Portugal–Spain tax treaty in English
Convention between the Portuguese Republic and the Kingdom of Spain for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income. Article by article, in English, with the Portuguese alongside: 192 aligned provisions.
Signature, entry into force and texts
- Signed
- 26 October 1993, Madrid
- Approved by
- Resolução da Assembleia da República n.º 6/95, de 28 de Janeiro (approved 29 June 1994), Diário da República n.º 24/1995, Série I-A, 28 January 1995, pp. 510-528, which annexes the Convention and Protocol (Portuguese and Spanish texts); Spain: Instrumento de ratificación of 3 March 1995, BOE n.º 266, 7 November 1995 (BOE-A-1995-24001)
- In force
- 28 June 1995 (Aviso n.º 164/95)
- Takes effect
- Both States: taxes withheld at source where the taxable event occurs on or after 1 January 1996; other taxes for tax periods beginning on or after 1 January 1996 (Art. 28(2)). Article 11 (interest) applies from 1 January 1993 (Protocol, para. 5). The 1968 Convention ceased to apply when this Convention took effect (Art. 28(3)).
- Authentic languages
- Portuguese, Spanish
- English text
- Our translation of the Portuguese text, reviewed by a second tax translator
Treaty rates for dividends, interest and royalties
The maximum tax the State where the income arises may charge when the beneficial owner is resident in the other State. The article reference opens the provision.
| Income | Rate | Condition | Article |
|---|---|---|---|
| Dividends | 10% | Beneficial owner is a company holding directly at least 25% of the capital of the paying company; since 1 January 2023 the holding must be maintained for a 365-day period including the payment date (MLI Art. 8(1)) | 10(2)(a) |
| Dividends | 15% | All other cases (gross amount) | 10(2)(b) |
| Interest | 15% | Gross amount; no treaty exemption for government, central-bank or bank interest | 11(2) |
| Royalties | 5% | Gross amount (definition includes payments for the use of industrial, commercial or scientific equipment) | 12(2) |
Treaty rates are maxima; domestic law may be more favourable. Between Portugal and Spain, dividends to qualifying parent companies and interest/royalties between qualifying associated companies may be exempt from withholding tax under the EU Parent-Subsidiary and Interest and Royalties Directives as implemented domestically (Portugal: Article 14(3) and 14(12) CIRC; Spain: Article 14 of the Non-Residents' Income Tax Law, RDLeg 5/2004), subject to holding-period and anti-abuse conditions. All reductions are subject to the ownership-based anti-abuse rule in paragraph 3 of the Protocol (reductions denied to companies more than 50% owned, directly or indirectly, by non-residents of their State of residence unless they carry on substantive commercial or industrial activities other than mere management of securities or other assets) and, since 1 January 2023, to the MLI principal purpose test. Rates confirmed by the AT Quadro resumo das convenções 2026 (Art. 10: 10% / 15%; Art. 11: 15%; Art. 12: 5%).
To apply a treaty rate at source in Portugal, the recipient gives the Portuguese payer a form certified by its own tax authority before the tax is due (Article 98 CIRC); otherwise the excess tax can be reclaimed afterwards.
Has the MLI changed this treaty?
The Convention is a Covered Tax Agreement for both Portugal and Spain and is modified by the MLI as shown in the synthesised text published by the Spanish Ministry of Finance (based on Spain's position deposited on 28 September 2021 and Portugal's on 28 February 2020; both States signed the MLI on 7 June 2017). The MLI replaces the preamble wording with the anti-abuse preamble, adds the principal purpose test, adds a 365-day holding period for the 10% dividend rate, replaces Article 13(2) with the 365-day/50% real-estate-rich entity rule, applies the anti-fragmentation rule and closely-related-person definition to Article 5, extends the MAP time limit to three years and requires implementation of agreements notwithstanding domestic time limits, and introduces mandatory binding arbitration under Part VI subject to both States' reservations. Articles 4 (dual-resident entities), 5 (methods), 10 (third-State PEs), 12 (commissionnaire arrangements), 14 (splitting-up of contracts) and 17 (corresponding adjustments) of the MLI do not modify the Convention. The BOE consolidated text carries a notice that the Convention may be affected by the MLI (BOE-A-2021-21097). No Portuguese synthesised text was located.
- From when
- MLI in force for Portugal on 1 June 2020 and for Spain on 1 January 2022; Spain notified completion of its internal procedures for this Convention under Art. 35(7)(b) on 1 June 2022. The MLI has effect for this Convention in both States for taxes withheld at source from 1 January 2023 and for other taxes for taxable periods beginning on or after 1 January 2023; Part VI (arbitration) has effect for cases presented on or after 1 July 2022 (earlier cases only if both competent authorities agree).
- Provisions applied
- Art. 6(1) (preamble)
- Art. 7(1) (principal purpose test)
- Art. 8(1) (365-day holding period for the 10% dividend rate, Art. 10(2)(a))
- Art. 9(4) (real-estate-rich entities, replacing Art. 13(2))
- Art. 13(4) (anti-fragmentation, Art. 5(4))
- Art. 15(1) (closely related person, Art. 5)
- Art. 16 (MAP: three-year time limit in Art. 25(1); implementation notwithstanding domestic time limits in Art. 25(2))
- Part VI, Arts. 18-26 (mandatory binding arbitration), with both States' reservations under Art. 28(2)(a)
Every article of the treaty
How this edition is made
The Portuguese text
Reproduced from the official publication and compared line by line with it. Where a protocol replaced or added a provision, the article shows the wording in force and a note names the protocol.
The English text
Our translation of the Portuguese, in the wording of the OECD Model Tax Convention wherever the treaty follows it, checked by a second tax translator against the Portuguese and the partner State’s authentic text for rates, conditions and cross-references.
What it is not
Not tax advice. Whether a treaty rate applies depends on residence, beneficial ownership, anti-abuse rules and the paperwork; domestic law may give a better result.
Unofficial English translation prepared by BCA Portugal for reference. The Convention was done in Portuguese and Spanish and only those texts are authentic. The Portuguese text is reproduced from the official publication. Editorial notes are ours and are not part of the Convention.
Treaty relief between Portugal and Spain, claimed correctly
Treaty rates are not automatic in Portugal: the recipient must give the payer a form certified by its own tax authority before the tax is due, or claim a refund afterwards. We check which article applies, the rate and the paperwork.