Tax treaty · signed 2011

Portugal–United Arab Emirates tax treaty in English (official text)

Convention between the Portuguese Republic and the United Arab Emirates for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income. Article by article, in the authentic English text, with the Portuguese alongside: 185 aligned provisions.

Withholding ratesDividends: Article 10
English, Portuguese or side by side31 articles and the protocolFree, no sign-up
Maximum tax at source
Dividends5%: company holding at least 10%, no minimum period5% · 15%
Interest0%: the State and government bodies0% · 10%
Royaltiesbeneficial owner resident in the other State5%
Multilateral Instrument (MLI): applies since 2021. Without the treaty, Portugal taxes these payments to non-resident companies at 25% (Article 87(4) CIRC).
Key facts

Signature, entry into force and texts

Signed
17 January 2011, Abu Dhabi
Approved by
Resolução da Assembleia da República n.º 47/2012, de 13 de abril (approved 24 February 2012), DR n.º 74/2012, Série I, 2012-04-13; ratified by Decreto do Presidente da República n.º 78/2012 (same DR issue).
In force
22 May 2012 (Aviso n.º 59/2012)
Takes effect
Taxes withheld at source: 30 days after entry into force, i.e. from 21 June 2012 (Art. 30(2)(a)). Other taxes: income arising in fiscal years beginning on or after 1 January 2012 (Art. 30(2)(b)).
Authentic languages
Portuguese, Arabic, English; the English text prevails in case of divergence
English text
Authentic, reproduced from the Diário da República publication (Resolution of the Assembly of the Republic No. 47/2012)
Withholding tax

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.

IncomeRateConditionArticle
Dividends5%Beneficial owner is a company (other than a partnership) holding directly at least 10% of the capital of the paying company; no minimum holding period10(2)(a)
Dividends15%All other cases (beneficial owner resident in the other State)10(2)(b)
Interest0%Interest paid by a company to a beneficial owner that is a resident described in Art. 4(2): the other State, its political or administrative subdivisions, local governments or authorities, its Central Bank, or wholly state-owned governmental institutions (e.g. Abu Dhabi Investment Authority)11(3)
Interest10%All other interest (beneficial owner resident in the other State)11(2)
Royalties5%Beneficial owner resident in the other State; definition does not include equipment leasing or technical service fees (the text is silent on them)12(2)

Treaty rates are maximum source-State rates on the gross amount, available only to the beneficial owner (Arts. 10-12 and 27(2)) and subject to the MLI principal purpose test (MLI Art. 7(1), replacing Art. 27(3)) and to domestic anti-abuse rules (Art. 27(1)). A UAE-resident individual must be both domiciled in the UAE and a UAE national (Art. 4(1)(b)). Individuals living in the UAE who are not UAE nationals therefore cannot claim treaty benefits as UAE residents, and a UAE company must be both incorporated and effectively managed in the UAE (Art. 4(1)(b)). The UAE currently applies a 0% withholding tax rate to payments to non-residents under its Corporate Tax Law, so the caps matter mainly for Portuguese-source income. Portugal: the reduced rates are applied at source if the payer holds form Mod. 21-RFI with a separate UAE residence certificate by the 20th of the month after payment (since October 2019 the form itself is no longer certified); otherwise a refund can be claimed (Mod. 22-, 23- or 24-RFI, depending on the income). Because the UAE appears on Portugal's list of privileged tax regimes (Portaria n.º 150/2004), the domestic aggravated 35% withholding rate applies where treaty relief is not obtained, and some domestic exemptions are unavailable. The MLI dividend holding period (MLI Art. 8) does not apply (UAE reservation).

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.

Multilateral Instrument

Has the MLI changed this treaty?

The Convention is a Covered Tax Agreement for both States. Portugal lists it at item lxxiv of art. 2(a) of Decreto do Presidente da República n.º 70/2019, and the UAE lists it as agreement no. 85 in its MLI position deposited on 29 May 2019. The OECD's 2024 treaty-shopping peer review records it as compliant with the minimum standard through the MLI (PPT). Matching the two positions gives four changes. (1) MLI Art. 6(1) preamble text replaces the existing preamble wording (both States notified it under Art. 6(5)); Art. 6(3) does not apply because Portugal did not choose it. (2) The MLI principal purpose test (Art. 7(1)) replaces Art. 27(3) (both States notified it under Art. 7(17)(a)); Art. 7(4) does not apply because Portugal did not choose it. (3) MLI Art. 16 adds to Art. 25(3) the sentence allowing consultation to eliminate double taxation in cases not provided for (both States notified its absence). Portugal's reservation on the first sentence of MLI Art. 16(1) leaves Art. 25(1) unchanged. (4) MLI Art. 17(1) replaces Art. 9(2) (both States notified it). The following MLI articles do not modify the Convention: Art. 3 (both reserved), Art. 4 (both reserved), Art. 5 (Portugal's Option C has no provision to replace), Art. 8 (UAE reserved), Art. 9 (UAE reserved 9(1); 9(4) not chosen by the UAE), Art. 10 (both reserved), Art. 11 (UAE reserved), Arts. 12-15 (UAE reserved) and Part VI arbitration (UAE did not opt in). No synthesised text for this Convention has been published by the Portuguese or UAE authorities, as far as could be found.

From when
MLI in force for the UAE on 1 September 2019 and for Portugal on 1 June 2020. Effective for this Convention for taxes withheld at source where the event giving rise to the tax occurs on or after 1 January 2021, and for other taxes for taxable periods beginning on or after 1 December 2020. Article 16 follows the same dates, because Portugal reserved MLI Art. 35(4).
Provisions applied
  • Art. 6(1) (preamble; replaces the existing preamble language)
  • Art. 7(1) (principal purpose test; replaces Art. 27(3))
  • Art. 16(4)(c)(ii) (MAP: second sentence added to Art. 25(3))
  • Art. 17(1) (corresponding adjustments; replaces Art. 9(2))
Contents

Every article of the treaty

  • PreTitle and preambleTítulo e preâmbulo
    • Chapter I · Scope of the ConventionÂmbito de aplicação da Convenção
    1. 1Persons coveredPessoas visadas
    2. 2Taxes coveredImpostos visados
    Chapter IV · Methods for elimination of double taxationMétodos de eliminação da dupla tributação
    1. 23Elimination of double taxationEliminação da dupla tributação
    Sources and method

    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

    An authentic text of the Convention, copied from the Diário da República publication (Resolution of the Assembly of the Republic No. 47/2012) and aligned with the Portuguese paragraph by paragraph. Obvious printing errors are corrected only where another authentic text confirms the reading, and each correction is noted.

    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.

    The English column is an authentic text of the Convention, reproduced from the Diário da República publication (Resolution of the Assembly of the Republic No. 47/2012). The Convention was done in Portuguese, Arabic and English, each text being authentic; the English text prevails in case of divergence. The Portuguese text is reproduced from the official publication. Editorial notes are ours and are not part of the Convention.

    Applying the law

    Treaty relief between Portugal and the United Arab Emirates, 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.

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