German-Portuguese Double Taxation Agreement: Scope of application and taxation law

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published on September 13, 2019 | reading time approx. 2 minutes
 
For companies with international business transactions, but also for private individuals who earn income in several countries, the question arises as to in which country the income is to be taxed. This question is of great practical relevance, as taxation can be decisive on the success or failure of a business activity and can be an essential factor to decide whether to invest or not in a particular location.
 

           

Taxation issues are of great importance to investors. Attractive tax systems can promote and increase investments and thus become a catalyst for economic recovery by providing a significant competitive advantage. The right to taxation, which is one of the most important sovereign rights of a country, can also represent risks for companies.

 

In Germany applies the principle of unlimited tax liability with a worldwide income in Germany, which may lead to the problem of double taxation if a type of income is taxed in another country during the same period.

 

In order to avoid double taxation, double taxation agreements have been concluded between different countries. In the legal sense, these agreements are treaties under international law which operate according to the principle that the right of one contracting state to tax is restricted in favour of the right of another state to tax.

 

The agreement of 15 July 1980 between the Federal Republic of Germany and the Portuguese Republic on the avoidance of double taxation in the area of taxes on income and assets applies for the German-Portuguese area.

 

Numerous treaties, such as the agreement between Germany and Portugal, were modelled on the OECD Model Tax Conventions for the Avoidance of Double Taxation on Income and Capital. Typical areas of regulation are the taxation of income, the taxation of assets and the allocation of tax revenue.

 

Our presentation ( Read PDF document ») gives you an overview of the main features of the agreement between Portugal and Germany and provides initial information on its principles, scope, definitions and structure as well as its relationship with tax incentives, such as the non-habitual resident status.

  

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Leonor Xavier

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