Portugal–Netherlands treaty Article 1: Persons covered

This Convention shall apply to persons who are residents of one or both of the Contracting States.

Esta Convenção aplica-se às pessoas residentes de um ou de ambos os Estados Contratantes.

Editorial note

Principal purpose test. Article 7(1) of the MLI adds the following rule to the Convention, with effect, for taxes withheld at source, from 1 January 2021 and, for other taxes, for taxable periods beginning on or after 1 December 2020 (MLI Art. 35(1); the MLI entered into force for the Netherlands on 1 July 2019 and for Portugal on 1 June 2020): “Notwithstanding any provisions of the Convention, a benefit under the Convention shall not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the Convention.” Neither State applies the simplified limitation-on-benefits provision. The discretionary-relief rule in Article 7(4) of the MLI does not apply, because only the Netherlands chose it. The anti-abuse rules in paragraphs II(3) to II(5) of the Protocol continue to apply alongside the test. No synthesised text has been published by either State for this Convention; this note is based on the MLI positions deposited by Portugal and the Netherlands (OECD).

Paying or receiving income between Portugal and the Netherlands? Article 1 may decide where it is taxed.

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The English column is an authentic text of the Convention, reproduced from the Dutch Treaty Series (Tractatenblad 1999, 180). The Convention was done in Portuguese, Dutch and English, each text being authentic; the English text prevails if the Portuguese and Dutch texts are interpreted differently. The Portuguese text is reproduced from the official publication. Editorial notes are ours and are not part of the Convention.

Article 1 Persons covered

Treaty relief between Portugal and the Netherlands, claimed correctly