Convention of Double Taxation (CDT)


On September 18, 2018, Portugal and Angola signed a Convention for the Avoidance of Double Taxation (“CDT”) with respect to taxes on income and prevention of tax evasion and avoidance, this being one of the first three CDT`s signed by Angola to date (alongside CDT’s with the United Arab Emirates and China).

After its ratification and deposit (precise dates unknown), the CDT will enter into force for a period of eight years, renewable for equal and successive periods.

Therefore, natural and legal persons residing in Portugal and Angola may pay less income taxes in both countries, while preventing the use of abusive arrangements that lead to situations of reduced taxation or non-taxation, since the CDT reflects the recent concerns of the Organization for Economic Cooperation and Development (OECD) – expressed in the Model Tax Convention on Income and on Capital of 2017 – on Base Erosion and Profit Shifting (BEPS).


The CDT shall apply in particular to the following income taxes:

  • Portugal: Personal Income Tax (IRS), Corporate Income Tax (IRC) and Local Taxes.
  • Angola: Personal Income Tax, Corporate Tax, Real Estate Tax, Property Transfer Tax and Capital Gains Tax.

The CDT does not prevent States` rights to tax income and profits derived from hydrocarbons.

Profits of Companies

Companies will be exclusively taxed in the State of domicile, unless carrying on business in the other Country, through a permanent establishment.
Following the OECD Model Tax Convention, the CDT between Portugal and Angola provides for a broad concept of permanent establishment, which includes, inter alia:

  • A building site, construction or installation project in activity for more than six months;
  • Dependent agents acting on behalf of a company, (i) habitually entering into or concluding contracts without material changes by the company, or (ii) maintaining a stock of goods or merchandise belonging to the Company solely for the purpose of delivery on its behalf;
  • Insurance companies (except for reinsurance) that collect premiums from policies in the other Country or insure risks there through a person other than an independent agent;
  • Facilities or structures used in research and exploitation of natural resources remaining in the other Country for a period exceeding 30 days.

Passive Income

Reduced rates of withholding tax are provided for the following passive income:

  • Dividends (including dividends distributed by funds or real estate investment companies): 8% or 15% depending on whether or not the beneficial owner of the dividends is a company which holds directly 25% of the capital of the company paying the dividends, over a period longer than 365 days[1];
  • Interest: the tax withheld in the other Country shall not exceed 10% of the gross amount;
  • Royalties: the tax withheld in the other Country shall not exceed 8% of the gross amount.

Independent Personal Services

A withholding tax rate is applicable to the payment of fees for technical services, specifically, any payment for the services of a technical nature, or management and consulting, except when such services are paid to:

An employee of the person making the payment;
A teacher in an educational institution or the teaching institution;
An individual for the provision of personal services to another individual.
However, the tax paid in the other Country shall not exceed 5% of the gross amount of the fees.

Capital Gains

Immovable and movable capital gains of companies, permanent establishments and independent agents may be taxed both in the Country of residence and in the other Country.

Gains derived from the sale of shares or comparable interests, such as interests in partnerships or trusts, may be taxed in the other Country, provided that at any time during

365 days preceding the alienation, these shares or comparable interests derived more than 50 per cent of their value, directly or indirectly, from immovable property.

Limitation of Benefits

In light of the OECD action plans for the prevention of BEPS, the CDT between Portugal and Angola provides for a clause limiting CDT’s tax advantages, namely:

  • When such benefit implies the violation of internal anti-abuse rules;
  • If obtaining the benefits is one of the main objectives of a legal arrangement or transaction that directly or indirectly result in said benefits;
  • When a Portuguese or Angolan company receives income deemed to be attributable to a permanent establishment of a company established in a third jurisdiction and the profits attributable to the permanent establishment are exempt, the benefits of the CDT do not apply to any income whose tax in that third jurisdiction is less than (i) 10% of the total income or (ii) 60% of the tax which would be levied in the Country of residence of the beneficiary company.

Elimination of Double Taxation

The CDT between Portugal and Angola allows a tax sparing credit, applicable for seven years, through which residents in Portugal may deduct to the income tax payable in Portugal the amount of tax that should have been paid in Angola, but was not paid due to the exemption or reduction of temporary relief, provided that such income does not derive from entities or permanent establishments whose activity consists in carrying out typical banking operations (even if not performed by credit institutions), insurance activity, operations relating to social rights or leasing of assets.


If you need any legal assistance in this matter, do not hesitate to contact one of the following Lawyers:

Vitor Marques da Cruz

Duarte Amaral da Cruz
Associate Lawyer

[1] This period includes the day of payment of the dividends, and the changes in ownership that would directly result from a corporate reorganization are not included in its calculation