PLMJ
  July 29, 2013 - Portugal

Withholding Tax Exemption on the Payment of Interest and Royalties
  by PLMJ

Introduction
On 6 June 2013 the Council of Ministers approved the bill to  finalise the transposition of Directive 2003/49/ EC of the Council of 3 June into the IRC (corporate  income  tax)  Code. The Directive, which establishes a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States, is commonly known as the ‘Interest & Royalties Directive’.

The Directive establishes a system for exemption from tax in the source State in relation to payments of interest and royalties made between  companies that qualify as “associated companies” (see the definition below).

Despite the fact the Directive dates from 2003, Portugal benefited from a transitional period of eight  years  for its full application during which the rates for withholding tax applicable to the payment of interest and royalties between associated companies were progressively reduced, first to 10%, and then, over the last four  years  to 5%.

From 1 July 2013, the retention  of IRC (corporate income tax) at source will cease to apply as long as certain requirements are met.                                                                                                                                                                                            



Read full article at: http://www.worldservicesgroup.com/files/emails/PLMJ2_Withholding_tax_exemption_on_the_payment_of_interest_and_royalties.pdf