Tax Treaty Case Law around the Globe 2020
1. Aufl. 2021
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S. 209Chapter 18 Portugal: Can Management and Coordination Services Be Transfers of Know-How?
Dinis Tracana and Joana Mansilha
18.1. Introduction
On , the Portuguese Court of Appeals (South Administrative Central Court, or Tribunal Central Administrativo Sul, or “the Court”) delivered a ruling on the interpretation of the article of the Portugal-United Kingdom Income Tax Treaty (1968) corresponding to article 12 of the 1963 OECD Model Tax Convention (OECD Model (1963)) double tax convention.
The judgment addressed whether Portugal had taxing rights over fees paid by a company tax resident in Portugal to a company tax resident in the United Kingdom for the rendering of management and advisory services.
The decision focused on the concept of “information concerning industrial, commercial or scientific experience” (typically known as “know-how”) and the relevant criteria for determining what constitutes know-how and what should qualify as business profits.
The Court ruled in favour of the taxpayers, concluding that the services rendered did not include the transfer of know-how to the Portuguese company, and therefore, Portugal would not be allowed to tax the aforementioned payment...