26 January 2015
The income tax treaty between Colombia and Portugal will enter into force on 30 January 2015. The treaty, signed 30 August 2010, is the first of its kind between the two countries.
The treaty covers Colombian income tax and its complementary taxes, and Portuguese personal and corporate income taxes, and the local surtax on corporate income.
If a company is a resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement. If the authorities cannot reach mutual agreement, the company will not be entitled to the benefits of the treaty.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise of one Contracting State furnishes services in the other 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.
Both countries apply the credit method for the elimination of double taxation.
The provisions of the treaty will not apply when the main purpose or one of the main purposes of any person concerned with the creation or assignment of the property or right in respect of which the income is paid is to take advantage of the treaty provisions. (Article 26)
A protocol to the treaty, signed the same date, includes the provision that if Colombia concludes a Convention with a third State that includes provisions regarding technical assistance, technical services or consulting services that are more favorable than those provided for in Article 12 of the Colombia-Portugal treaty, then the more favorable provisions will automatically apply to the Colombia-Portugal treaty from the date of entry into force of the Convention with the third State.
The treaty applies from 1 January 2016.
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