Income Tax Treaty between the United States and Portugal

 

United Spain-Portugal Tax Treaty

Quick Summary.  Portugal is located on the Iberian Peninsula in southwestern Europe, bordering the Atlantic ocean and Spain.  Portugal is a democratic republic.  Its Constitution provides for a president, a unicameral Assembly of the Republic, and judicial system headed by the Constitutional Tribunal.

Portugal provides for three tier of government below the national level, including parishes (freesias), municipalities (concertos), and districts. Portugal is comprised of 18 districts and two autonomous regions with a capital at Lison.

Portugal’s tax laws primarily derives from the Portuguese Constitution, EU Regulations and Directives, codes regarding the taxes , the General Tax Law and other tax legislation.

Portugal is a member of the North Atlantic Treaty Organization (NATO) and the European Union (EU).

U.S.-Portugal Tax Treaty.

Currency.  Euro (EUR)

Common Legal Entities.  Corporation (SA), limited liability company (Lda), general and limited partnership, partnership limited by shares, branch of a foreign company, individual enterprise with limited liability, investment fund and real estate investment trust (REIT).

Tax Authorities. Tax and Customs Authority (Autoridade Tributária e Aduaneira)

Tax Treaties.  Portugal is party to 77 tax treaties, and is a signatory to the OECD’s MLI.

Corporate Income Tax Rate.  21%

Individual Tax Rate.  48%

Corporate Capital Gains Tax Rate.  Subject to Participation exemption.  Portugal provides for the exclusion of 50% of gains from certain capital transactions.

Individual Capital Gains Tax Rate.  Generally, 28%, with certain exclusions.  

Residence.  Companies are resident of Portugal if its legal seat or place of effective management is in Portugal.

Withholding Tax.

            Dividends.  25%

            Interest.  25%

            Royalties.  25%

Transfer Pricing.  Portugal generally follows OECD transfer pricing guidelines.

CFC Rules.  Undistributed profits of nonresident companies may be subject to CFC treatment.

Inheritance/estate tax.  No.