Taxation

International double taxation in Portugal

&amp;NewLine;<p>As we enter a new era of globalization and digitalization&amp;comma; tax issues linked to international double taxation are becoming increasingly important for investors and companies operating on a global scale&amp;period; In Portugal&amp;comma; these issues are at the heart of tax policy&amp;comma; with measures aimed at facilitating cross-border investment while guaranteeing fair competition and avoiding tax abuse&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>This update provides a comprehensive overview of double taxation relief schemes in France. <a href&equals;"https&colon;&sol;&sol;vivreauportugalconsulting&period;com&sol;ifici-rnh-est-de-retour-au-portugal&sol;" data-type&equals;"post" data-id&equals;"12403">effective in 2024<&sol;a>It also includes a look at recent international developments&amp;comma; including the application of the Multilateral Instrument &amp;lpar;MLI&amp;rpar; and developments in tax transparency&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<h2 class&equals;"wp-block-heading">International double taxation in Portugal<&sol;h2>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>Measures to reduce double taxation aim to eliminate obstacles to cross-border investment and international trade&amp;period; They are crucial in today&amp;rsquo&amp;semi;s economic environment&amp;comma; marked by digitalization&amp;comma; technological advances&amp;comma; increasing globalization and the free movement of people and goods within the European Union&amp;lpar;EU&amp;rpar;&amp;period; These measures not only help to prevent tax evasion and capital flight&amp;comma; but also attract investment and strengthen economic and other ties between countries&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>Countries such as France have put in place unilateral measures to mitigate international double taxation&amp;period; In addition&amp;comma; conventional measures resulting from international conventions&amp;comma; as well as harmonized measures under European law&amp;comma; reinforce this framework&amp;period; The country is thus positioned as an international platform for&amp;rsquo&amp;semi;strategic investment&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<h3 class&equals;"wp-block-heading">Double taxation agreements<&sol;h3>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>As a founding member of the Organisation for Economic Co-operation and Development &amp;lpar;<a href&equals;"https&colon;&sol;&sol;www&period;dgae&period;gov&period;pt&sol;servicos&sol;comercio-internacional-e-relacoes-internacionais&sol;multilaterais&sol;organizacao-para-a-cooperacao-e-desenvolvimento-economico-ocde-&period;aspx" target&equals;"&lowbar;blank" data-type&equals;"link" data-id&equals;"https&colon;&sol;&sol;www&period;dgae&period;gov&period;pt&sol;servicos&sol;comercio-internacional-e-relacoes-internacionais&sol;multilaterais&sol;organizacao-para-a-cooperacao-e-desenvolvimento-economico-ocde-&period;aspx" rel&equals;"noreferrer noopener">OECD<&sol;a>&amp;rpar;&amp;comma; has extensive experience in concluding bilateral tax treaties &amp;lpar;CDI&amp;rpar;&amp;comma; based mainly on the OECD Model Convention&amp;period; This network of tax treaties is extensive and covers many countries&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>An updated summary table of tax treaties signed by Portugal&amp;comma; with an overview of their key points&amp;comma; is available as an attachment&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<h3 class&equals;"wp-block-heading">Multilateral Convention on the Erosion of the Tax Base and the Transfer of Profits &amp;lpar;MLI&amp;rpar;<&sol;h3>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>The MLI &amp;lpar;Multilateral Instrument&amp;rpar;&amp;comma; a major outcome of the Base Erosion and Profit Shifting Project &amp;lpar;BEPS&amp;rpar;&amp;comma; provides a mechanism for responding to abusive tax practices&amp;period; This unprecedented multilateral treaty offers signatory states considerable flexibility in adapting the application of tax measures to their context&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>In particular, the MLI has introduced a general anti-abuse rule &amp;lpar;the "main purpose test"&amp;rpar;&amp;period;into almost all DTAs concluded by Portugal. Details of its impact on each agreement are set out in the practical table attached&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<h3 class&equals;"wp-block-heading">European Union directives<&sol;h3>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>Several aspects of direct taxation are harmonized within the EU through directives such as &amp;colon;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>The Parent-Subsidiary Directive, designed to eliminate double taxation on non-bearing investments&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>The Interest and Royalty Directive, which eliminates double taxation of payments between affiliated companies&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>The Anti-Abuse Directives &amp;lpar;ATAD 1 and ATAD 2&amp;rpar;&amp;comma; harmonizing the rules on&amp;rsquo&amp;semi;tax avoidance&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>The "FASTER" Directive&amp;comma; under consultation&amp;comma; which will introduce a digital tax residence certificate &amp;lpar;eTRC&amp;rpar; at EU level to accelerate the reduction of withholding taxes&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<h3 class&equals;"wp-block-heading">Fundamental freedoms of the European Union<&sol;h3>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>The fundamental freedoms enshrined in the EU Treaties are essential to the European internal market&amp;period; In the absence of full harmonization of direct taxation&amp;comma; these freedoms&amp;comma; confirmed by the case law of the Court of Justice of the EU&amp;comma; provide an essential framework for defending taxpayers in international tax matters&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<h3 class&equals;"wp-block-heading">Unilateral mechanisms for eliminating double taxation<&sol;h3>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>In the absence of special agreements such as a DTA&amp;comma; Portugal unilaterally reduces or eliminates international double taxation for its residents&amp;period; Resident taxpayers&amp;comma; whether individuals or legal entities&amp;comma;they are individuals or legal entities&amp;comma; can benefit from a&amp;rsquo&amp;semi;tax credit to mitigate double taxation&amp;period; This credit corresponds to the lower of the&amp;rsquo&amp;semi;tax due in Portugal and the&amp;rsquo&amp;semi;tax paid abroad&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>Non-residents can also benefit from tax exemptions&amp;comma; in particular on certain capital gains or bond interest&amp;comma; under certain conditions&amp;period; Specific rules also apply in Madeira's tax-free zone&amp;period;<&sol;p>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<h3 class&equals;"wp-block-heading">Transparency, information exchange and tax havens<&sol;h3>&amp;NewLine;&amp;NewLine;&amp;NewLine;&amp;NewLine;<p>The framework for transparency and exchange of tax information has evolved considerably&amp;comma; both at European and international level&amp;period; Portugal also applies a list of privileged tax jurisdictions&amp;comma; defined by ministerial decree&amp;comma; which takes into account criteria such as the absence of&amp;rsquo&amp;semi;a tax similar to the&amp;rsquo&amp;semi;IRC or a tax rate lower than 60 &amp;percnt; of the normal rate of the&amp;rsquo&amp;semi;IRC&amp;period;<&sol;p>&amp;NewLine;

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