On August 25, 2016, Christian ECKERT, Secretary of State for the Budget, traveled to Portugal to sign an amendment to the tax treaty of January 14, 1971, with his counterpart Fernando António Portela Rocha de Andrade.
This amendment introduces two significant changes in line with principles established by the OECD (Organisation for Economic Co-operation and Development).
Avoiding Double Taxation
First, it aims to resolve concrete difficulties encountered by around one hundred French citizens residing in Portugal A who receive public-sector salaries, particularly staff from the Agency for French Education Abroad (AEFE) working in Lisbon and Porto.
They will now be subject to taxation exclusively in the Portugal, and will no longer be required to pay taxes in both countries before filing for double taxation relief, as was previously the case.
The text includes retroactive application to tax periods starting from January 1, 2013, thereby addressing both past and future tax years.
Fighting Tax Evasion and Fraud
The amendment also brings the bilateral tax treaty in line with the highest international standards in combating tax evasion and tax fraud.
The treaty will now include:
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an updated information exchange mechanism
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a new system for assistance in the recovery of tax claims
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and an anti-abuse clause in accordance with OECD guidelines, ensuring the benefits of the treaty are not misused through arrangements designed solely to avoid taxation.
Source: economie.gouv.fr