Tax Treaty Case Law around the Globe 2016

S. 85Chapter 7 Portugal: Tax Residence Certification and Entitlement to Compensatory Interest within a Relief at Source System

João Félix Pinto Nogueira

7.1. Introduction

Tax treaties need to be implemented in real-life situations. They are worthless if taxpayers cannot claim benefits therein enshrined.

Application of treaties depends on the fulfilment of certain requirements. Some of them are established in the treaties, others stem from domestic law. In what concerns the latter, they vary immensely from country to country. Entitlement to the benefits of the same treaty may differ in accordance to which country is granting those benefits.

One of the most problematic requirements concerns subjective treaty entitlement. Treaties are not comprehensive in defining residence and entitlement relies mostly on what is established by domestic law. And when we look at different jurisdictions, we see a huge diversity not only on the criteria to assess residence but also on the modalities to prove residence (in that or in other jurisdictions).

Many countries (and particularly the “other contracting state”) make subjective treaty entitlement dependent on the possession, by the paying agent, of a tax cert...