Tax Treaty Case Law around the Globe 2013

S. 23Portugal: Tax treaty case law on personal and substantive scope

Ana Paula Dourado/José Almeida Fernandes

1. S. 25 Case 05071/11, 6 june 2012, Tribunal Central Administrativo Sul

1.1. Introduction

In the tax case under analysis, the second instance of the Portuguese tax court – „Administrative Central Court – South“ – had to decide whether reimbursements made by a Portuguese corporation to a related French corporation for the payments made by the French corporation to one of its employees who had been hired to work in Portugal was income covered under Article 7 of the Portugal – France DTC.

1.2. Facts of the Case

The court accepted the following facts as established: Mr. C was the director of a company resident in France – B Corporation – who was seconded to company A to render services to it. A was resident in Portugal and a related company of B. Mr. C rendered the abovementioned services physically in Portugal, and according to the court, it was a matter of fact that company B paid him for those services corresponding to “wages, costs and bonuses”, and invoiced company A for a refund. Company A paid the gross invoiced amount to company B free of any withholding taxes. According to the court...