Tax Treaty Case Law around the Globe 2013
1. Aufl. 2013
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S. 157 Portugal: Tax treaty case law on the application of Art 12 (royalties)
Ana Paula Dourado/José Almeida Fernandes
1. S. 159 Case 03506/09, Tribunal Central Administrativo Sul, 3 July 2012
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 software payments, that had been qualified as royalties in the source country (Spain), were to be considered as royalties in the residence State (Portugal) for tax treaty purposes.
1.2. Facts of the Case
Mr. Lídio was resident in Portugal, had no permanent establishment in Spain, and entered into an agreement on behalf of “Construction Computer Software (PTY) Ltd” to grant, for consideration, the use of a software programme to a Spanish corporation.
The contracting parties were, on the one hand, Construction Computer Software (PTY) Ltd, as it was the owner of the software programme, and the Spanish company. Mr. Lídio entered into agreements with third parties concerning the software programme and the income the Spanish company paid him was subject to a withholding tax in Spain at 25%. Mr. Lídio declared in his personal income tax returns, foreign inc...