IN167 - Portugese Double Taxation Treaties – Including Specific Limitation of Benefits

A list of the countries involved and the specific limitation of benefits in relation to Portugal’s double taxation treaties are detailed below:

• Brazil

Protocol reference to Article 24 states: “the benefits of this Convention are not granted to any person entitled to fiscal benefits pertaining to income tax in accordance with the tax instruments and other measures related to the Free Trade Zone of Madeira”. Madeira companies clearly do not therefore benefit from the terms and conditions of the respective Convention.  

• Canada

According to Article 27.3 of the Convention, a company or entity entitled to or benefiting from legislation and other measures relating to the tax-free zones of Portugal will, for the purposes of the Convention, not be deemed as Portuguese resident. However, this restriction does not include companies actively involved in selling goods or services other than those of a financial or insurance nature i.e. banks, insurance companies, dealers in securities etc. Such a provision may therefore limit the use of companies benefiting from the taxation regime of the Free Trade Zone of Madeira.

• Mexico

• Spain

Protocol 3 states that the tax reductions or exemptions arising from Articles 10 (Dividends), 11 (Interest), 12 (Royalties) and 13 (Capital Gains) of the Convention will not apply should such items of income be derived from Spain by a Portuguese resident company where less than 50% of the beneficial owners are Portuguese residents. This is not however the case if the Portuguese resident company in Portugal, provides a substantial business activity beyond the mere holding of securities or other assets.        

• Sweden

Article 27 states: A Portuguese resident company’s income or dividends paid, will be excluded from provisions of the Convention regarding an exemption or reduction in tax, should such a company derive its income primarily from other states where such income bears a “significantly lower” tax than income similarly derived in Portugal. This limitation applies to companies actively involved in banking, shipping, financing, insurance or being an administrative headquarters/co-ordination centre to a group of companies carrying out business primarily in other states. Such a provision may therefore limit the use of companies benefiting from the taxation regime of the Free Trade Zone of Madeira.  

• USA

The benefits of the Convention are not extended to include persons benefiting from legislation and other measures relating to the tax-free zone of Madeira. This is in line with Paragraph 6 of Article 17: Limitation of Benefits of the Convention.

Summary Table: Double Taxation Treaties with Portugal

 

			DIVIDENDS			INTEREST			ROYALTIES
			TAXES
ALGERIA			10 % a) 15 % b)			15 %			10 %
AUSTRIA			15 %			10 %			5 % b) 10 % c)
BELGIUM			15 %			15 %			10 %
BRAZIL*			10 % a) 15 % b)			15 %			15 %
BULGARIA			10 % a) 15 % b)			10 %			10 %
CANADA*			10 % a) 15 % b)			10 %			10 %
CAPE VERDE			10 %			10 %			10 %
CHILE			10 %  a) 15 %  b)			5 % d) 10 % e) 15 % b)			5 % f) 10 % b)
CHINA			10 %			10 %			10 %
CUBA			5 % a) 10 % b)			10 %			5 %
CZECH REPUBLIC			10 % a) 15 % b)			10 %			10 %
DENMARK			10 %			10 %			10 %
ESTONIA			10 %			10 %			10 %
FINLAND			5 % a) 10 % b)			15 %			10 %
FRANCE			15 %			10 % g) 12 % b)			5 %
GERMANY			15 %			10 %  h) 15 %  b)			10 %
GREECE			15 %			15%			10 %
HUNGARY			10 %  i) 15 %  b)			10 %			10 %
ICELAND			10 %  a) 15 %  b)			10%			10%
INDIA			10 % a) 15 % b)			10 %			10 %
INDONESIA			10 %			10 %			10 %
IRELAND			15 %			15 %			10 %
ISRAEL			5% a) 10% j) 15% b)			10%			10%
ITALY			15 %			15 %			12 %
LATVIA			10 %			10 %			10 %
LITHUANIA			10 %			10 %			10 %
LUXEMBOURG			15 %			10 % k) 15 % b)			10%
MACAU			10 %			10 %			10 %
MALTA			10 % a) 15 % b)			10 %			10 %
MEXICO*			10 %			10 %			10 %
MOROCCO			10 % i) 15 % b)			12 %			10 %
MOZAMBIQUE			15 %			10 %			10 %
NORWAY			10 %  a) 15 %  b)			15 %			10 %
NETHERLANDS			10 %			10 %			10 %
PAKISTAN			10 % a) 15 % b)			10 %			10 %
POLAND			10 % a) 15 % b)			10 %			10 %
ROMANIA			10 % a) 15 % b)			10 %			10 %
RUSSIA			10 % a) 15 % b)			10 %			10 %
SINGAPORE			10 %			10 %			10 %
SLOVAKIA			10 % a) 15 % b)			10 %			10 %
SLOVENIA			5 % a) 15 % b)			10 %			5 %
SOUTH AFRICA			10 %  a) 15 %  b)			10 %			10 %
SOUTH KOREA			10 %  a) 15 %  b)			15 %			10 %
SPAIN*			10 % a) 15 % b)			15 %			5 %
SWEDEN*			10 %			10 %			5 %
SWITZERLAND			10 % a) 15 % b)			10 %			5 %
TUNISIA			15 %			15 %			10 %
TURKEY			5 % a) 15 % b)			10 % l) 15 % m)			10 %
UKRAINE			10 % a) 15 % b)			10 %			10 %
UNITED KINGDOM			10 % a) 15 % b)			10 %			5 %
UNITED STATES OF AMERICA*			5% a) 15 % b)			10 %			10 %
VENEZUELA			10 % b) 15 % i)			10 %			10% n) 12% b)