Decree-Law 106/2020 of 23 December (the “TPR Law”), which was published on 23 December, sets out a Temporary Permissions Regime (the “Portuguese TPR”) for UK entities that provide financial services in Portugal under the freedom to provide services or freedom of establishment as provided for in the applicable EU legislation (the “EU Passport”). It allows that certain operations to continue to be performed after the end of the transition period provided in the EU-UK Withdrawal Agreement (the “Brexit Effective Date”).

The Portuguese TPR will start to apply from 1 January 2021 if, on that date, no agreement is reached between the EU and the UK, or no equivalence decision is adopted that regulates the matters covered by the Portuguese TPR. The Portuguese TPR will cease to apply from 31 December 2021 (subject to certain exceptions).

Below is a summary of the main highlights of the Portuguese TPR.

Banking, payment and e-money services

The Portuguese TPR provides that, after the end of the transition period provided in the EU-UK Withdrawal Agreement, credit institutions, payment service providers and e-money institutions, with their registered office in the UK and which act in Portugal under an EU Passport, can only execute contracts or carry out new transactions in Portugal with respect to deposit-taking, lending and payment or e-money services, if they are authorised to do so by the Bank of Portugal.

However, the Portuguese TPR provides that, after the Brexit Effective Date, these entities may do what is necessary to perform and comply with contracts relating to the above services and operations that are executed up to the Brexit Effective Date. This includes services ancillary or instrumental to the main existing contracts executed with a client resident in Portugal and which do not constitute new transactions or contracts.

UK entities that intend to benefit from the Portuguese TPR concerning operations for which authorisation by the Bank of Portugal is required must submit a notification in the form set out in Annex V of the TPR Law to the Bank of Portugal within 3 months after the Brexit Effective Date and will be subject to Portuguese law regarding those services and operations in Portugal.

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