Teresa Teixeira Mota (Managing Associate, Tax), together with André Vilaça Ferreira, co-authored the article 'Unlocking Double Tax Treaty Benefits: Portugal’s Ruling on Foreign Partnerships', published in the International Tax Review.
In the piece, the authors discuss a recent binding ruling issued by the Portuguese Tax Authority, which considered the application of the Portugal–Germany Double Taxation Convention (DTC) to payments of income from services, interest and royalties made by Portuguese companies to German partnerships that are fiscally transparent and not tax-resident in Germany, even though they have their place of effective management there. These partnerships, while transparent for tax purposes in Germany, are treated as opaque under Portuguese law — creating a mismatch in the application of double tax treaties.
In its April 2025 ruling, the Tax Authority concluded that partners of partnerships effectively managed in Germany, and who are taxed there on the income attributed to them through the partnership, qualify as German residents for the purposes of applying the Portugal–Germany DTC, provided they meet the formal requirements set out in the Corporate Income Tax Code (IRC) — namely, submitting Form 21-RFI together with a tax residence certificate issued by the German tax authorities.
This decision makes it easier for partners in transparent partnerships with effective management in Germany — even if resident elsewhere — to benefit from the provisions of the Portugal–Germany DTC.
- This article is available here.
