Portugal-Netherlands Double Taxation: 

Portugal and the Netherlands have a Double Taxation Treaty (DTT) in force since 11 August 2000, signed in Porto on 20 September 1999, and approved by Resolution of the Assembly of the Republic No. 62/2000. This agreement exists to ensure that those who live in one country and receive income from the other do not pay tax twice for the same income.

The treaty applies to taxes on income and capital and sets out clear rules on:

• Dutch pensions (AOW and private funds)

• Salaries received in the Netherlands

• Dividends, interest and royalties

• Properties located in the Netherlands

• Capital gains and business income

The Convention is officially listed among Portugal's tax treaties.

How the treaty avoids paying tax twice

DTT uses two mechanisms:

1️⃣ Tax Credit

Portugal allows you to deduct the tax paid in the Netherlands from the IRS due in Portugal.

2️⃣ Exemption with progressivity

Some income is exempt in Portugal, but influences the rate applicable to the remaining income.

These methods follow the OECD model and are recognized as the European standard for avoiding double taxation.

Practical examples

✔ Dutch pensions (AOW and private funds)

Usually taxed in the Netherlands, but declared in Portugal. Portugal applies a tax credit or exemption, depending on the type of pension.

✔ Salaries

If the work is carried out in the Netherlands, it can be taxed there. Portugal avoids double taxation through tax credit.

✔ Dividends, interest and royalties

The treaty limits the maximum withholding tax rates applied by the Netherlands, reducing the anticipated tax burden.

✔ Real Estate in the Netherlands

They are taxed exclusively in the Netherlands. Portugal applies exemption progressively.

⚖️ Important Note

This information is general and does not dispense with the consultation of a tax expert or the competent tax authorities, as each situation may have particularities that change the applicable framework.