Article 36 – Payments to Connected Persons
1. Without prejudice to the provisions of Article 28 of this Decree-Law, a payment or benefit provided by a Taxable Person to its Connected Person shall be deductible only if and to the extent the payment or benefit corresponds with the Market Value of the service, benefit or otherwise provided by the Connected Person and is incurred wholly and exclusively for the purposes of the Taxable Person’s Business.
2. For the purposes of this Decree-Law, a Person shall be considered a Connected Person of a Taxable Person if that Person is:
- An owner of the Taxable Person.
- A director or officer of the Taxable Person.
- A Related Party of any of the Persons referred to in paragraphs (a) and (b) of Clause 2 of this Article.
3. For the purposes of paragraph (a) of Clause 2 of this Article, an owner of the Taxable Person is any natural person who directly or indirectly owns an ownership interest in the Taxable Person or Controls such Taxable Person.
4. Where the Taxable Person is a partner in an Unincorporated Partnership, a Connected Person is any other partner in that same Unincorporated Partnership, and any Person that is a Related Party of that partner.
5. To determine that a payment or benefit provided by the Taxable Person corresponds with the Market Value of the service or otherwise provided by the Connected Person in exchange, the relevant provisions of Article 34 of this Decree-Law shall apply as the context requires.
6. Clause 1 of this Article shall not apply to any of the following:
- A Taxable Person whose shares are traded on a Recognised Stock Exchange.
- A Taxable Person that is subject to the regulatory oversight of a competent authority in the State.
- Any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister.