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Madeira Double Tax Treaties

As part of Portugal, Madeira has access to the substantial number of tax treaties entered into by the mother country. Generally speaking, the treaty benefits are available to all Madeiran companies. However, Madeiran companies in the International Business Centre licensed under the Free Trade Zone Legislation are able to remit interest, dividends and royalties to non-residents without the imposition of withholding tax, so that treaty benefits in that instance are not needed.

The participation exemption available under the EU Parent/Subsidiary Directive No. 90/435 also overrides treaty benefits: any company in the EU owning 25% or more of another company and having done so for 2 years or since incorporation is able to receive income from it without the application of withholding tax. Among Madeiran companies, only the Mixed Holding Company is sometimes unable to take advantage of the Directive (because many countries consider that it does not pay enough tax).

See Withholding Taxes for details of rates chargeable for non-Free Trade Zone companies when there is no treaty.

The following countries have double-tax treaties with Portugal (an * indicates that the treaty is under negotiation or awaiting ratification):

 

  • Austria
  • Belgium
  • Brazil
  • Bulgaria
  • Canada
  • Cape Verde
  • China
  • Cuba
  • Czech Republic
  • Denmark
  • Estonia
  • Finland
  • France
  • Germany
  • Greece
  • Hungary
  • India
  • Ireland
  • Iceland
  • Italy
  • Latvia*
  • Lithuania*
  • Luxembourg*
  • Macao
  • Malta*
  • Mauritius*
  • Mexico
  • Morocco
  • Mozambique
  • Netherlands
  • Norway
  • Pakistan
  • Poland
  • Romania
  • Russia
  • Singapore*
  • Slovakia*
  • Slovenia
  • South Africa*
  • South Korea
  • Sweden
  • Spain
  • Switzerland
  • Tunisia*
  • Ukraine*
  • United Kingdom
  • USA
  • Venezuela

 Madeira Table of Treaty Rates

This table lists the percentage rates of withholding tax on payments made from Treaty countries to Madeira and vice versa. When two rates are quoted, the lower one applies to payments from a company in which the payee has a 10% participation - this is the usual level in OECD-model treaties.

 

Country
Interest
Dividends
Royalties
Rcvd. in Madeira
Paid from Madeira
Rcvd. in Madeira
Paid from Madeira
Rcvd. in Madeira
Paid from Madeira
Austria
10
10
15
15
5/10
5/10
Belgium
15
15
15
15
5
5
Brazil
15
15
15
15
10/15
10/15
Bulgaria
10
10
10/15
10
10
10
Canada
10
10
10/15
10/15
10
10
Czech Rep.
10
10
10/15
10/15
10
10
Denmark
10
10
10
10
10
10
Estonia
10
10
10
10
10
10
Finland
15
15
10/15
10/15
10
10
France
12
10/12
15
15
5
5
Germany
15
15
15
15
10
10
Greece
15
15
15
15
10
10
Hungary
10
10
15
15
10
10
India
10
10
10/15
10/15
10
10
Ireland
15
15
15
15
10
10
Italy
12.5/15
15
15
15
12
10
Morocco
12
12
10/15
10/15
10
10
Mozambique
10
10
15
15
10
10
Netherlands
10
10
10
10
10
10
Norway
nil
15
10/15
10/15
nil
10
Poland
10
10
10/15
10/15
10
10
Russia
10
10
10/15
10/15
10
10
South Korea
15
15
10/15
10/15
10
10
Spain
15
15
10
10/15
5
5
Sweden
10
10
10
10
10
10
Switzerland
10
10
10/15
10/15
nil
5
United Kingdom
10
10
nil
10/15
5
5
USA
10
10
15
15
10
10
Venezuela
10
10
15
10
10
10/12
The treaties with Brazil and the USA exclude MIBC companies..


Madeira Other International Agreements

Mutual Assistance Treaties: Portugal has entered a number of mutual assistance treaties as such; in addition, Double Tax Treaties usually provide for co-operation with foreign investigators, and some contain exchange of information clauses. There are also EU Directives which apply.

By and large these agreements and the directives cover drug and weapons trafficking, as well as money laundering, which is also covered in Portugal's Banking Secrecy Law.

Fiscal crime is not covered by Portugal's international agreements, nor by the Banking Secrecy Act. The authorities do not normally co-operate with foreign investigations into tax evasion.

The Tax Reform Act 2000. No doubt with an eye to the general tightening-up of global standards of protection against money-laundering, the Tax Reform Act has changed the rules so that the Portuguese tax authorities are no longer required to obtain a Court Order requesting taxpayer's information from banking, credit and finance institutions.

There is still a right of appeal for the taxpayer in most circumstances, and this is sometimes suspensive. There are a number of other safeguards, including compulsory notification to the tax-payer of any investigative process. and a requirement to disclose evidence to the taxpayer. The legislation also contains a much wider definition of reportable transactions than previously.