PORTUGAL Law and Practice Contributed by: Tânia de Almeida Ferreira, João Pedro Albuquerque, Filipe Gomes da Silva and Pedro Neves, CCA Law Firm
CCA Law Firm Edifício Diogo Cão, Doca de Alcântara Norte 1350-352 Lisboa Portugal Praça do Bom Sucesso, Nº 131 Edifício Península, 2.º andar, sala 204 4150-146 Porto Portugal
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1. Sources and Principles 1.1 Domestic Sources of International Tax Law The main sources of international tax law in Portugal include international treaties (notably double tax trea - ties, or DTTs), European Union (EU) law and domestic law designed to align with global standards. These sources apply concurrently in both domestic and cross-border contexts and are primarily aimed at eliminating double taxation, preventing tax evasion and regulating cross-border transactions. Portuguese case law, in particular that of the admin - istrative and tax courts, has some pertinence, with the courts frequently addressing issues of treaty interpretation and the interaction between domestic provisions, EU law and anti-abuse standards. The approach of the courts tends to be consistent with developments in international and EU case law, which acts as the main authority responsible for interpreta - tion in line with global standards and practices. Administrative guidance and binding rulings issued by the Portuguese Tax Authority (PTA) play a pivotal role in promoting consistency in tax administration. Binding rulings are commonly sought in domestic and cross-border reorganisations, financing structures and investment transactions to secure legal certainty, as they set out the PTA’s interpretation by reference to a defined factual framework. Notwithstanding the above, the PTA has shown a degree of reluctance in
adopting interpretations derived from international standards and case law. Portugal maintains an extensive DTT network (approx - imately 79 treaties concluded, of which 78 are cur - rently in force) which follows the OECD model. These treaties allocate taxing rights between contracting states in respect of the main categories of income, including income from immovable property, business profits, dividends, interest, royalties, capital gains, employment income and pensions. Issues relating to treaty access, entitlement to benefits and treaty inter - pretation frequently arise in inbound and outbound structuring, as well as in tax disputes, rendering DTTs one of the main sources of international tax law in Portugal. 1.2 Hierarchy of Sources International treaties duly ratified and published form part of the Portuguese legal system and, as a rule, prevail over conflicting domestic provisions. This prin - ciple applies to tax treaties (including DTTs) and other international tax instruments. DTTs do not create standalone taxing powers; rath - er, they allocate taxing rights between contracting states, thereby restricting the exercise of domestic taxing jurisdiction. This is particularly relevant in areas such as withholding taxes, permanent establishment (PE) assessment, and the allocation of taxing rights in respect of cross-border income.
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