Profits distributed by Portuguese resident companies
According to the transposition made to the Corporate Income Tax Code (Article 14), the distribution of profits made by a Portuguese resident company is exempt from withholding tax in Portugal in the following conditions:
(i) To companies resident in the European Union (EU), provided:
(ii) To a permanent establishment (PE) of an entity resident in a EU country, located in another EU country or in a country member of the Economic European Area (EEA); the EU entity that has such PE must comply with the conditions set forth in (i) above, and must own wholly or partially, through that PE, at least 10%, for a consecutive one year period, of the share capital of the Portuguese subsidiary.
(iii) To a PE located in a EU or EEA country, of an entity resident in a EEA country, provided such EEA country is bounded by an agreement for tax cooperation within the scope agreed within the EU.
(iv) To a company resident in Switzerland, within the scope and terms of Article 15 of the Agreement between the EU and the Swiss Confederation providing for measures equivalent to those laid down in Council Directive 2003/48/EC on taxation of savings income in the form of interest payments, provided that:
(v) To a company resident in a EEA country, bounded by an agreement for tax cooperation within the scope agreed within the EU, provided both companies meet comparable conditions (with the proper adjustments) to those set forth in Article 2 of Directive nr. 2011/69/EU, and present such proof.
Profits received by a Portuguese resident company
According the transposition made to the Corporate Income Tax Code (Article 14), no taxation arises on profits received by Portuguese resident companies, as well as on profits distributed and allocated to Portuguese PE's of EU or EEA companies (in the latter case bounded by an agreement for tax cooperation within the scope agreed within the EU), provided that:
Proof of compliance with the conditions set forth in Article 2 of Directive 2011/96/EU is required (a certificate duly certified by the competent tax authorities).
Council Directive nr. 2009/133/EC, of 19 October, on the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office, of an SE or SCE, between Member States (Merger Directive)
Mergers, divisions, partial divisions, transfers of assets and exchanges of shares involving EU resident companies, as well as a transfer of the registered office within the EU, are tax neutral, provided that (among other conditions) the companies involved:
It is possible, under certain conditions, to transfer tax losses of the companies involved.
Council Directive nr. 2003/49/EC, of 3 June, on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (Interest and Royalties Directive)
The payment of interest and royalties made by Portuguese companies to EU and Swiss resident companies should be exempted from withholding tax, provided that:
Council Directive nr. 2014/107/EU, of 9 December, on automatic exchange of information in the field of taxation
New rules are established relating to compliance with due diligence obligations on reportable financial accounts of holders or beneficiaries resident in other Member States of the EU, or in any other participating jurisdictions, with whom Portugal has committed to automatically exchange financial accounts information, following OECD’s Multilateral Competent Authority Agreement (MCAA), signed under the Convention on Mutual Administrative Assistance in Tax Matters, adopted in Strasbourg, on 25 January 1988.
Thus, this Directive extends the scope of the regime regarding mandatory exchange of information between EU member state (created by Council Directive n.º 2003/48/EC, revoked by Council Directive 2015/20160/EU, of November 10).
Due to the existence of transitional measures, some obligations from Council Directive nr. 2003/48/EC might be in force in 2019.
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