In mid-September, Portugal’s prime minister
made an official visit to Angola to meet the
latter’s new president. This visit was historical
since, after years of negotiations and impasses, the two
countries signed a convention on the avoidance of double
taxation and the prevention of fiscal evasion with respect to
income taxes (DTA). The countries also agreed on a strategic
cooperation program (ADP).
Considering that this is the first DTA concluded by Angola
with any country, it may be a game changer in the economic
relationship between the countries.
Although the DTA provisions have yet to be published, we
anticipate that, by virtue of the permanent establishment
provision, Portuguese companies performing remote services for
Angolan entities will no longer be subject to the 6.5% Angolan
tax on services.
Meanwhile, Angolan companies investing in Portugal will
benefit from a significant reduction in the withholding taxes
applicable on interest, which is currently 25%. It is also
clear that expatriates may benefit from having a DTA in force,
as employment income provisions should eliminate (or at least
reduce) double taxation.
Despite these immediate benefits, one should not consider
this DTA as an advantage solely to Portugal–Angola
relations; it will also be relevant to entities from any
jurisdiction doing business in Angola.
The combination of this DTA with the Portuguese
participation exemption regime for outbound dividend payments
(together with the EU Parent-Subsidiary Directive), will make
Portugal a privileged hub for foreign entities intending to
invest or do business in Angola. Under the Portuguese
participation exemption regime, no withholding tax will apply
to the distribution of dividends made by a Portuguese SPV to a
foreign company provided the following requirements are
- The foreign company has a minimum 10% stake in the share
capital or voting rights of the Portuguese Company;
- The participation is held for at least one year prior to
- The foreign company is resident in an EU or EEA member
state, or a third country with a double tax treaty in force
with Portugal, and is subject to corporate income tax at a
rate corresponding to at least 60% of the Portuguese
corporate income tax rate (ie 12.6%).
In addition, with the Interest and Royalties Directive, any
interest paid on shareholder’s loans granted by EU
companies to a Portuguese SPV aiming at financing activity in
Angola are exempt from Portuguese withholding tax provided that
the lender has a direct holding of at least 25% of the share
capital or voting rights of the borrowers for at least two
consecutive years, or vice-versa.
If we consider that Portugal has 77 DTAs currently in force,
companies intending to invest in the third-largest African
market – which is also one of the
continent’s leading oil producers – will
likely consider Portugal as a very credible and efficient
alternative to investing in Angola, taking advantage of the new
Portugal and Angola also signed an ADP that recognises
Portugal as a crucial partner for the Angolan Development Plan
for the period 2018–2022. With this agreement and the
DTA, Portugal may take on a very important role in implementing
the strategic options to be selected by the Angolan government
in the next few years.
This article was prepared by Tiago Marreiros Moreira,
partner (email@example.com), and
João Riscado Rapoula, senior associate (firstname.lastname@example.org) at Vieira de