Double Taxation Agreement Us Portugal

Payments between resident companies are generally subject to withholding tax. Rates range from 15% to 25%. If payments are made by residents to non-residents, the tax rate may be reduced if there is a double taxation agreement. Global capital gains realized by resident companies are included in taxable income and are taxed at a flat rate of 26.5%. The result is the difference between the proceeds of sale and the acquisition cost, which can be updated using official inflation coefficients. If the proceeds of the sale are reinvested in other fixed assets, 50% of the realized profit (less associated losses) is excluded from tax. For this purpose, reinvestments made during the previous year, the sales year and the following two years are taken into account. This is a very important aspect of tax treaties – the difference in the use of the term can and should. Article 6 refers to the fact that income from immovable property may be taxed in the other State.

In other words, a person can be subject to tax in both countries – although the double taxation aspect of the treaty would prevent double taxation. Other contracts use the word should and usually clarify it with the word “only”, as in should only be taxable in the country. In addition, there is a tax treaty between the United States and Portugal that ensures that you are not taxed twice or other worrisome situations. There will also be more information about this in this article. In addition, there are often credits that can be very helpful in determining your total tax liability if you qualify. Simplified scheme: undertakings with a total turnover of less than EUR 149 639,37 in the previous year; and (b) have not chosen to be valued in accordance with the above-mentioned general regime, are subject to the simplified tax regime. Under this scheme, taxable income is calculated as follows: – 20 % of turnover from the sale of goods; plus – 70% of gross income from other sources Based on European Union (EU) regulations, as well as bilateral social security agreements, an exemption from social security contributions may apply to longer business travelers. Following the signing of this agreement, the window of opportunity to achieve compliance closes before it is too late.

If a foreign financial institution reports your information to the United States and you are audited or investigated before you have the opportunity to comply with the regulations, the penalties can be very high. Reach more than 100% of the value of your foreign account. In addition to the Portuguese national regulations that provide for relief from international double taxation, Portugal has concluded double taxation treaties with more than 70 countries/jurisdictions in order to avoid double taxation and allow cooperation between Portugal and foreign tax authorities in the application of their respective tax laws. *Whether or not a country has entered into a FATCA agreement does not affect whether you, as an individual or company, are required to report your accounts abroad. Portuguese residents are subject to the taxation of their worldwide income at progressive marginal tax rates, and certain types of income are taxed at flat rates (between 10 and 28 per cent), and non-residents are subject to Portuguese tax on their Portuguese income at the applicable rates (between 10 and 28 per cent), depending on the type of income received. A double taxation convention may provide for a derogation from these provisions. The FATCA 8/2015 agreement was signed specifically for Portugal. Gains from the sale of shares by qualified holding companies (SGPS) are not subject to tax. However, capital losses resulting from the sale of shares, as well as interest on loans used to purchase shares, are not deductible for CRI purposes at the SGPS level. There is no minimum threshold/number of days that exempts the employee from the obligation to file and pay taxes in Portugal with respect to Portuguese working days. However, the application of a double taxation agreement may stipulate that the employee has no obligation to register if the person spends less than 183 days in Portugal and the person`s income is not paid by a Portuguese company or credited to a Portuguese entity. For example, if a person from Portugal is a resident of the United States, the United States may tax it on interest income.

Similarly, if the company paying the interest is a Portuguese company, Portugal can also tax it – but the interest rate is limited to 10%. For example, if Martha is originally from Portugal and moves to the United States and receives interest income from a Portuguese company, the United States may tax her on interest income. Capital gains – Capital gains resulting from the sale of the principal residence of a natural person are exempt from tax if the proceeds are used to acquire another permanent residence in Portuguese territory. Only 50% of the profits from the sale of real estate are taxable. Capital gains from the sale of real estate are taxable at a rate of 10%. Capital gains on shares are excluded from tax if they are held for more than 12 months (the exclusion does not apply if more than 50% of the company`s assets are in the form of real estate in Portugal). The payment of dividends between companies established in Portugal is totally exempt from participation if the beneficiary of the dividends is a company that has held at least 10% of the share capital of the distributing company for a period of at least one year. If these conditions are not met, 50% of the dividend amount is excluded from tax (i.e. only 50% of the dividend amount is subject to tax). Income Tax Return and Payment of Tax Returns – Tax return deadlines are between February 1 and March 15 (March 10 to April 15 if filed electronically) after the end of the year only for individuals with employment or pension income, and between March 16 and April 30 (April 16 to May 25 if filed by electronic means) for persons with other types of income. .

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