Portugal has historically favoured source-based taxation on passive income, which has been coupled with stringent documentation requirements to claim the application of tax treaties (the so-called RFI forms). The Portuguese tax authorities have recently published a new set of procedural forms, this time to apply the transitional regime under the interest and royalties directive (council directive 2003/49/EC). Those developments provide a good pretext to outline the current state of play concerning outbound interest and royalty payments.
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Pillar two might be top of mind for many multinational companies, but the huge variations between countries’ readiness means getting ahead of the game now, argues Russell Gammon, chief solutions officer at Tax Systems.