Garrigues Portugal

The Portuguese tax authorities recently published three rulings covering taxation of income derived from foreign fiduciary structures by resident individuals.

A country's tax policy is reflected in its domestic tax legislation as well as its tax treaty positions.

Portugal has historically favoured source-based taxation on passive income, which has been coupled with stringent documentation requirements to claim the application of tax treaties (the so-called RFI forms). The Portuguese tax authorities have recently published a new set of procedural forms, this time to apply the transitional regime under the interest and royalties directive (council directive 2003/49/EC). Those developments provide a good pretext to outline the current state of play concerning outbound interest and royalty payments.