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7 October 2019

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Tax Treaty between Angola and Portugal has Entered into Force

Portugal has published Notice No. 93/2019 in the Official Gazette, announcing that the income tax treaty between Angola and Portugal entered into force on 22 August 2019. The treaty, signed 18 September 2018, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Angolan employment income tax, industrial income tax, urban property tax, and investment income tax. It covers Portuguese personal income tax, corporate income tax, and surtaxes on corporate income tax.

Income from Hydrocarbons

Article 2 (Taxes Covered) includes the provision that the treaty will not affect the right of either of the Contracting States to apply their domestic laws and regulations related to the taxation of income and profits derived from hydrocarbons situated in the territory of the respective Contracting State.


If a person, other than an individual, is considered a resident in both Contracting States, its residence for the purpose of the treaty will be determined by the competent authorities through mutual agreement. If no agreement is reached, the person will not be entitled to any benefits provided by the treaty, except those provided by Articles 23 (Elimination of Double Taxation), 24 (Non-Discrimination), and 25 (Mutual Agreement Procedure).

Permanent Establishment

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services in a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days within any 12-month period.

The treaty also includes the provision that facilities or structures used for the exploration and exploitation of natural resources located in a Contracting State will constitute a permanent establishment if such facilities or structures remain for a period exceeding 30 days.

Limited Force of Attraction Provision

Article 7 (Business Profits) includes a limited force of attraction provision, whereby taxing rights are granted to a Contracting State on profits attributable to the sale of goods or merchandise in that Contracting State by a resident of the other State if the same or similar goods or merchandise are also sold through a permanent establishment maintained by that resident in the first-mentioned Contracting State.

Withholding Tax Rates

  • Dividends - 8% if the beneficial owner is a company that has directly held at least 25% of the paying company's capital for a period of at least 365 days including the date of payment; otherwise 15%
  • Interest – 10%
  • Royalties – 8%
  • Fees for technical services (managerial, technical, or consultancy) – 5%

Note – Article 10 (Dividends) includes the provision that the profits of a company of a Contracting State attributed to a permanent establishment in the other State may be taxed by that other State, but the additional tax so charged may not exceed 8% of the value of the repatriated profits.

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and
  • Gains from the alienation of shares or comparable interests if, at any time during the 365 days preceding the alienation, the shares or comparable interests derived more than 50% of their value directly or indirectly from immovable property situated in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation. A provision is also included for a tax sparing credit, whereby Portugal will deem tax paid in Angola to include any amount that would have been payable but was exempted or reduced under legislation designed to promote economic development in Angola, subject to certain conditions. The tax sparing credit is limited to the first seven years the treaty is effective but may be extended.

Entitlement to Benefits

Article 28 (Entitlement to Benefits) includes the provision that a benefit under the treaty will not be granted in respect of an item of income if it is reasonable to conclude that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit would be in accordance with the object and purpose of the relevant provisions of the treaty. There are also provisions to limit benefits where income is attributed to a permanent establishment in a third state.

Effective Date

The treaty applies from 1 January 2020.

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