The use of Tax Treaties – Portugal

Portugal has negotiated an increasingly large number of tax treaties with other countries to reduce the double taxation burden.

A Tax Treaty overrides the Corporate and Personal Income Tax rules of Portugal for items covered by the Treaty. Any item of income not addressed explicitly by the Treaty will be taxed per Portuguese domestic laws, which provide tax withholdings on most items of income paid by resident companies (or equivalent entities).

In double tax residency cases, Tax Treaties may specifically define or modify residency status for purposes of the Tax Treaty’s rules. Most treaties include tiebreaker rules to determine the country of residence for Tax Treaty purposes, which overrides domestic laws.

Portuguese tax residents may be able to claim a reduced withholding tax rate income generated in Treaty Countries. Nonresident taxpayers may also claim Treaty relief on several types of income. Filing of forms with the Portuguese Tax Authorities may be required to reduce or avoid taxation at source.

Disclaimer

This publication or document contains general information and is not intended to be comprehensive nor to provide legal or tax advice or services. It should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Professional legal advice should be requested for specific cases. We do not undertake any continuing obligation to advise on future legal amendments, or of the impact on the conclusions herein. Prior results do not guarantee a similar outcome. The contents of this publication or document may not be reproduced, in whole or in part, without the express consent of GFDL.