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Hong Kong-Portugal Double Taxation Agreement Summary

On 22 March 2010, Hong Kong and Portugal signed an agreement to avoid double taxation, bringing the number of such agreements for Hong Kong to nineteen. This agreement provides investors with greater certainty on tax liabilities from cross-border economic activities and fosters closer economic and trade links between Hong Kong and Portugal.

Key provisions include reduced withholding tax rates for dividends, interest, and royalties under certain conditions. Dividends: Standard rates range from 20% to 21.5%, with reduced rates of 5% to 10% for companies holding at least 10% directly of the paying company's capital, provided arrangements do not have a main purpose of tax advantage. Interest: Standard rates of 20-21.5% may be reduced to 0-10%, with interest paid to the Hong Kong SAR Government, HKMA, or other specified institutions wholly owned or funded by the Hong Kong SAR Government exempt from withholding tax. Royalties: Standard rates are 15-21.5%, with a reduced rate of 5% under the agreement.

The agreement entered into force in Portugal from 1 January of the year following its force, while in Hong Kong, it takes effect from 1 April of the following year.

For detailed information, refer to: http://www.ird.gov.hk/eng/pdf/Agreement_Portugal_HongKong.pdf