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