The Portuguese Personal Income Taxation of Non-Portuguese Investment Fund (IF) distributions, in particular under the OECD Model Tax Convention on Income and on Capital (OECD-MC) and the Portuguese Non-habitual tax resident (NHR) regime, is a complex topic, namely due to the diversity of legal and tax status among IFs. RPBA’s Infographic provides a step-by-step questionnaire for an accurate and full analysis of the matter.

1. Is the IF widely-held?
Is the IF composed by a
diversified portfolio?
Is the IF subject to
investor protection
regulation in the
country in which it is
established?
Do the managers of
the IF have
discretionary powers
to manage its assets so
that the IF is the
beneficial owner of the
income it generates?
If one or more of
the previous
characteristics are
not verified, the
entity is not an IF
in the OECD-MC
sense, for which
the remaining
analysis can be
fully applicable.
NO
YES
NO
YES
YES
NO
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T.: (351) 212 402 743 F.: (351) 210 103 898 E.: geral@rpba.pt
NO
YES
Is the IF a legal
person (body
corporate)?
YES
NO
Is the IF treated as a
body corporate for
tax purposes?
Is the IF treated, wholly
or partially, as a fiscally
transparent entity by the
State where it is
established?
Is the IF subjectively
exempt?
Is the IF a resident
of a Contracting
State, being liable
to tax where it is
established?
NO
YES
Nevertheless, do the
Contracting States
consider the IF liable to tax
and, therefore, resident?
Is there a zero-effective
tax (due to deductions,
exemptions, carry-
forward of tax losses,
etc.)?
Is the income derived by the IF
considered to be income of that IF
as a resident of the State where it
is established , by that State, for
purposes of taxation (i.e., it is not
considered to be income of the
Portuguese tax resident
participant)?
NO
Is the income distributed
qualifiable as a “dividend”
or “interest” under the
OECD-MC?
Is the IF subject to a
zero nominal tax rate
(materially equivalent
to a subjective
exemption)?
YES
NO
NO
YES
In both cases
the IF should
still be
considered
liable to tax
YES
YES
NO
Articles 10 /11 of
the OECD-MC
applicable and
income exempted
in Portugal under
the NHR regime
YES
Portuguese Personal Income Taxation of Non-Portuguese Investment Fund (IF) distributions, in particular under the OECD Model Tax
Convention on Income and on Capital (OECD-MC) and the Portuguese Non-habitual tax resident (NHR) regime
1
AND
AND
Articles 10 /11 of
the OECD-MC not
prima facie
applicable
(SEE NEXT SLIDE)
AND

2. Rua Abranches Ferrão, n.º 10, 9.º Piso, Fracção G, 1600-001 Lisboa, Portugal
T.: (351) 212 402 743 F.: (351) 210 103 898 E.: geral@rpba.pt
Articles 10 / 11 of
the OECD-MC not
prima facie
applicable
Given the structure
through which the income
is generated (e.g., a fixed
place of business), can it
still be considered as
originating from the State
where the IF is established
(Source State)?
Does the “Other income”
provision of the real
Double Taxation
Convention (DTC) at stake
follow article 21 of the
OECD-MC?
Does the “Other income” provision
of the DTC allow the State where
the IF is established (Source State)
to tax this income, alongside the
Residence State of the Portuguese
tax resident participant?
YES
YES
YES
NO
NO
Income exempted
in Portugal under
the NHR regime
Income taxable in
Portugal at a 28%
tax rate
NO
DISCLAIMER: This infographic is updated until
December 9th, 2021. Although great care has
been taken when drafting this infographic,
Ricardo da Palma Borges & Associados (RPBA)
- Sociedade de Advogados, S.P., R.L. does not
accept any responsibility whatsoever for any
consequences arising from the use of the
information contained herein. Such
information is provided solely for general
purposes and cannot be regarded as legal or
other advice. You are strongly recommended
to take professional legal advice appropriate
for your case before taking any decisions.
2
Portuguese Personal Income Taxation of Non-Portuguese Investment Fund (IF) distributions, in particular under the OECD Model Tax
Convention on Income and on Capital (OECD-MC) and the Portuguese Non-habitual tax resident (NHR) regime