31 December 2015
The income tax treaty between Portugal and San Marino entered into force on 3 December 2015. The treaty, signed 18 November 2010, is the first of its kind between the two countries.
The treaty covers Portuguese personal income tax, corporate income tax, and local surtax on corporate income tax. It covers San Marino general income tax on individuals and on bodies corporate and proprietorships.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Portugal applies the credit method for the elimination of double taxation, while San Marino generally applies the exemption with progression method. However, in the case of income covered by Articles 10 (Dividends), 11 (Interest) and 12 (Royalties), San Marino applies the credit method.
Article 28 (Limitation on Benefits) includes the provision that the benefits of the treaty will not apply for income derived by a resident of one Contracting State from the other State if the main purpose or one of the main purposes of any person concerned with the creation or assignment of such income was to take advantage of the treaty.
In addition, a company that is entitled to special fiscal treatment under the provisions of any legislation or administrative practice of either Contracting State will not be entitled to the benefits of the treaty. The same applies to income received by a resident of a Contracting state from companies that are entitled to such special fiscal treatment, or in respect of shares or other corporate rights in the capital of such companies.
The treaty applies from 1 January 2016.
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