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Tax Treaty between France and Portugal: all you need to know

Living in Portugal, but still receiving income from France? Don’t know whether to pay tax here, there or both? Learn all about the tax treaty between France and Portugal to avoid dual taxation, so that you don’t have to pay tax on the same income twice.

Relations between Portugal and France go far back in time. To avoid people living in one of the countries, but receiving income from the other, having to pay double the taxes, there’s a tax treaty between France and Portugal on dual taxation. This tax treaty between France and Portugal dates to 1971 but was reformulated in 2017.

So, if you are French and your salary or pension is paid through France, but you live in Portugal, you should be aware that there is a tax treaty between Portugal and France which helps you avoid dual taxation. This treaty saves you from paying income tax twice if you’ve already paid in one of the two countries. The first tax treaty between Portugal and France was published in 1971 but underwent some changes in 2017.

The tax treaty between Portugal and Spain to avoid dual taxation stipulates that income paid by “one of the Contracting States, or by a political or administrative subdivision, or by local or territorial government, or by a legal person under public law to an individual, for services rendered to that state, or subdivision, or local government or legal person, can only be taxed in that State”. As for pensions, they can only be taxed in the country where they are paid.

Nonetheless, in both cases the pension or worker’s income “are taxable exclusively in the other Contracting State if the services are rendered in that state and if the individual is a national and does not also have the nationality of the former State”, decree 105/71 goes on to explain. If this treaty did not exist, then the State of residence could tax income even if it had already been taxed in the other country.

Taxes covered by the tax treaty between France and Portugal

This treaty covers the following taxes:

In France:

  • Income Tax (l’impôt sur le revenu);
  • Corporate Tax (l’impôt sur les sociétés);
  • Corporate Tax surcharge (les contributions sur l’impôt sur les sociétés);
  • General Social Contributions (les contributions sociales généralisées);
  • Social Debt Repayment Contribution (les contributions pour le remboursement de la dette sociale); including withheld taxes (retenues à la source and précomptes) and advances (avances) deducted from these taxes; (hereafter referred to as ‘French tax’);

In Portugal:

  • Income Tax (IRS);
  • Corporate Tax (IRC);
  • Surtax.

The tax treaty between France and Portugal also stipulates that there be exchange of information between both countries, as well as provision of “mutual aid to the effect of collecting respective tax credits”.

Better tax regime for dividends

Besides salaries and other income, the treaty between Portugal and France to avoid dual taxation also covers capital income, such as distribution of stock dividends and interest received outside of the country of origin.

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