, allocation criteria).
This approach has a clear benefit: it does not force the parties to discuss every time the tariff regime changes or a decision to cancel tariffs is made. Instead of reacting to market changes, a tool is adopted to manage potential scenarios, which is much more resilient commercially and easier to oversee, as the rules have already been agreed upon.
This allows the impact of duties to be regulated not as an extraordinary variable, to be agreed upon on a one-time basis, but as a structural, adaptable phenomenon that could last a long time.
This is why it is crucial to know how to draft contracts that cover both the current situation and potential changes, including any refunds.
Conclusion: Three practical steps for companies exporting to the US
The first is to agree on the consequences for the contract of the introduction of a new duty, increasing it, or revoking it (renegotiation, cost sharing, automatic price adjustment, right to share the refund).
The second is to clearly document any discount granted to offset a duty. If it remains a generic «commercial discount,» the right to a refund if reimbursement occurs will be much harder to enforce.
The third step is to determine what happens if the duty is canceled or revoked: the importer’s responsibility to take action to get a refund, manage the administrative process or litigation, how to divide costs, who oversees the activities of consultants and lawyers, and how the recovered funds will be allocated.
Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.
Where this new duty comes from
The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”
Companies involved in the investigation
The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.
U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.
Next steps in the procedure
Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.
The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.
The preliminary nature of this determination means there is still room to change the decision before it becomes final.
Possible effective date
The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.
If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.
What to do between now and January 1, 2026?
At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.
So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:
- Some rushed to ship as many products as possible before the potential effective date of the duty;
- Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
- Some suspended orders, pending definitive news on the impact of the duties.
These are all valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.
The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.
The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.
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