Portugal and UK Finalise Post-Brexit Double Taxation Treaty
Portugal and the United Kingdom have officially signed a new bilateral agreement addressing double taxation, a move announced today in London by Portuguese Minister of Foreign Affairs, Paulo Rangel. The treaty, which also includes provisions for the exchange of confidential information, was formalised during a meeting with the UK's new Foreign Secretary, Yvette Cooper.
Minister Rangel stated to the press that the primary focus of the diplomatic effort was the revision of the double taxation agreement, which had not been updated since the United Kingdom's departure from the European Union in 2020. "The main [agreement] is the double taxation agreement, which is very important for the Portuguese living in the UK, for the British living in Portugal, and for companies, to promote investment," Rangel explained.
The negotiations were reportedly conducted with "great urgency" throughout the current year, following the identification of the need to amend the existing rules in the post-Brexit context. The minister described the outcome as a "significant improvement" for citizens and businesses of both nations, calling it "a very important thing for investment" and "undoubtedly, an important step."
The meeting between Rangel and Cooper was noted for its symbolic value, with Rangel being the first foreign minister to be officially received by the new Foreign Secretary, underscoring the historic Anglo-Portuguese Alliance established by the Treaty of Tagilde in 1372.
This new agreement follows the "Joint Declaration on Bilateral Cooperation" signed in 2022 by then-Prime Ministers António Costa and Boris Johnson. That declaration established a broad framework for post-Brexit relations, covering areas such as foreign policy, trade, investment, and the protection of resident citizens in both countries.
While many aspects of the relationship between the two nations are governed by the broader EU-UK framework, this bilateral treaty provides specific regulations concerning taxation. It is expected to directly affect the financial affairs of Portuguese residents in the UK and the large community of British expatriates and investors residing in Portugal.
The Portuguese government has indicated that the treaty is designed to create a more stable and predictable environment for cross-border economic activities. The specific terms of the agreement will provide updated rules for how income, capital gains, and other forms of revenue are taxed for individuals and companies with financial interests in both countries, preventing the same income from being taxed by both jurisdictions.
The formalisation of this agreement is a key development in defining the economic relationship between Portugal and the UK after Brexit. It provides a clear legal and financial structure that will influence corporate investment decisions and the personal financial planning of thousands of individuals.
The Ministry of Foreign Affairs has not yet released the full text of the treaty, but it is expected to be published following ratification by both governments. The implementation of the new rules will be a critical point of interest for tax professionals and investors operating between the two countries.
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