27 April 2011
Details of the income tax treaty and protocol between Norway and Portugal, signed on 10 March 2011, have become available. The treaty was concluded in the Portuguese, Norwegian and English languages, each text having equal authenticity. In the case of divergence, however, the English text prevails. Once in force treaty will replace the former income and capital tax treaty of 24 June 1970 between Norway and Portugal. The treaty generally follows the OECD Model Convention.
The maximum rates of withholding tax are:
|-||15% on dividends in general; 5% if the beneficial owner is:
|-||10% on interest, subject to exceptions; and|
|-||10% on royalties.|
Deviations from the OECD Model include that:
|-||the term "permanent establishment" (PE) includes a building site, a construction, assembly or installation project or a supervisory or consultancy activity connected therewith but only where such site, project or activity lasts for more than 6 months (Art. 5(3));|
|-||the term "royalties" includes payments received for the use of or the right to use films or tapes for radio or television broadcasting (Art. 12(3));|
|-||the treaty includes an article on independent personal services (Art. 14) in line with the UN Model Convention (2001); and|
|-||the treaty includes an article on offshore activities (Art. 21).|
Both countries generally provide for the credit and exemption-with-progression methods to avoid double taxation (Art. 23(1)(2)).
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