• Marco Zawar MBA/LLM (Tax)

Portuguese tax authorities update forms to apply tax relief at source under existing tax treaties

Portugal taxes dividends and interests paid to non-resident investors at a tax rate of 25%.

The double tax treaty between Portugal and Hong Kong reduce the withholding tax on

  • Dividends[1] paid to Hong Kong tax resident to 5[2]/10%;

  • Interests[3] paid to Hong Kong tax residents to 10%

To apply a reduction of the withholding tax to a tax treaty rate the Portuguese tax authority on August 31, 2020 approved with Notice No 8363/2020 changes to MOD.21-RFI, MOD.22-RFI.

Impact on Hong Kong tax residents investing into Portuguese businesses

With immediate effect, Hong Kong based investors shall use the update form

  • MOD.21-RFI to apply for total or partial exemption from Portuguese withholding tax; or

  • MOD.22-RFI to claim for repayment of Portuguese tax on dividends from shares and interests from debt securities.

Please be aware, that form MOD.21-RFI is valid for a maximum period of one year.

[1] PWC Worldwide Tax Summaries Online [2] The lower of the listed rates on dividends applies if the beneficial owner is a company (other than a partnership) that directly holds at least 10% of the capital of the company paying the dividends. [3] PWC Worldwide Tax Summaries Online

©2019 by Marco Zawar