Article by PLMJ Tax Practice Area
International double taxation is an obstacle to trade relations and to the free movement of goods, services, people and capital. The need to eliminate this obstacle has become more acute in the current context, dominated by new technologies and by the internet. By regulating the right of the countries involved to levy taxes, it is possible to avoid the relocation of income and capital to other countries merely for tax purposes and boost (economic and other) ties between the countries in question.
Over the years, Portugal has signed fifty-two double tax treaties for the avoidance of double taxation on income tax, following the OECD Model Convention, with some reservations which are aimed essentially at ensuring a broader concept of permanent establishment and seek to raise the level of taxation in the source country with regard to dividends, interest and royalties. As a rule, the method used in the concluded treaties is that of the ordinary tax credit, although it should be noted that in some of the treaties, provision has been made for a matching credit or tax-sparing credit.
By circular issued on 13 March 2009 (No. 20137), the International Relations Services Department of the Directorate-General of Taxation again released the official list of all the international double tax treaties entered into by Portugal. The reason behind this release is that traders need up-to-date information about the existing agreements and the legal instruments which preceded their publication, the date on which they came into force and easy access to the rates of tax for situations where withholding tax is partially waived.
The treaties concluded by Portugal in accordance with this OECD model come into play only when those paying the income have the necessary forms for this purpose (21-RFI to 24-RFI), duly completed and authenticated by the respective tax authorities. These forms replaced the old forms (7-RFI to 18-RFI) in 2008. However, according to Circular No. 5/2008, of 7 March, issued in the meantime by the International Relations Services Department of the Directorate-General of Taxation, the Portuguese and Spanish versions of forms (7-RFI to 18-RFI) will remain in force until the new forms in these two languages have been approved, in view of the fact that internal legislation obliges the respective tax authority to certify only documents drawn up in Spanish.
The following table lists the treaties for the avoidance of double taxation entered into by Portugal and published by the tax authorities:
|
COUNTRIES (alphabetical order) |
LEGAL INSTRUMENT |
EXCHANGE OF RATIFICATION INSTRUMENTS/ ENTRY INTO FORCE |
REDUCTION RATE |
|||||
|
DIVIDENDS |
INTEREST |
ROYALTIES |
||||||
|
Article |
Rate |
Article |
Rate |
Article |
Rate |
|||
|
ALGERIA |
Parliamentary Resolution No.22/06 of 23 March |
Notice 579/2006 published on
05-05-2006 IN FORCE SINCE 01-05-2006 |
10 |
10% m) 15% b) |
11 |
15% |
12 |
10% |
|
AUSTRIA |
DL 70/71 of 8 March |
Notice published on 08-02-1972 IN FORCE SINCE 28-02-1972 |
10 |
15% |
11 |
10% |
12 |
5% b) 10%c) |
|
BELGIUM |
DL 619/70, of 15 December Additional Convention (Parl. Res. No. 82/00 of 14 December) |
Notice published on 17-02-1971 IN FORCE SINCE 19-02-1971 Additional Convention IN FORCE SINCE 05-04-2001 |
10 |
15% |
11 |
15% |
12 |
10% |
|
BRAZIL d) |
Parliamentary Resolution No. 33/01 of 27 April |
Notice published on 14-12-2001 IN FORCE SINCE 05-10-2001 effective from 01-01-2000 |
10 |
10% m) 15% b) |
11 |
15% |
12. |
15% |
|
BULGARIA |
Parliamentary Resolution No.14/96 of 11 April |
Notice 258/96 published on 26-08-1996 IN FORCE SINCE 18-07-1996 |
10 |
10% e) 15% b) |
11 |
10% |
12 |
10% |
|
CANADA |
Parliamentary Resolution No. 81/00 of 6 December |
Notice published on 17-10-2001 IN FORCE SINCE 24-10-2001 |
10 |
10% m) 15% b) |
11 |
10% |
12 |
10% |
|
CAPE VERDE |
Parliamentary Resolution No. 63/00 of 12 July |
Notice 4/2001 published on 18-01-2001 IN FORCE SINCE 15-12-2000 |
10 |
10% |
11 |
10% |
12 |
10% |
|
CHILE |
Parliamentary Resolution No. 28/06 of 6 April |
Notice 243/2008 published on 29-12-2008 IN FORCE SINCE 25-08-2008 |
10 |
10% f) 15% b) |
11 |
5% r) 10% r) 15% b) |
12 |
5% r) 10% r) |
|
CHINA |
Parliamentary Resolution No. 28/2000 of 30 March |
Notice 109/2000 published on 02-06-2000 IN FORCE SINCE 08-06-2000 |
10 |
10% |
11 |
10% |
12 |
10% |
|
CUBA |
Parliamentary Resolution No. 49/01 of 13 July |
Notice 187/06, published on 23-01-2006 (and Notice 279/05 of 29-07-2005) IN FORCE SINCE 28-12-05 |
10 |
5% f) 10% b) |
11 |
10% |
12 |
15% |
|
CZECH REPUBLIC |
Parliamentary Resolution 26/97, of 9 May |
Notice 288/97, published on 08-11-1997 IN FORCE SINCE 01-10-1997 |
10 |
10% e) 15% b) |
11 |
10% |
12 |
10% |
|
DENMARK |
Parliamentary Resolution No. 6/02 of 23 February |
Notice 53/2002, published on 15-06-2002 IN FORCE SINCE 24-05-2002 effective from 01-01-03 |
10 |
10% |
11 |
10% |
12 |
10% |
|
ESTONIA |
Parliamentary Resolution No. 47/04 of 8 July |
Notice 175/04 published on 27-11-2004 IN FORCE SINCE 23-07-2004 effective from 01-01-05 |
10 |
10% |
11 |
10% |
12 |
10% |
|
FINLAND |
DL 494/70, of 23 October |
Notice published on 22-08-1980 IN FORCE SINCE 14-07-1971 |
10 |
10% f) 15% b) |
11 |
15% |
12 |
10% |
|
FRANCE |
DL 105/71 of 26 March |
Notice published on 13-11-1972 IN FORCE SINCE 18-11-1972 |
11 |
15% |
12 |
10% h) 12% b) |
13 |
5% |
|
GERMANY |
Law 12/82 of 3 June |
Notice published on 14-10-1982 IN FORCE SINCE 08-10-1982 |
10 |
15% |
11 |
10% a) 15% b) |
12 |
10% |
|
GREECE |
Parliamentary Resolution No. 25/02 of 4 April |
Notice 85/2002, published on 24-09-2002 IN FORCE SINCE 13-08-2002 effective from 01-01-03 |
10 |
15% |
11 |
15% |
12 |
10% |
|
HOLLAND |
Parliamentary Resolution No. 62/00 of 12 July |
Notice 177/2000 published on 24-08-2000 IN FORCE SINCE 11-08-2000 |
10 |
10% |
11 |
10% |
12 |
10% |
|
HUNGARY |
Parliamentary Resolution No. 4/99 of 28 January |
Notice 126/2000 published on 30-06-2000 IN FORCE SINCE 08-05-2000 |
10% |
10% e) 15% b) |
11 |
10% |
12 |
10% |
|
INDIA |
Parliamentary Resolution No. 20/2000 of 6 March |
Notice 123/2000 published on 15-06-2000 IN FORCE SINCE 05-04-2000 |
10% |
10% m) 15% b) |
11 |
10% |
12 |
10% |
|
INDONESIA |
Parliamentary Resolution No. 64/2006, of 6 December |
Notice 42/2008, published on 04-04-2008 IN FORCE SINCE 11-05-2007 |
10% |
10% |
11 |
10% |
12 |
10% |
|
ICELAND |
Parliamentary Resolution No. 16/02, of 8 March |
Notice 48/2002, published on 08-06-2002 IN FORCE SINCE 11-04-2002 effective from 01-01-03 |
10 |
10% m) 15% b) |
11 |
10% |
12 |
10% |
|
IRELAND |
Parliamentary Resolution No. 29/94, of 24 June Review Protocol - Parl. Res. No. 62/2006, of 06-12-2006 |
Notice 218/94 published on 24-08-1994 IN FORCE SINCE 11-07-1994 Notice 45/2008, published on 17-04-2008 – Review Protocol IN FORCE SINCE 18-12-2006 |
10 |
15% |
11 |
15% |
12 |
10% |
|
ISRAEL |
Parliamentary Resolution No. 02/08 of 15 January |
Notice 94/2008, published on 13-06-2008 and rectified by Notice 129/2008 published on 22-07-2008 IN FORCE SINCE 18-02-2008 |
10 |
5% r) 10% r) 15% r) |
11. |
10% |
12 |
10% |
|
ITALY |
Law 10/82, of 1 June |
Notice published on 07-01-1983 IN FORCE SINCE 15-01-1983 |
10 |
15% |
11 |
15% |
12 |
12% |
|
KOREA |
Parliamentary Resolution No. 25/97 of 8 May |
Notice 315/97 published on 27-12-1997 IN FORCE SINCE 21-12-1997 |
10 |
10% e) 15% b) |
11 |
15% |
12 |
10% |
|
LATVIA |
Parliamentary Resolution No. 12/03, of 28 February |
Notice 138/2003 published on 26-04-2003 IN FORCE SINCE 07-03-2003 |
10 |
10% |
11 |
10% |
12 |
10% |
|
LITHUANIA |
Parliamentary Resolution No. 10/03 of 25 February |
Notice 123/2003, published on 22-03-2003 IN FORCE SINCE 26-02-2003 |
10 |
10% |
11 |
10% |
12 |
10% |
|
LUXEMBOURG |
Parliamentary Resolution No. 56/00 of 30 June |
Notice 256/2000, published on 30-12-2000 IN FORCE SINCE 30-12-2000 |
10. |
15% |
11. |
10% n) 15% b) |
12. |
10% |
|
MACAO |
Parliamentary Resolution No. 80-A/99, of 16 December |
Notice 72/2001 published on 16-07-2001 IN FORCE SINCE 01-01-1999 |
10. |
10% |
11. |
10% |
12. |
10% |
|
MALTA |
Parliamentary Resolution No. 1/02 of 25 February |
Notice 33/2002, published on 06-04-and rectified on 30-04-2002 IN FORCE SINCE 05-04-2002 effective from 01-01-03 |
10 |
10% m) 15% b) |
11 |
10% |
12 |
10% |
|
MEXICO |
Parliamentary Resolution No. 84/00, of 15 December |
Notice 49/01 published on 21-05-2001 IN FORCE SINCE 09-01-2001 |
10 |
10% |
11 |
10% |
12 |
10% |
|
MOROCCO |
Parliamentary Resolution No. 69-A/98 of 23 December |
Notice 201/2000 published on 16-10-2000 IN FORCE SINCE 27-06-2000 |
10 |
10% e) 15% b) |
11 |
12% |
12 |
10% |
|
MOZAMBIQUE |
Parliamentary Resolution No. 36/92 of 30 December – Review Protocol (Parl. Res. No. 36/2009, of 8 May) |
Notice 55/95, published on 03-03-1995 IN FORCE SINCE 01-01-1994 |
10 |
15% |
11 |
10% |
12 |
10% |
|
NORWAY |
DL 504/70 of 27 October |
Notice published on 15-10-1971 IN FORCE SINCE 01-10-1971 |
10 |
10% f) 15% b) |
11 |
15% |
12 |
10% |
|
PAKISTAN |
Parliamentary Resolution No. 66/03, of 2 August |
Notice 6/08 published on 21-01-2008 IN FORCE SINCE 04-06-2007 |
10 |
10% m) 15% b) |
11 |
10% o) |
12 |
10% p) |
|
POLAND |
Parliamentary Resolution No. 57/97, of 9 September |
Notice 52/98 published on 25-03-1998 IN FORCE SINCE 04-02-1998 |
10 |
10% e) 15% b) |
11 |
10% |
12 |
10% |
|
ROMANIA |
Parliamentary Resolution No. 56/99, of 10 July |
Notice 96/99, published on 18-08-1999 IN FORCE SINCE 14-07-1999 |
10 |
10% m) 15% b) |
11 |
10% |
12 |
10% |
|
RUSSIA |
Parliamentary Resolution No. 10/02, of 25 February |
Notice 32/2003, published on 30-01-2003 IN FORCE SINCE 11-12-2002 effective from 01-01-03 |
10 |
10% m) 15% b) |
11 |
10% |
12 |
10% |
|
SINGAPORE |
Parliamentary Resolution No. 85/00, of 15 December |
Notice 45/01, published on 11-05-2001 IN FORCE SINCE 16-03-2001 |
10 |
10% |
11 |
10% |
12 |
10% |
|
SLOVAKIA |
Parliamentary Resolution No. 49/04 of 13 July |
Notice 191/04 published on 04-12-2004 IN FORCE SINCE 02-11-2004 effective from 01-01-2005 |
10 |
15% b) 10% m) |
11 |
10% |
12 |
10% |
|
SLOVENIA |
Parliamentary Resolution No. 48/04 of 10 July |
Notice 155/04 published on 31-08-2004 IN FORCE SINCE 13-08-2004 effective from 01-01-05 |
10 |
5% f) 15% b) |
11 |
10% |
12 |
5% |
|
SOUTH AFRICA |
Parliamentary Resolution No. 53/08 of 22 September |
Notice 222/2008 published on 20-11-2008 IN FORCE SINCE 22-10-2008 |
10 |
10% m) 15% b) |
11 |
10% |
12 |
10% |
|
SPAIN |
Parliamentary Resolution No. 6/95, of 28 January |
Notice 164/95 published on 18-07-1995 IN FORCE SINCE 28-06-1995 |
10 |
10% f) 15% b) |
11 |
15% |
12 |
5% |
|
SWEDEN |
Parliamentary Resolution No.20/03, of 11 March |
Notice 3/2004 published on 02-01-2004; Notice 32/04, de 10-04-2004 IN FORCE SINCE 19-12-2003 effective from 01-01-2000 |
10 |
10% |
11 |
10% q) |
12 |
10% |
|
SWITZERLAND |
DL 716/74, of 12 December |
Notice published on 26-02-1976 IN FORCE SINCE 18-12-1975 |
10 |
10% f) 15% b) |
11 |
10% |
12 |
5% |
|
TUNISIA |
Parliamentary Resolution No. 33/2000, of 31 March |
Notice 203/2000, published on 16-10-2000 IN FORCE SINCE 21-08-2000 |
10 |
15% |
11 |
15% |
12 |
10% |
|
TURKEY |
Parliamentary Resolution No. 13/06, of 21 February |
Notice 2/2007, published on 10-01-2007 IN FORCE SINCE 18-12-2006 |
10 |
5% m) 15% b) |
11 |
10% p) 15% b) |
12 |
10% |
|
UNITED KINGDOM |
DL 48497, of 24 July 1968 |
Notice published on 03-03-1969 IN FORCE SINCE 20-01-1969 |
10 |
10% f) 15% b) |
11 |
10% |
12 |
5% |
|
UKRAINE |
Parliamentary Resolution No. 15/02, of 8 March |
Notice 34/2002, published on 11-04-2002 and rectified on 30-04-2002 IN FORCE SINCE 11-03-2002 effective from 01-01-03 |
10 |
10% m) 15% b) |
11 |
10% |
12 |
10% |
|
USA |
Parliamentary Resolution No. 39/95, of 12 October |
Notice 35/96 published on 09-01-1996 IN FORCE SINCE 01-01-1996 |
10 |
5% g) 10% g) 15% b) |
11 |
10% |
13 |
10% |
|
VENEZUELA |
Parliamentary Resolution No. 68/97, of 5 December |
Notice 15/98, published on 16-01-1998 IN FORCE SINCE 08-01-1998 |
10 |
10% i) 15% j) |
11 |
10% |
12 |
10%k) 15% l) |
NOTES:
- When paid by banking entities;
- In all other cases;
- When the company controls 50% or more of the share capital;
- Between 01-01-1972 and 31-12-1999, there was a double tax treaty between Portugal and Brazil approved by DL 244/71 of 2 June which was unilaterally terminated by Brazil. The lowest rate for dividends, interest and royalties was 15% and 10% on royalties, whenever literary, scientific or artistic work was in question. Its application was regulated by Circular No. 17/73 of 19 October;
- When the actual beneficiary is a company that held 25% of the share capital of the payer for a consecutive period of two years prior to the time the dividends were paid, the rate may not exceed 10% of the gross amount of dividends paid after 31-12-1996. However, under Article 28 or 29 of the treaties in question, as this lower 10% rate is a withholding tax, it will only apply to situations where the chargeable event came about on or after January 1st of the year immediately after the year the treaty came into force;
- When the actual beneficiary is a company which controls 25% or more of the share capital;
- When the member is a company which directly held 25% or more of the share capital for two consecutive years prior to the payment of the dividends, the rate is 10% from 01-01-1997 to 31-12-1999 and 5% after 31-12-1999;
- For bonds issued in France after 01-01-1965;
- As from 01-01-1997. However, under Article 29(2)(a) of the treaty with Venezuela, as this lower 10% rate is a withholding tax, it will only apply to situations where the chargeable event came about on or after 01-01-1999;
- Until 31-12-1996, as set out in Article 10(2) of the treaty with Venezuela. However, as this treaty only came into force on 08-01-1998, the lower 15% was never applied, nor will it be;
- Technical assistance rate;
- Rate for royalties in general;
- When the actual beneficiary of the dividends is a company which directly held at least 25% of the share capital of the company paying the dividends for an uninterrupted period of two years prior to the payment of the dividends;
- If the interest is paid by one company from a Contracting State where interest is considered a deductible expense to a financial establishment resident in another Contracting State;
- However, interest deriving from a Contracting State will be exempt in that State under the terms of Article 11(a), (b) or (c) of the Treaty with Pakistan, if the condition set out therein are met;
- The lower 10% rate still applies to "technical assistance payments" under Article 12(4) and (5) of the Treaty with Pakistan and has the same range.
- However, the interest may only be taxed in the Contracting State where the actual beneficiary is resident if one of the conditions set out in Article 11(3)(a) to (d) of the Treaty with Sweden have been met;
- See the article in question.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.