This content is from: Angola

Portugal: The new gateway to Angola

Vieira de Almeida's Tiago Marreiros Moreir and João Riscado Rapoula explore the new double taxation agreement between Portugal and Angola and what it could mean for companies doing business in the respective countries.

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 met:

  • 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 dividend distribution;
  • 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 DTA.

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 (, and João Riscado Rapoula, senior associate ( at Vieira de Almeida.

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