II SÉRIE-A — NÚMERO 78 44

deemed-compliant FFI for purposes of section 1471 of the U.S. Internal Revenue Code or has a Related Entity

or branch that is treated as a Nonparticipating Financial Institution solely due to the expiration of the transitional

rule for limited FFIs and limited branches under relevant U.S. Treasury Regulations, such Portuguese Financial

Institution shall continue to be in compliance with the terms of this Agreement and shall continue to be treated as

a deemed-compliant FFI or exempt beneficial owner, as appropriate, for purposes of section 1471 of the U.S.

Internal Revenue Code, provided that:

a) the Portuguese Financial Institution treats each such Related Entity or branch as a separate

Nonparticipating Financial Institution for purposes of all the reporting and withholding requirements of this

Agreement and each such Related Entity or branch identifies itself to withholding agents as a Nonparticipating

Financial Institution;

b) each such Related Entity or branch identifies its U.S. accounts and reports the information with respect to

those accounts as required under section 1471 of the U.S. Internal Revenue Code to the extent permitted under

the relevant laws pertaining to the Related Entity or branch; and

c) such Related Entity or branch does not specifically solicit U.S. accounts held by persons that are not

resident in the jurisdiction where such Related Entity or branch is located or accounts held by Nonparticipating

Financial Institutions that are not established in the jurisdiction where such Related Entity or branch is located,

and such Related Entity or branch is not used by the Portuguese Financial Institution or any other Related Entity

to circumvent the obligations under this Agreement or under section 1471 of the U.S. Internal Revenue Code, as

appropriate.

6. Coordination of Timing. Notwithstanding paragraphs 3 and 5 of Article 3 of this Agreement:

a) Portugal shall not be obligated to obtain and exchange information with respect to a calendar year that is

prior to the calendar year with respect to which similar information is required to be reported to the IRS by

participating FFIs pursuant to relevant U.S. Treasury Regulations;

b) Portugal shall not be obligated to begin exchanging information prior to the date by which participating

FFIs are required to report similar information to the IRS under relevant U.S. Treasury Regulations;

c) the United States shall not be obligated to obtain and exchange information with respect to a calendar year

that is prior to the first calendar year with respect to which Portugal is required to obtain and exchange information;

and

d) the United States shall not be obligated to begin exchanging information prior to the date by which Portugal

is required to begin exchanging information.

7. Coordination of Definitions with U.S. Treasury Regulations. Notwithstanding Article 1 of this Agreement

and the definitions provided in the Annexes to this Agreement, in implementing this Agreement, Portugal may

use, and may permit Portuguese Financial Institutions to use, a definition in relevant U.S. Treasury Regulations

in lieu of a corresponding definition in this Agreement, provided that such application would not frustrate the

purposes of this Agreement.

Article 5

Collaboration on Compliance and Enforcement

1. Minor and Administrative Errors. A Competent Authority shall notify the Competent Authority of the other

Party when the first-mentioned Competent Authority has reason to believe that administrative errors or other

minor errors may have led to incorrect or incomplete information reporting or resulted in other infringements of

this Agreement. The Competent Authority of such other Party shall apply its domestic law (including applicable

penalties) to obtain corrected and/or complete information or to resolve other infringements of this Agreement.

2. Significant Non-Compliance.

a) A Competent Authority shall notify the Competent Authority of the other Party when the first-mentioned

Competent Authority has determined that there is significant non-compliance with the obligations under this

Agreement with respect to a Reporting Financial Institution in the other jurisdiction. The Competent Authority of

such other Party shall apply its domestic law (including applicable penalties) to address the significant non-

compliance described in the notice.