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3. Satisfies at least one of the following requirements:

a) The fund is generally exempt from tax in Portugal on investment income under the laws of Portugal due to

its status as a retirement or pension plan;

b) The fund receives at least 50 percent of its total contributions (other than transfers of assets from other

plans described in paragraphs A through D of this section or from retirement and pension accounts described in

subparagraph A(1) of section V of this Annex II) from the sponsoring employers;

c) Distributions or withdrawals from the fund are allowed only upon the occurrence of specified events related

to retirement, disability, or death (except rollover distributions to other retirement funds described in paragraphs

A through D of this section or retirement and pension accounts described in subparagraph A(1) of section V of

this Annex II), or penalties apply to distributions or withdrawals made before such specified events; or

d) Contributions (other than certain permitted make-up contributions) by employees to the fund are limited by

reference to earned income of the employee or may not exceed $50,000 annually, applying the rules set forth in

Annex I for account aggregation and currency translation.

C. Narrow Participation Retirement Fund. A fund established in Portugal to provide retirement, disability, or

death benefits to beneficiaries that are current or former employees (or persons designated by such employees)

of one or more employers in consideration for services rendered, provided that:

1. The fund has fewer than 50 participants;

2. The fund is sponsored by one or more employers that are not Investment Entities or Passive NFFEs;

3. The employee and employer contributions to the fund (other than transfers of assets from treaty-qualified

retirement funds described in paragraph A of this section or retirement and pension accounts described in

subparagraph A(1) of section V of this Annex II) are limited by reference to earned income and compensation of

the employee, respectively;

4. Participants that are not residents of Portugal are not entitled to more than 20 percent of the fund’s assets;

and

5. The fund is subject to government regulation and provides annual information reporting about its

beneficiaries to the relevant tax authorities in Portugal.

D. Pension Fund of an Exempt Beneficial Owner. A fund established in Portugal by an exempt beneficial

owner to provide retirement, disability, or death benefits to beneficiaries or participants that are current or former

employees of the exempt beneficial owner (or persons designated by such employees), or that are not current or

former employees, if the benefits provided to such beneficiaries or participants are in consideration of personal

services performed for the exempt beneficial owner.

E. Investment Entity Wholly Owned by Exempt Beneficial Owners. An Entity that is a Portuguese Financial

Institution solely because it is an Investment Entity, provided that each direct holder of an Equity Interest in the

Entity is an exempt beneficial owner, and each direct holder of a debt interest in such Entity is either a Depository

Institution (with respect to a loan made to such Entity) or an exempt beneficial owner.

III. Small or Limited Scope Financial Institutions that Qualify as Deemed-Compliant FFIs. The following

Financial Institutions are Non-Reporting Portuguese Financial Institutions that shall be treated as deemed-

compliant FFIs for purposes of section 1471 of the U.S. Internal Revenue Code.

A. Financial Institution with a Local Client Base. A Financial Institution satisfying the following requirements:

1. The Financial Institution must be licensed and regulated as a financial institution under the laws of Portugal;

2. The Financial Institution must have no fixed place of business outside of Portugal. For this purpose, a

fixed place of business does not include a location that is not advertised to the public and from which the Financial

Institution performs solely administrative support functions;

3. The Financial Institution must not solicit customers or Account Holders outside Portugal. For this purpose,

a Financial Institution shall not be considered to have solicited customers or Account Holders outside Portugal