Portugal–United States tax treaty in English (official text)
Convention between the Portuguese Republic and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, and Protocol. Article by article, in the authentic English text, with the Portuguese alongside: 245 aligned provisions.
Signature, entry into force and texts
- Signed
- 6 September 1994, Washington
- Approved by
- Resolução da Assembleia da República n.º 39/95 (approved 21 June 1995), DR I Série-A n.º 236, 12 October 1995; ratified by Decreto do Presidente da República n.º 73/95, same DR issue
- In force
- 18 December 1995 (Aviso n.º 35/96)
- Takes effect
- Withholding taxes: amounts paid or credited on or after 1 January 1996; other taxes: taxable years beginning on or after 1 January 1996 (art. 30(2))
- Authentic languages
- Portuguese, English
- English text
- Authentic, reproduced from the Diário da República publication (Resolution of the Assembly of the Republic No. 39/95), checked against the text published by the US Internal Revenue Service
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 | 15% | General cap where the beneficial owner is a resident of the other State | 10(2) |
| Dividends | 5% | Beneficial owner is a company resident in the other State that, for an uninterrupted period of 2 years before payment, owns directly at least 25% of the capital (capital social) of the paying company; the cap is the rate Portugal may apply to such dividends paid to residents of EU Member States, but not less than 5% (dividends paid after 31 December 1999) | 10(3)(b) |
| Dividends | 10% | Same 25%/2-year holding; dividends paid after 31 December 1996 and before 1 January 2000 only (spent) | 10(3)(a) |
| Dividends | 15% / domestic rate | US RIC dividends: art. 10(2) applies; US REIT dividends: art. 10(2) only for an individual holding less than 25% of the REIT, otherwise the domestic withholding rate; art. 10(3) never applies | 10(4) |
| Dividends | 15% / 5% (dividend equivalent amount); 5% / 10% (excess interest) | US branch profits tax on a Portuguese corporation: dividend equivalent amount at the art. 10(2)/(3) rate; excess interest at 5% (banks) or 10% (others) | 12(2) |
| Interest | 10% | General cap where the beneficial owner is a resident of the other State | 11(2) |
| Interest | 0% | Debtor is the Government of the source State, a political or administrative subdivision or a local authority | 11(3)(a) |
| Interest | 0% | Paid to the Government of the other State, a subdivision or local authority, or an institution or organisation (including financial institutions) wholly owned by them | 11(3)(b) |
| Interest | 0% | Interest on a long-term loan (5 or more years) granted by a bank or other financial institution resident in the other State | 11(3)(c) |
| Interest | 15% | Interest determined by reference to the profits of the issuer or an associated enterprise: capped at the art. 10(2) rate | 11(4) |
| Interest | domestic rate | US tax on excess inclusions from a residual interest in a REMIC: arts. 11(2) and (3) do not apply | Protocol 9 |
| Royalties | 10% | General cap; «royalties» includes rental of industrial, commercial or scientific equipment and technical assistance related to the application of a right or property | 13(2)-(3) |
| Royalties | 0% | Royalties for the use of containers in international traffic: taxable only in the recipient's State of residence | Protocol 11 |
All caps are lost where the income is effectively connected with a PE or fixed base in the source State (arts. 10(6), 11(6), 13(4)), and no benefits are available to a person that fails the limitation-on-benefits test (art. 17) or is entitled to the Madeira/Santa Maria free-zone benefits (art. 17(6)). Domestic law may be more favourable than the treaty: Portuguese domestic law (art. 14.º(3) CIRC) can exempt dividends paid to qualifying companies resident in states with which Portugal has a tax treaty, and the US has its own domestic exemptions; check the domestic conditions. The MLI does not apply, so there is no MLI dividend holding period (MLI art. 8) and no principal purpose test; the treaty's own 2-year holding requirement in art. 10(3) applies.
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?
Not a covered tax agreement. Portugal listed the Convention with the United States among its covered tax agreements when it ratified the MLI (Decreto do Presidente da República n.º 70/2019, art. 2(a)(lxxvi)) and made reservations and notifications naming the United States under MLI arts. 6, 8, 9, 11, 13, 16 and 17 (Portugal's MLI position, agreement no. 76). The United States has not signed or ratified the MLI, and under MLI art. 2(1)(a) an agreement is a covered tax agreement only where it is in force between two Parties that have both notified it. The MLI therefore modifies no provision of this Convention: no new preamble, no principal purpose test, no dual-resident or PE changes, no mandatory arbitration. Anti-abuse protection comes from the Convention's own limitation-on-benefits article (art. 17) and the saving clause in Protocol, para. 1(b).
- From when
- Not applicable.
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
An authentic text of the Convention, copied from the Diário da República publication (Resolution of the Assembly of the Republic No. 39/95), checked against the text published by the US Internal Revenue Service 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. 39/95), checked against the text published by the US Internal Revenue Service. The Convention was done in Portuguese and English, each text being 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 the United States, 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.