IT –
Withholding Tax
Services acquired in
a foreign country
IRC
Corporate Income Tax
Article 4th IRC Code -
Extension of the tax obligation
1 – Regarding corporate bodies and
other entities with central management or control in
Portuguese territory, IRC falls upon their whole income,
including incomes made outside that territory.
2 – Corporate bodies and other
entities that do not have central management or control
in Portuguese territory are only subject to IRC
regarding income made in such territory.
3 – Pursuant to the terms of the
previous item, incomes imputable to the branch situated
in the said territory are the ones considered as being
made in Portuguese territory, as well as the following
ones:
a) Incomes related to real
property situated in Portuguese territory, including
the earnings resulting from its onerous transfer;
c) The under-mentioned incomes,
whose debtor has residence, central management or
control in Portuguese territory or whose payment is
chargeable to a branch there located:
6) Incomes
deriving from the intermediation
while concluding contracts;
7) Income deriving from
other services rendered or used in Portuguese territory
except for the ones related to transport, communication
and financial activities;
4 – The incomes mentioned in
paragraph c) are not considered as being made in
Portuguese territory when they represent a charge for
the branch situated outside that territory regarding the
activity run through it, also, when such conditions do
not occur, the incomes referred in nr. 7 of that same
paragraph, when the services to which they derived from
- being fully provided outside the Portuguese territory
– are not related to assets situated in that
territory, nor to studies, projects, technical support
or management, accounting or audits and consultancy
services, organization, investigation and development in
any field.
Article 88th IRC Code -
Withholding tax
1 - IRC is subject to tax
deduction at source regarding the following incomes
made in Portuguese territory:
d) Salary received as member of
statutory bodies of corporate bodies or other entities;
g) Incomes coming from the
intermediation while concluding any contracts and
incomes of other services rendered or used in Portuguese
territory, except for the ones related to transport,
communication and financial activities.
2 – Pursuant to the contents of the
previous item, the incomes mentioned in nr. 3 of article
4th are considered as being made in Portuguese
territory, except for the ones referred in nr. 4 of
that same article.
3 – Withholding taxes share the same
nature of the tax on account, except when they have
definite feature, like in the following situations:
b) When, if it is not a question of
property income, the holder of the incomes is a
non-resident that does not possess a branch in
Portuguese territory or, if he possesses one, that
income is not imputable to such holder.
4 – IRC withholding taxes are made
at the rates foreseen for the IRS withholding tax,
regarding residents in Portuguese territory, being
applied to the incomes referred in paragraph d) of nr. 1
at the rate of 20%.
5 – Withholding taxes which, pursuant
to the nr. 3, have a definite feature are
excluded from the contents of the previous item. The
corresponding rates foreseen in article 80th
(IRC Code) are then being applied.
6 – The obligation to make IRC
deduction at source at the date set down for the
identical obligation in IRS Code or, when there is lack
of it, at the date when the income is put at one’s
disposal, the sums of money withheld having to be
handed over to the State until the 20th of the following
month to the one from which they have been deducted
in compliance with the terms set down in the IRS Code or
in the complementary legislation.
Article 80th IRC Code - Rates
1 – The IRC rate is of 25%, except
for the cases foreseen in the following items.
2 – If the incomes are made by
entities that do not possess a central management or
control in Portuguese territory and do not possess a
branch to which those are imputable, the IRC rate is of
25%, except for the following incomes:
e) Commissions arising from the
intermediation while concluding any contracts and
incomes arising from services rendered referred in
nr. 7) of paragraph c) of nr. 3 of article 4th, the
rate being 15%.
Article 90-A CIRC
- Withholding tax exemption
There is no need for IRC to be
deducted at source, whenever it has the feature of a tax
on account, in several cases.
There is also no need for IRC to be
deducted at source, full or partly, whenever the case
may be, regarding the incomes referred in nr. 1 of
article 88th, when the taxable persons benefit from full
or partial exemption or, by force of a convention
made by Portugal meant to avoid double taxation, the
competence for the taxation of incomes made by a
resident of the other contracting State is not
attributed to the State of source or, if it is so, in a
limited way.
3 – In the situations referred in the
previous paragraph, the beneficiaries of the incomes
have to produce evidence, before the entity that is
compelled to make the tax deduction at source, of the
observance of the legal requirements in which
depends the exemption, or the ones that result from a
convention meant to avoid double taxation. In such case,
a form model 21-RFI has to be submitted,
certified by the relevant authorities of the State of
residence.
4 – When such evidence is not
produced until the time limit set down for the payment
of such tax, the taxpayer is compelled to pay that
tax in full, which should have been deducted
according to the law.
Corporate
Income Tax Code
IRS
Personal Income Tax
Article 18th
IRS Code - Income made in Portuguese territory
1 – It is
considered as being made in Portuguese territory:
f) Incomes
that are not foreseen in the previous item arising from
professional activities and other services -
including the ones of scientific, artistic and technical
features, as well as the intermediation while concluding
contracts - rendered or used in Portuguese territory,
except for the ones related with transports,
telecommunication and financial activities, provided
they are due by entities in which they have residence,
central management or control, or a branch to which the
payment has to be charged;
Article 71st
CIRS - Fixed Rates
4. The following incomes are taxable
at the rate of 15%:
b) Incomes foreseen in paragraph
f) of nr. 1 of article 18th, except for the ones
embraced by paragraph c) of nr. 2 of this article,
paid or made available to non-residents in Portuguese
territory.
Personal
Income Tax Code
Forms
Pursuant
to
nr. 3 of article 90th of IRC Code and in nr 2 of
article 18th of the
Decree-Law
42/91, of 22nd January, it
was approved the forms
Model nr. 21-RFI
meant to allow the exemption, full or partially,
of withholding tax.
Law 67-A/2007, 31st
December
Form
M21-RFI (Portuguese-English)
The retention must
be done when the payment is done and the sums withheld have to be paid to Government up to
the 20th of the following month.
.
This note is
only for information and does not hold its divulgers
responsible. For thorough information you must consult
the Law.
