Double Taxation Treaty — DTT

A Double Taxation Treaty (DTT), also called a Double Tax Agreement (DTA), is a bilateral agreement between two countries that determines which country has the primary right to tax specific types of income when a person is a resident of one country and receives income from the other. Portugal has approximately 79 active DTTs. These treaties typically follow the OECD Model Tax Convention and contain provisions for: employment income (taxed where work is performed), dividends and interest (shared taxation), pensions (residence or source country, depending on type), and tie-breaker rules for dual residency. Under DTTs, if one country taxes income, the other typically provides relief via exemption or a foreign tax credit (DTAA credit). Tax residents of Portugal should review the specific treaty with their home country to understand how their income will be treated.